Imagine having a way to pay for all your health care expenses with pre-tax dollars, pay lower than average monthly premiums in most cases and use the same plan to save for retirement. Well, if you haven’t heard until now, allow me to introduce the Health Savings Accounts or HSA’s? Here is a brief introduction to the best kept secret in health care.
HSA’s are fairly new to the scene within the grand scope of the health care industry. They have only been available to the American public since January 2004. HSA’s are often referred to as the 401(k) of the health care industry. The HSA is a special health plan directly tied to a bank account which is used to pay for qualifying medical expenses. To qualify for an HSA plan, the applicant must be enrolled in a High Deductable Health Plan or HDHP. Contributions into the HSA account can be made by an employer, the employee/individual, or both. All funds paid into an HSA account are owned and administered by the individual owner and not the employer nor the bank. Currently the maximum annual contribution into your HSA account is $2,900. for individuals and $5,800. for a family. If the plan owner is age 55 or older, “catch-up” contributions can be made until they enroll in Medicare.
Contributions to your HSA account roll over annually, with interest and/or investment earnings compounding on a tax free basis, just like a 401(k) or IRA account. However, unlike a 401(k) or IRA account your HSA has the potential to save you three times as much on taxes. This is because you are able to make tax free contributions to the account. All interest & investment earnings are tax deductable. Distributions for qualified medical expenses are also tax deductable.
HSA’s can be funded with an IRA account (except a SEP IRA). This transaction must be a direct trustee-to-trustee transfer. The IRA to HSA transfer may only take place once per lifetime. The only exception to this rule is if the contributing individual switches from a self-only to a family plan. You may not however fund an IRA nor any other type account with your HSA account.
HSA’s are portable; this means the account goes with you in the event you change jobs, become unemployed or self-employed. As of this writing, HSA plans are not available to individuals who have recently received health benefits from the Veterans Administration. HSA plans are also not available to individuals enrolled in Tricare. All funds remaining in the HSA account after age 65 (or if you become disabled) can be withdrawn for any purpose, even non-medical reasons without incurring the 10% IRS penalty.
The HSA as a powerful financial tool intended to empower the owner toward becoming more actively involved in their health care decisions. Sounds to good to be true? Absolutely not! HSA’s are steadily growing in popularity as more and more American’s realize the numerous benefits they offer.
A health insurance plan that covers not only you but your whole family is a solid deal. In a single premium you get to cover up to 15 members of your family. Such comprehensive health insurance plan is called a family floater plan. Since, it is a single policy that takes care of every family member of yours; you are escaped from the task of maintaining records of numerous individual health policies and keeping track of their renewal dates. Also, a family floater policy costs you cheaper than taking numerous individual policies.
As cost of other things rises, the cost of medical expenses also rises. Health insurance policies offer the feature of increasing the sum insured after some years. Sometimes, as a reward for your timely renewal of policy and no claims, the insurance company increases the amount of your sum assured. A family floater policy is a life saver for the house and keeps you ready to face any medical contingency with confidence. In case of medical emergencies, many times the cost of treatment causes more fear and pain than the emergency itself.
For what was earlier considered as a luxury is now a necessity. The service sector has boomed exponentially in India over the past decades. And thus, this boom has passed on economies of scale to the insurance and banking sector as well. The premiums are quite affordable and the service has bettered. The IRDA since its setup in 1999 has taken good measures to regulate the insurance industry and win the trust of masses in insurance. Earlier people were very skeptical whether their claim would be paid or not but that scenario has changed a lot since.
Earlier the only health insurance people used to have was the one done by their employer for them. Apart from that only a select few used to buy it. Some people used to buy health insurance only for the tax benefits. One can get a handsome tax exemption under section 80D, but is not the only motivation to go for a health insurance plan. With increasing awareness people now know how beneficial a health insurance plan is to them.
You can also take health plans exclusively for your parents. Such plans have no entry age limit, cover pre-existing diseases like Diabetes and Cardiac conditions and 100% claim settlement without co-pay.
Aging parents have more medical needs to tender to. If parents are senior citizens you can get additional tax rebate up to Rs. 20000 for the money paid as premium.
Compare health insurance plans to avail the best deal and a plan loaded with attractive and suitable features. Following the experts, one should compare plans of at least three companies before buying. Being more informed about the market, you can take advantage of the competition. Thus, a healthy advice is to do ample market research and evaluation. A healthy family signifies happiness and prosperity!!
A well structured employee benefit plan can help attract and retain productive employees that contribute to the bottom line of your business. Being aware of the tremendous impacts we all know is important. The absence of a valued employee due to health and stress related issues is costly, time-consuming and can be challenging to deal with from an HR perspective. In 2011, a Statistics Canada study found that businesses lost 105 million workdays due to employee illness and personal reasons, an average of about 9.3 workdays lost per employee.
According to a 2012 Conference Board of Canada study, these absences cost the economy an astounding $16.6 billion. When the costs associated with those absences are double and sometimes triple the cost of drug claims, we know we have a bigger problem than first imagined. Employees suffering long-term illnesses with no definitive diagnosis is a major and costly problem in the Canadian work place. Like most things in life, preventive maintenance can help avoid major problems. A well structured employee benefit and wellness program can help employees take care of themselves, remain healthy and stay productive.
It’s essential employers understand that investing in each employee’s health and well-being is not only a meaningful gesture, it’s good for business. This is why many leading employers now offer employee benefits that provide in-depth expert medical reviews, customized health coaching, and much more. Employee benefits plans can ensure your employees are getting the right diagnosis and treatment plan in the early stages. This will maximize productivity and improve morale in your company.
When compared to employees obtaining coverage on an individual basis, employee benefit plans are far more cost-effective. Through a group plan your employees will obtain enhanced dental, extended medical, prescription drug and access to disability coverage with no medical testing and at a discounted rate. The leverage of buying your coverage as group has its advantages. It is standard practice that private sector employers share the cost of the monthly premiums with their employees
There are a variety of options when it comes to constructing a plan that works well for your company. The nature of your business, your employee demographics and the type of budget you have available will all be considered when selecting the type of plan that works best for you.
Having employers and employees work together can form a powerful team against medical uncertainty and the millions of lost workdays that result from incorrectly diagnosed or improperly treated conditions.