Is Health Care broken, or is the fix easier than thought?

The answer:

You can make a one-time transfer from a 401(k) to your HSA account.

This option will free up those dollars you generally invest in an HSA…wich now come from a 401(k) transfer.

This temporary option gives a lot of people more money in their pocket.

But the other benefit is, it allows you to have investment dollars for retirement as well as the option to use that money to get healthier or for a health emergency.

All in all many of our financial decisions will help many of us come through this financial downturn smelling like roses.

Part one of a five-part series will discuss the use of health savings accounts to pay for your cobra.

We find that many people with an HSA are not using it to its full capacity.

With the downturn in the economy we find that many people are put in a position of changing jobs to become an entrepreneur or moving to another company.

Because COBRA is one of those options in making that move, many people with an HSA may not be aware that those payments can now be made from your HSA.

This allows us to free up dollars that we would generally be spending on those COBRA premiums.

In my e-book Health Savings Account Guidelines Made Easy you would look under the section COBRA payments and it will give you guidelines to easily understand any specifics of how to best use your health savings account.

Featured Story May 29, 2008

Bank of America to ‘Walk the Walk’ by Offering Its Own Employees Health Care Account for Expenses

Reprinted from INSIDE CONSUMER-DIRECTED CARE, a biweekly newsletter with timely news and insightful analysis of benefit design, contracts, market strategies and financial results.

Account for Expenses Charlotte, N.C.-based Bank of America (BoA) is sweetening its transition to consumer-directed health care (CDH) by offering some employees extra money to help defray out-of-pocket health care expenses. Beginning in 2009, employees who earn less than $100,000 per year will be eligible to receive up to $100 a month in a “health care account” to use at their discretion, according to company spokesperson Kelly Sapp.

In January, BoA consolidated its health and insurance benefits under one carrier — Aetna Inc. — replacing a hodgepodge of plans from more than a dozen carriers. Bank employees can choose from a traditional PPO-HMO blended plan with a flexible spending account (FSA), or a high-deductible health plan with an HSA.

In addition, BoA will place $600 to $1,200 per year into a health care account that employees can use for copayments and other expenses. The amount of funds deposited on the health care account is based on an employee’s annual salary. The money can be rolled over from year to year and saved into retirement, Sapp explains.

“Employees can take the health care account into retirement,” she says. “But if they leave Bank of America before retirement, they can’t take the money with them.”

Account Is Similar to HSA or HRA

Although neither an HSA nor a health reimbursement arrangement (HRA), the health care account has characteristics of both. Like an HRA, the money nominally belongs to the employer. However, it rolls over from year to year, and like an HSA eventually belongs to the employee.

The health care accounts are a dividend from the savings expected to result from streamlining the company’s health benefits. “Going to a primary provider of health benefits allowed us to gain some operational efficiencies with which we were able to enhance and offer some additional programs to our associates, the health care account being one of them,” Sapp says.

At the Consumer Health World conference in Arlington, Va., last December, Thomas Joseph, senior vice president and business development executive for benefit solutions at BoA, described the difficulty of “selling” CDH to its own employees when the plan was introduced in 2006.

Sapp says that there are no immediate plans for BoA to discontinue the PPO HMO blended plan and fully replace the benefit with CDH. However, the health care account will give employees more control over their money and help them cope with rising health care costs, she says.

Several other financial institutions and HSA administrators are introducing CDH to their work force or replacing their traditional health benefits plans. Daryl P. Richard, spokesman for OptumHealth Bank, Inc., parent UnitedHealth Group, Inc., says that it is important for a company that markets CDH to practice what it preaches.

“Given that we sell CDH plans ourselves, and having one of the largest enrollments, we thought it was critically important to walk the walk,” Richard says. “If we’re going to be talking about the increased need for consumers to be engaged, we thought we should start with our own employees so they understand what these changes in the health care system are.”

Richard says that working with its own employees allows UnitedHealth Group an opportunity to take new systems for a shakedown cruise before being rolled out to customers. “It’s been helpful to test with our own employees some of the tools and resources that we make available broadly to our millions of members enrolled in CDH plans,” he says.

About 150,000 Bank of America employees in the U.S. will be eligible for health care accounts, according to Sapp. With dependents, the benefit will include about 500,000 lives, she says.

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First and foremost, Health Savings Accounts are coupled with High Deductible Insurance Plans that can decrease your total out of pocket expenses. Once the deductible is met all covered medical expenses are paid by the insurance carrier, including prescription drugs. Secondly, funds that are deposited into your Health Savings Account are 100% tax deductible as long as the money is being spent on qualified medical expenses. Some examples of qualified medical expenses are: fertility treatment, prescription and over the counter medications, travel expenses and lodging. The third reason that you should consider a Health Savings Account along with a High Deductible Insurance Plan is increased availability. Many banking institutions, like Wells Fargo and US Bank are offering Health Savings Accounts, making it easier for policy holders to manage their Health Savings Accounts.

As mentioned previously Health Savings Accounts allow policy holders the freedom to choose methods of treatment and prevention. This leads to reason number four. Choosing a Health Savings Account decreased the amount of out of pocket expenses by paying for a number of medical expenses not typically covered under traditional health insurance policies. Vitamins, dental treatments, chiropractic work, and physical therapy are just a few of the qualified medical expenses covered through a Health Savings Account.

There are many reasons to consider a Health Savings Account for you and your family. This article has just skimmed the surface.

For calendar year 2009, the annual limitation on deductions for an individual with self-only coverage under a High Deductible Health Plan is $3,000. For 2009, the annual limitation on deductions for an individual with family coverage under a high-deductible health plan is $5,950.

For 2009, a high-deductible health plan is defined as a health plan with an annual deductible that is not less than $1,150 for self-only coverage, or $2,300 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $5,800 for self-only coverage or $11,600 for family coverage.