Health Savings Accounts are Off The Grid for Texas State Workers
Texas House Bill 1766 was designed to provide Health Savings Accounts to state employees in the very first instance. In the words of Andy Homer, the director of government relations at the Texas Public Employees Association, Health Savings Accounts would bring no benefits to his membership. He is adamant to the contrary. Health Savings Accounts are only used to aid in political campaigns. It’s not surprising that the bill was not passed by the committee. But what exactly do Health Savings Accounts offer?
They’ve been one of the most popular choices in the private sector of health insurance for many years. In general, there’s an increase in the number of people moving away from the highest cost coverage options towards plans that offer low prices. They are usually high-deductible policies. Certain high-deductible plans can be combined with the Health Savings Account (HSA). This is an excellent money-saving option for businesses, especially small-sized business owners because it takes less of the profits. HSA Plans are often cheaper for employees since employers are more likely to transfer the cost of rising the premiums onto employees.
Health Savings Accounts Have Already Been Employed By State employees
Indiana as an example has been using HSA Plans for state employees for a while. Five years after the implementation the Gov. Mitch Daniels called his HSA Plan program a huge success for state employees and for the government of Indiana. The advocates for HSA Plans say they definitely cut down on the out-of-pocket expenses of state employees. Studies have found a clear decrease in the cost of health services in the first year in which policy holders opt for a health insurance plan with a high-deductible.
Opponents of the idea say that delaying the use of preventive health services is suicide for the society. Why should we pay “through the cost of the nose” in ER interventions in a time when early preventive health care reduces medical expenses and boosts the productivity of people by keeping them healthy? Health care reformers reforms heeded that warning, and in every state, with the exception of four high-deductible health insurance plans cover preventive health services prior to the deductible being satisfied. There are a few restrictions to this coverage, however.
The majority of preventive services are only covered if it is by a provider that is in-network. Doctors are able to bill separately for appointments in the event that they go beyond provide health insurance-covered preventive care. In that situation, patients could be charged at least a portion of the appointment.
HSA Plan Enrollments Have been In a Boost For Many The Past Several Years
According to a study conducted by the trade group America’s Health Insurance Plans, 11.4 million U.S. residents (nearly 640,00 of them reside located in Texas) are currently enrolled in an insurance plan with a high-deductible that’s connected to an HSA. It’s an increase of 33 percent in coverage for large groups and a 22-percent rise in coverage for small groups.
A survey conducted annually from the Kaiser Foundation showed that Health Savings Accounts currently comprise 13.3% of health insurance private market. This means that the number HSA owners has increased by three times from 2006. The shift to lower rates might not be the sole reason but it is a significant one.
The growth in popularity can also be attributable to the tax advantages which are incorporated into HSA rules. Individual HSA owners can contribute up to $3,050 into an HSA and families can contribute a maximum per year to an HSA contribution of $6150. The contributions can be taken from the adjusted gross earnings even in the event that the HSA owner did not use the funds for health care. It’s also an investment option that has no time limit.
When it comes to IRA investments, investors must start withdrawing their funds once they reach the age of 65. If they have the HSA Plan, investors can use HSA funds for health care to help fill in the gaps within Medicare or to fund long-term care insurance, without having to pay taxes on withdrawals. But, they also have the option to put the money into the HSA to be invested in mutual funds, bonds or stocks, and let the profits grow tax-free for the time they wish.
After the age of 65, health insurance that is qualified is the sole expense HSA funds can be used to pay for, without a penalty of 20 percent for the amount that is withdrawn. After the age of 65 HSA cash can also be utilized to purchase any item whatsoever and there’s no penalty. Whatever what the HSA owners age HSA cash withdrawals used for any other item than qualified health care will mean tax obligations are due.