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Thursday, June 20, 2013
HSA Massage Rules
Image courtesy of Marcus at FreeDigitalPhotos.net

When looking at HSA dollars and how to spend them, it’s important to consider how one expense can be qualified and another similar expense is not.  A good example of the grey area in the otherwise "black vs. white", "yes vs. no", "qualified vs. non-qualified expense" HSA world we live in, would be “massage”.

Massage therapy appears nowhere in the long list of eligible HSA expenses that the IRS provides.  But in certain, clearly defined circumstances it can become an eligible expense from your health savings account.  Consider the following scenario:

Sally was involved in a fender bender.  After the accident she went to her chiropractor, got an adjustment and got back to daily life.  She worked through the first few days after the wreck just fine, but after 4 days the real pain set in.  She went to her general practitioner to be examined. 

He could see that nothing was broken, but the impact of the accident had left her with a twisted muscle in her lower back.  The pain was exacerbated by Sally’s desk job.  Dr. Smith wrote Sally a prescription for two therapeutic massages, knowing they would aid her recovery. 

HSA Prescription Requirements
Image courtesy of photostock at FreeDigitalPhotos.net

Therapeutic massage/body work is similar to relaxation massage, but it is more concentrated on correcting things like strained muscles and repetitive use injuries.  Dr. Smith saw massage as a viable option for Sally, to both ease her pain and speed healing.  He knew that two visits would help get the back muscle to relax and get her back into the swing of things.  With the doctor’s prescription, Sally was able to use her HSA dollars.  She also made sure that she had a very good paper trail in the case of an audit by the IRS. 

If Sally had not gone to see Dr. Smith and instead went to a spa/massage center in her neighborhood, she could not use her HSA funds to pay for her treatment.  The doctor’s prescription is the key.  Unless a procedure is deemed medically necessary, you cannot use your HSA funds to pay for it. 

Dr. Smith made the call.  His prescription made Sally’s massage treatment a qualified HSA expense.  Sally put her prescription for two therapeutic massages into her HSA folder and matched the receipts.  She was careful not to misuse funds.  Perfect!

Navigating HSA Rules
Image courtesy of Ambro at FreeDigitalPhotos.net

Massage is a great example of one of those vague and tricky areas that may or may not be an eligible HSA expense, based on a few very important factors.  The golden rule if you’re ever in doubt, is to get a prescription from your doctor for whatever medicine or procedure you’re questioning.

The moral of the story is that when you’re navigating the grey area of qualified HSA expenses, it’s always in your best interest to make sure you use your HSA funds correctly.  This isn’t always easy, so please keep in mind there are several resources to help you determine whether or not a certain expense will be deemed eligible for funds from your health savings account. 

First, you can check the official IRS position on the issue by consulting IRS Publication 502.  We know that’s a little tedious to read through, so you can easily visit our webpage on Eligible HSA Expenses and use our convenient dropdown features to help you quickly find what you’re looking for.  But if you want a quick and easy answer, you can always contact our office and we would be more than happy to answer any questions you may have on the matter. 

Let us know what you think in the comments below, and share this post with others who have health savings accounts to help them out!

Be smart and safe with your HSA and as always, we look forward to hearing from you!


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Posted by HSA Admin at 6/20/2013 7:06:00 PM
Monday, June 10, 2013

BMI OutdatedSometimes we like to change up the pace here on our company blog and write about some topics that are a little more focused on health and wellness.  For this week’s blog post, we’re going to tackle the infamous “Body Mass Index” scale, and explain what a useless and outdated formula this truly is on so many different levels.  The fact that some of today’s “experts” even recommend still using this formula to somehow calculate your level of health and fitness is truly appalling, and the quicker we can put an end to this misinformation the better.

The Body Mass Index (BMI) is defined as “a measure for human body shape based on an individual's weight and height”, according to Wikipedia.  It was devised around 1830 (yes, almost 200 years ago) and as the definition states above, only uses HEIGHT and WEIGHT to calculate your health and fitness levels, nothing more.  That being the case, let’s take a look at some very important factors it fails to consider: gender, age, body fat percentage, muscle mass, bone density, body type, activity level, diet, family history…just to name a few.

BMI Formula

I suppose it would be one thing if this old formula was just a piece of history we looked back and laughed at, but unfortunately it isn’t.  In fact, it’s recommended by none other than the U.S. Department of Health and Human Services for gauging your health to this very day.  People seeking out the government’s help because they probably have no real education in health and fitness are being told that a BMI calculator is going to tell them what they need to know.  Here’s an excerpt from our government’s official website on health and fitness:

“Finding out your body mass index (BMI) is the best way to learn if you are at a healthy weight." 

"Use this Body Mass Index (BMI) calculator to find out your BMI and what it means for you.”

So what’s the problem? 

Using BMI as the “standard” measure for gauging fitness presents a very large problem, because almost all of the individual results are completely inaccurate due to a total lack of information. The reasons for the inaccuracies typically vary by gender, and create different problems for different reasons based on those outcomes.
 
BMI Body Comparison
For men, the results aren’t accurate or realistic because they tend to say you’re more out of shape than you actually are.  Because it only takes height and weight into account, healthy and athletic men (due to their muscle mass) tend to register as “overweight” and/or “obese”.  Just for fun, let’s take a look at a couple examples of what the BMI considers to be “overweight” and/or “obese” men.
 

Lebron James

Height:  6' 8"

Weight:  250

BMI Rating:  27.9

Classification:  "Overweight"

 Lebron James
 

Ray Lewis

Height:  6' 1"

Weight:  240

BMI Rating:  31.1

Classification:  "Obese"

 Ray Lewis
 
I think we can agree that these people are well-accustomed to the inside of a gym, not to mention all the effort that goes into maintaining their rigorous diet and conditioning training.  Without question they are extremely fit and healthy individuals, which clearly illustrates the BMI has some major flaws in reporting men’s results at a bare minimum.
 
But what about women’s results? 
 
Women’s results tend to be skewed in the opposite direction, which is actually a whole lot scarier than the men’s scenario.  In an interesting twist, the BMI tends to tell women they are healthier than they really are.  In fact, a recent study revealed that 48% of women were misclassified as “normal” using the BMI, when in fact they were “overweight” and/or “obese” when formally tested by a physician. 48 percent!!
 
That is a frightening number, and clearly gives very inaccurate results to the people who need to be made most aware that they should make some healthier choices and start a diet and exercise program to better their health. Take a look at this excellent video clip below that illustrates exactly what we’re talking about in regards to the BMI and how it classifies women’s health:
 

Visit NBCNews.com for breaking news, world news, and news about the economy

Because this test is strictly all about height and weight, the problems seem to stem from the old adage (not quite 1830 old…), “muscle weighs more than fat”.  Men tend to carry more muscle mass, which increases their weight on the scale, therefore increasing the likelihood of a miscategorization as “overweight” or “obese”.  Women on the other hand, tend to carry less.  In fact, the less muscle mass one carries, the worse off from a health and fitness standpoint they probably are.  So because women (and especially unhealthy women) tend to carry less, they tend to weigh less, increasing the likelihood of a miscategorization of an overweight or obese person of “normal” or “average”.
 
Muscle vs. Fat
The bottom line, is that the only real way to determine one’s health and fitness level (men or women) is to measure their body fat percentage, which the BMI simply doesn’t do.  As Dr. Eric Braverman stated in the video above, “BMI doesn’t tell you how much fat [or adiposity] you have.  That is the predictor of heart disease, cancer, stroke, gall bladder and fertility problems, depression, anxiety, sleep disorder, etc.”. 
 
The good news, is measuring your body fat percentage is relatively easy to do these days.  In addition to walking into any gym in your area and having yourself tested, you can easily get these measurements in the privacy of your own home.  Here’s a few easy ways to accomplish this:
  • Skin Fold Calipers w/ a Free Online Calculator: Skin fold calipers are inexpensive (about $3) and are very accurate in measuring your body fat percentage when done correctly.  You can use a free online calculator to do the math for you, in addition to showing you how and where to measure.
     
  • Biometric Impedance Analysis: This technology comes with many new bathroom scales, and can also be found in handheld devices.  It’s relatively inexpensive ($20 or so) to get your hands on, and obtains its results by sending a small electric charge through your body and back to the device.  Muscle has a much higher water content than fat, making it much more conductive to electricity.  The more resistance to the charge, the higher the body fat content.  The accuracy is spotty at times, and although it sounds new and great, it’s still not quite as reliable as the good old calipers.
     
  • Anthropometric Measurements: This is arguably the least accurate home method of the three, but is cheap and simple to administer.  Simply grab a cloth measuring tape and measure yourself in several gender-specific locations.  Throw those numbers into a free online calculator, and get a ballpark measurement of your body fat.  The problem with this method however, is that the body fat isn’t directly measured.  It’s an estimation at best.

With all of today’s research, technology and resources available to the general public via the internet, we really need to get away from using simple and outdated formulas like the BMI.  It “over-corrects” for men’s health and fitness levels, labeling healthy men as “overweight” and “obese”.  However, its most prevalent and fatal flaw is how it “under-corrects” for unhealthy women, giving false-negative results to overweight and obese women telling them they’re in the “normal” range.  These test results are skewed in all directions, and for far too many people.

We all know (or should know) that the number one predictor of your overall health and fitness has nothing to do with your height or your weight, and everything to do with your body fat percentage, so spread the word!  The BMI has GOT TO GO, and should immediately be replaced with educational resources leading to information and testing that is accurate and responsible for everyone regardless of age, gender, height or weight.

So let’s all ditch the BMI, grab some calipers, and get happy, healthy and fit for ourselves and for our families!

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Posted by HSA Admin at 6/10/2013 10:28:00 PM
Thursday, May 30, 2013
Image courtesy of Stuart Miles at FreeDigitalPhotos.net

You have decided to jump on the consumer-driven healthcare bandwagon.  The choice was quite clear for you as you see the fantastic value in using tax-free dollars to pay for medical expenses for both yourself and your family.  It’s kind of a no-brainer.

What may not be so clear, is who to use as your HSA administrator.

You know you need to open an account, start making deposits and getting the maximum benefits out of your HSA .  You want to be able to trust that your account is being handled properly.  We can help make the choice crystal clear.

Consider the following:

How long has the company, bank, or credit union been handling HSAs? 

American Health Value has been taking care of health savings accounts and their owners since 1996.  We treat our members with respect and call many of them our friends.  Our custodian bank has assets in excess of $3 billion.  This means your money is safe.

How do I access my money?
 
If you are a member with us, your account is opened in your name and you can use a debit card or checks to make purchases.  Your funds are not mingled with other account holders and you have 100% percent control of your money at all times.  If you are looking at an administrator that also does FSAs and/or HRAs, your money may be pooled with other accounts.  Find out what provisions are made to ensure your money is available to you whenever you need it. 
 
With our online banking platform, you have 24/7 access that is simple and secure.  You can also make quick online transfers and deposits, and can take advantage of our free bill pay features!
 
Are my funds insured for my protection?
 
AHV members have the security of FDIC insurance up to the legal maximum.  Accounts are also covered by SIPC insurance.  As an added safety measure, American Health Value carries a separate professional liability policy.
 
What are others saying about the company and service?
 
Personal experience from others is the best indicator of what you can expect when dealing with an HSA Administrator.  Be sure to ask for testimonials!  We are endorsed by carriers, insurance agents, and account holders across the country, and prominently feature these testimonials on our website.
 
Can you talk with someone whenever you want?
 
Call the company you are considering and see if you can actually speak with a real person.  Is there an automated system or phone tree?  How many buttons do you have to push before you speak with someone?  Can they answer all your questions to your satisfaction?  Courteous, knowledgeable and friendly specialists are what you get when you call American Health Value.  Give us a call at 800-914-3248 and see what we mean!
American Health Value
You are someone who looks for value in everything you do, so don’t drop the ball now.  Get the best HSA Administrator out there, and give us a call at American Health Value.  We look forward to hearing from you!

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Posted by HSA Admin at 5/30/2013 11:28:00 PM
Wednesday, May 22, 2013

I rarely pass by active duty military or a Veteran in uniform without stopping to say “thank you”.  I’ve even been known to anonymously pick up the tab for a group of active duty military who may be setting at a table close to me in a restaurant.  Our military is worthy of great respect.

Occasionally I come across something that puzzles me a bit in regards to Veterans, and my blog today is about one of those puzzling moments. 

Health Savings Accounts (HSAs) were signed into law in 2003. HSAs, when coupled with a high-deductible health insurance plan, allow consumers to put money aside in a tax-deferred account to pay for current and future medical expenses. 

Each year the government sets the limit for how much can be deposited into these accounts.  For 2013 you can deposit $3,250 (or $6,450 if you have dependents on your health insurance).  You can also deposit an additional $1,000 if you are 55+.

This is true for everyone but Veterans, and this is what puzzles me.

I admit I don’t understand the logic in the legislation, but the facts are clearly laid out.  If you use VA benefits for anything other than dental, vision, or preventive care, you are ineligible to deposit money into your HSA for three months.  If you use your benefits once, you reduce your allowed deposits into your HSA by one-fourth.  Use them twice and you could be cutting your allowed HSA deposits by half. Puzzling indeed!

There is some encouraging news, however.  A Veteran recently asked me if going to the VA for a service-related injury would disqualify him for depositing into his HSA.  It was a good question and well worth running by our contact at the Treasury Department. 

According to our contact, going to the VA for a service-related injury does not disqualify you from making deposits into your HSA.  Why?  Because the VA visit is for a specific “accident” related injury.  The HSA legislation does allow for accident coverage in addition to the qualified health insurance, and this treatment falls into that category.  That news certainly made my day!

It is also heartening to know there has been legislation introduced on more than one occasion that would disregard VA benefits entirely when considering HSA deposits.  No news on this yet.  It’s comforting to know we have national heroes who protect our freedoms and our form of government so these wheels of a free republic can turn.

If you’re a Veteran or active duty military – Thank You.  Next time your meal is paid for at a restaurant remember that it’s because someone appreciates your service.  It’s a small token of a grateful heart.


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Posted by HSA Admin at 5/22/2013 10:26:00 PM
Thursday, May 16, 2013

Concierge Medicine & Your HSAConcierge medicine is defined as “a relationship between a patient and a primary care physician in which the patient pays an annual fee or retainer”.  Basically, you pay a monthly and/or annual fee to have unprecedented access to a doctor for enhanced care and services as defined under their concierge agreement.

With concierge medicine you could receive 24/7 access to a doctor, same day appointments, longer appointment times and a greater degree of personalized attention.  The doctor may still bill your insurance (or you could be responsible for this), but you will not pay any additional funds for services covered at 100% under your agreement.

The lowest cost we found for this service via an internet search was $39/month, but average concierge fees can range anywhere from $1,500 to $15,000 per year.  It appears you can go with either the Volkswagen Bug or the Bentley!  It depends what you’re looking for in your concierge care and how much you’re willing to spend.

When it comes to covering the annual fee for this service, one of the first places people consider paying from is their HSA.  However, HSA funds can only be used for qualified expenses that have already happened.  They cannot be used in anticipation of future expenses.  For this reason, a concierge fee cannot be paid from an HSA.

But hold on…..there is still a silver lining!  You can reimburse yourself for HSA-qualified medical expenses received under your concierge membership during the year.  Confused?  No problem, it’s a little complicated.  Here’s a scenario to help make things a little more clear:

  • Let’s say you paid $2,500 for your concierge membership. 

  • During that year, you used your membership for $1,000 in medical services that were HSA-qualified and were not reimbursed by insurance. 

  • If your physician provides an invoice showing the actual cost of qualified medical expenses received under your concierge agreement, you can reimburse yourself for that $1,000 from your HSA.

  • You cannot, however, reimburse yourself from your HSA for concierge services that are in excess of your annual concierge fee. 
Qualified medical expenses that are not part of your concierge services can be reimbursed from the HSA if they have not been reimbursed by insurance.

Just a friendly reminder….documentation is everything!  If you reimburse yourself for concierge services received, be sure to keep detailed records in case of an IRS audit of your HSA.

What isn't complicated to understand, is that concierge medicine certainly seems to have a growing appeal.  2012 saw a 25% increase from the previous year in private physicians providing this service!

Concierge medicine is just one more option to consider when you sit down and budget your healthcare dollars.  Some will find it to be a perfect fit in their overall healthcare planning, while others may not see a benefit for their unique situation.  In consumer-driven healthcare, having options is healthy….and after all, isn’t “healthy” where we all want to be?

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Posted by HSA Admin at 5/16/2013 11:00:00 PM
Tuesday, May 7, 2013

Finding the HSA Sweet SpotWe all know that health savings accounts can help you save money on your healthcare costs by doing great things like lowering insurance premiums, reducing your taxable income, and helping you put aside money for healthcare both before and during retirement.  But we’re here today to discuss one of the lesser-known HSA strategies; a strategy we’re calling the “HSA Sweet Spot”.

The HSA Sweet Spot is the definition of healthcare Zen.  It is unique to health savings accounts, and when you find it, can completely change your perspective on how you both spend and save your healthcare dollars.
 
So, what is this HSA Sweet Spot?  Its "technical" definition, is when the balance in your health savings account grows to the point at which it completely covers your annual maximum out of pocket on your high deductible insurance plan.  That was a mouthful, and it contained a fair amount of “industry jargon”, so what does that mean to the average person? 
 
It basically means that you’ve got enough money in your HSA to fully cover any major medical event that may come up in the future, effectively freeing you of the monetary stress that goes along with having to deal with whatever healthcare-related issues are at hand.  In short, it simply means peace of mind.  Let’s take a look at a couple functional examples to help paint this picture clearly.
 
In order to have an HSA, you must first have an HSA-qualified high deductible insurance policy (HDHP).  For an individual in 2013, an HSA-qualified HDHP would have a minimum deductible of $1,250 and a maximum out of pocket of $6,250.

 

2013 DEDUCTIBLES & CONTRIBUTIONS

Insurance

HSA Contribution Limits *

Coverage
Minimum
Deductible
Maximum
Out-of-Pocket
Regular
Catch-Up

Individual

$1,250
$6,250
$3,250
$1,000

Family

$2,500
$12,500
$6,450
$1,000
*If insurance is effective after January 1 and you deposit the contribution limit, you must maintain your qualified insurance coverage through the end of the following calendar year to avoid possible taxes and penalties on part of your contribution.

 

This range of numbers relates to the amount of money you’re required to pay before your insurance kicks in.  So in the event of an emergency or catastrophic event, the minimum you’d be required to pay is $1,250 and the maximum you’d be on the hook for is $6,250.  But…how does this relate to the HSA Sweet Spot? 

Simple.  Let’s say you’ve got a $2,500 deductible, with a health savings account.  When you have a balance of $2,500 or more in your HSA, congratulations!  You’ve hit the HSA Sweet Spot.  If at this point something were to happen to you or your family (Heaven forbid), you’d be completely covered with zero liability.  You could simply write a check for your entire deductible straight from your HSA (in this case $2,500), and your insurance carrier would pick up the rest of the tab so you can focus on getting the healthcare treatment you need, without having to worry about how you’re going to pay for all of it.
 
Once you’ve gotten to the HSA Sweet Spot, a new world of opportunities opens up with both your health savings account and the rest of your finances.  Consider the following strategies and scenarios:
 
Shifting to Investments
 
HSA Investments
For starters, any additional money that goes in on top of your policy’s maximum out of pocket could simply be put into investments.  You’ll always be earning interest on the funds sitting in your HSA, but since you’ve got your maximum out of pocket covered for the year, you could choose to invest any additional funds to earn some extra money.  Our account holders have access to over 6,000 different stocks, bonds and mutual funds to choose from when investing their HSA dollars.
 
Tending to Other Financial Needs 
HSA Freedom
 
Is money a little tight these days?  We’re all aware that today’s economy isn’t the greatest.  But remember, you’ve already got your healthcare bills covered for the entire year (if you even need it), so you may want to think about spending some of the funds that would’ve gone into your HSA on something else.  Groceries, college funds, home improvements, or whatever comes up.  Although it’s a great strategy to sock away the annual maximum contribution ($3,250 for an individual in 2013) to reduce your tax liability, you may simply just need to use those funds elsewhere, and you have the freedom to do that with your potential healthcare costs totally covered.
 
"Deductible Walking" 101
 
HSA Deductible Walking
 Ok, we’ve saved the best for last.  Have you ever heard of “deductible walking”?  No?  We’re not surprised, we’re pretty sure we just coined the term.  This one’s more of a long-term strategy, but bear with us here and you could save some serious money over time.  Let’s say you’ve got a $2,500 deductible, as we’ve used as a previous example. With that $2,500 deductible, let’s say your monthly premiums on your HDHP are $250.  You’ve got more than $2,500 saved away in your HSA, so your potential healthcare costs are covered…  Here’s where it gets creative.
 
Next year when you’re looking to renew your insurance policy, think about bumping up your deductible and maximum out of pocket.  This will lower your monthly HDHP premiums (saving you money) and all you need to do is bump up the balance in your HSA to match the new maximum out of pocket.  You could even use the savings in premiums to do it!  Once you’ve done that, you’re back to your HSA Sweet Spot with your new HDHP, and you’re saving money every single month on the premiums.  Take a look at the chart below to see a visual example of what we mean:

 

"Deductible Walking" - 2013 vs. 2014

2013 Figures

2014 Figures

Deductible
$2,500
Deductible
$3,500
Monthly Premium
$250
Monthly Premium
$150
Savings
n/a
Savings
$100 (Deposit to HSA)

 

“Walk” up your deductible and “walk” down your premiums each year, and you’ll be building a bigger balance in your HSA while simultaneously saving money on premiums every time you renew your policy (all while being fully covered in the event of a large healthcare event).  You can increase your deductible all the way up to the indexed annual maximum (for an individual in 2013, that would be $6,250) to save the most money you possibly can on your premiums and subsequently use those savings to max out your HSA each year, effectively reducing your tax liability, and saving for retirement and future healthcare expenses.  It’s a bit of a long-term, advanced HSA strategy but it’s definitely a win-win!
 
Contact Us with Questions
 
That’s it for our summary of the HSA Sweet Spot, but as always, please reach out and contact us if you have any questions!  Some of these topics can get a little convoluted, and as much as we try to steer clear of industry jargon we understand sometimes all these acronyms can make your eyes glaze over.  Luckily HSAs are the only thing we focus on, so we eat, sleep and breathe them.  We’re always happy to answer any questions anyone may have.  Until next time, have a wonderful day!

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Posted by HSA Admin at 5/7/2013 4:33:00 PM
Friday, May 3, 2013

HSAs and MedicareThese days, turning 65 doesn’t mean a person automatically retires.  Every year we see more and more people opting to work beyond their 65th birthday for a number of reasons.  It’s important to be aware that enrollment in Medicare affects how much you can fund an HSA

Meet Bob.  When Bob turned 65 in May, he enrolled in Medicare.  He has had an HSA with his company for the last seven years.  He focused on saving and building his HSA, rather than using it, and has built up a nice balance of around $30,000.  Bob knows that at age 65, he can keep the funds in his account and use it for HSA-qualified medical expenses.  He can also cash the account out, pay taxes on it and take that dream vacation.  
 
But, Bob is a saver.  He saw building his Health Savings Account as an opportunity to have some extra financial security after he retired.  And now Bob feels pretty comfortable about his decision!
 
His employer called our office at the beginning of the year to see what Bob’s options were for his HSA if he enrolled in Medicare, or opted out.  Last year Bob was thinking about staying on full time for his employer and continuing to be on the group insurance plan, but the closer he got to retirement, the more he longed to take advantage of his “golden years” and start fishing more.  He opted to drop to part time hours (much his employer’s delight, as they were able to keep a great seasoned employee for their business) and enroll in Medicare. 
 
When Bob enrolled Medicare, he was no longer eligible to contribute to an HSA.  The IRS requires anyone funding an HSA to have a qualified high deductible health plan.  You can have no other insurance. Medicare is considered “other insurance”. 
 
Since Bob turned 65 in May, he was an eligible individual for four months of that year.  He was able to do a prorated funding into his HSA.  Bob had family coverage, so we used this simple formula (all figures for 2013):   
 
Determining Maximum Funding
 
Because Bob enrolled in Medicare and he’s only eligible for partial contributions, we need to break out the monthly averages based on both his insurance coverage type and his age (over 55 or not). 
 
First, we take the annual maximum for the family policy, and divide by 12 to get the monthly contribution average.
 
$6,450.00 divided by 12 = $537.50
 
Next, we’ll take that monthly amount and multiply it by 4, to include funding for January, February, March and April (his eligible months).
 
$537.50 x 4 = $2,150.00 (total eligible monthly contributions)
 
Since Bob was over 55, he was also eligible for four months of the catch up contribution of$1,000.00. We’ll divide that by 12 to get that monthly average.
 
$1,000.00 divided by 12 = $83.33 (per month)
 
$83.33 x 4 = $333.32 (total catch up contributions for the year)
 
$333.32 + $2,150.00 = $2,483.32 (total eligible HSA contributions for the year)
 
Therefore, Bob’s grand funding total for the year he turned 65 was $2,483.32
If Bob had decided to opt out of Medicare, he would have been eligible to continue to receive contributions into his HSA as he always has in the past.
 
HSAs are a great option for those nearing retirement.  It’s a secure, easy way to build a savings account that is specifically designed to cover the medical expenses that everyone has.  And when you do retire, it gives you extra a little extra security (or a lot, depending on what kind of saver you are) and one less worry to disrupt your relaxing retirement days!

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Posted by HSA Admin at 5/3/2013 6:54:00 PM
Wednesday, April 24, 2013

Can An HSA Help Me?

Some time ago when HSAs first became law in December of 2003, opponents touted the plans as "only for the healthy and the wealthy". This couldn't be further from the truth. You don’t have to be wealthy to be smart with your health care dollars. If you have medical bills, be wise and pay for them with tax- free funds. 

Anyone who wants to make life a bit less stressful should consider looking into opening a health savings account for medical costs.
 
Take the following quiz to see if an HSA can help you:
Lowering Your Insurance Premiums
 
Lower Insurance PremiumsTypically, an insurance policy that works with an HSA has a higher deductible than a traditional plan, and also carries a lower premium. The monetary difference you save in purchasing the high deductible plan can be put away in your HSA and used to pay for future medical expenses. A real world example is one that looks like this:

Your current plan has a $1,000 deductible and you pay $300 a month. The HSA plan has a $2,500 deductible and you pay $225 a month. The savings in monthly premiums is $75. This amount can then be deposited into your HSA bank account. After 12 months, you would have saved $900 in premiums!!! 
 
That money now sits in your HSA earning tax-free interest, rolls over year after year, is ready to be spent on any necessary medical costs you may have, and can be pulled out as taxable income at age 65 for supplemental retirement income.
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Reducing Your Taxable Income
 

Reduce Taxes with an HSAAny money you deposit into your health savings account reduces your taxable income. Two options to consider when funding your account are whether to fund it pre-tax, or post-tax. You can set up “pre-tax” contributions through your employer (through a section 125 or cafeteria plan) or you can claim any “post-tax” HSA contributions you made when you file your taxes.

Both of these methods effectively reduce your taxable income by the amount of your annual HSA contributions. This is a great way to reduce your tax liability, while simultaneously setting aside money to pay for upcoming healthcare expenses in the future!

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Paying For Medical Expenses Tax-Free
 
Because HSAs are regulated by the IRS, there are a few guidelines that need to be followed. One example would be what you can spend your money on. We refer to these “sanctioned costs” as eligible HSA expenses. Once the money is deposited in your HSA, you can use it for healthcare costs relating to medical, dental, vision, pharmaceutical, alternative healthcare, etc. This can be for yourself, your spouse and any dependents regardless of the type of health coverage they have, or even if they don’t have any coverage at all. Again, all of the money that is spent on these eligible HSA expenses is spent tax-free.
 
See the flyer below for examples of what qualifies as an eligible HSA expense:

Eligible HSA Expenses

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Saving Money for Retirement

Save for Retirement with an HSAHealth savings accounts are actually an excellent retirement vehicle. In fact, they’re sometimes referenced to as “Medical IRAs”! For example, if you have a particular year with few medical bills, you can still make deposits to your health savings account for all the tax benefits. In addition, the money you don’t use in any given year carries over (rolls over) to the next year, unlike a Flexible Spending Account (FSA). This allows you to build a strong balance in your HSA that not only earns tax-free interest while the funds aren’t being used, but can also be invested in stocks, bonds and mutual funds as well!

Another key difference from the FSA that makes the HSA a great retirement savings option is that the money in your HSA belongs to you, not your employer. If you change jobs, start or stop your insurance coverage, move across the country, etc. your HSA follows you, much like a 401(k)! 
 
Even when you turn 65, you can continue to use the money for eligible medical expenses tax-free. You can even pay Medicare or LTC premiums, or you can withdraw the funds from your HSA and count it as taxable income to take a trip, or spend it on anything you choose. It is your nest egg. You saved it, you earned it.
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So, if you answered “yes” to any of the questions above, an HSA may really be beneficial to you and your healthcare situation! If you have any questions about any of the topics we covered here, please feel free to let us know in the comments below, or contact our officeHSAs are what we do, and we look forward to hearing from you!

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Posted by HSA Admin at 4/24/2013 9:31:00 PM
Thursday, April 18, 2013

HSAs and Obamacare

With the 2012 reelection of President Obama, the healthcare bill commonly referred to as “ObamaCare” became more of a reality with implementation at hand. Whether you are for or against ObamaCare, a common ground shared by all was the anticipation of the yet-to-be-released regulations by Health and Human Services and what impact that would have on industry and consumers alike. 

Within the HSA community, venturing whether the HSA-qualified health plan would pass the “formula” that included new mandates and regulations now under federal law was the subject of intense speculation. The ultimate question was: “Will health savings accounts survive?”
 
Late in 2012, Health and Human Services released to the public their actuarial value calculator that allowed one the ability to test health plans to see if it complied with ObamaCare’s new guidelines. As healthcare policy experts from across the country tested the HSA plans, they quickly discovered (much to their surprise) that HSAs do indeed qualify for the insurance exchanges in almost all variations. This included the self-insured, small group and individual markets. 
 
In addition, HSAs are predicted to be the lowest cost health plans for nearly everyone – individuals, small groups and large groups.   We found the article below to be one of the best-written pieces on explaining the HSA and how it fits into the exchange model, along with an explanation of the new “metal” insurance tiers.
 
 
 

 

In summary, the article states that HSA-qualified plans will be available in all four of the new “metal” tiers: Platinum, Gold, Silver & Bronze.
 
  • Platinum Plans: Pay 90% of covered benefits with an average individual paying the remaining 10% out of pocket. These plans are HSA-eligible.
 
  • Gold Plans: Pay 80% of covered benefits with an average individual paying the remaining 20% out of pocket. These plans are HSA-eligible.
 
  • Silver Plans: Pay 70% of covered benefits with an average individual paying the remaining 30% out of pocket. These plans are HSA-eligible.
 
  • Bronze Plans: Pay 60% of covered benefits with an average individual paying the remaining 40% out of pocket. These plans are HSA-eligible.
 
So if there’s one thing we can state with absolute certainty at this point, it’s that the HSA is not “in trouble” or “disappearing”. The time for worrying about their compatibility with the insurance plans within the exchange has passed, and we can all breathe a sigh of relief and chalk up a victory for the survival of the HSA and the consumer-driven healthcare philosophy.
 
Naturally, as more information on Obamacare and the exchanges becomes available we will be sure to post it to our blogs and keep our readers and accountholders informed. 
 

What do you think, did we miss anything? Do you have something to add? Let us know in the comment section below, or as always, please feel free to visit our website or contact our office with any questions. We look forward to hearing from you!


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Posted by HSA Admin at 4/18/2013 6:57:00 PM
Monday, April 8, 2013

Are you eligible for a health savings account?

We were recently asked to clarify an individual’s eligibility to open a health savings account.   Having a high deductible health insurance plan (HDHP) does not necessarily mean the HSA is a slam-dunk.  There are still several other factors to consider before determining your eligibility to open an HSA, and we’ll cover them in this article.

Medicare#1. Enrollment in Medicare:

Enrollment in Medicare means you cannot fund an HSA.  That includes the part of Medicare you are automatically enrolled in at age 65.  If you’re on Medicare, don’t open an HSA.

If you already have a health savings account and are aging into Medicare, you don't need to close your HSA!  Even though you're ineligible to make contributions, you can still use the existing funds tax-free to pay for any HSA-qualified medical expenses, earn tax-free interest on the standing balance, and utilize any applicable investment opportunities.

 

Tricare#2. Enrollment in Tricare:

Enrollment in Tricare means you cannot fund an HSA.  If you’re on Tricare, don’t open an HSA.
 

On a side note, if your spouse is also on your insurance policy and is not enrolled in Medicare or Tricare, they may be eligible to open an HSA.  The nice part about this, is you would be able to use the funds your spouse puts in their HSA.  You can still benefit from the account; it just isn’t in your name.

Umbrella Insurance Coverage#3. Enrollment in Multiple Policies:

If you are covered under another health insurance policy you may not be able to open an HSA.  Exceptions to this scenario, would be another HSA-qualified insurance policy or one that is for a specific disease or illness – such as a cancer policy, or a policy that pays a fixed amount per day for a hospital stay.

Flex Spending Account#4. Having an Existing FSA:

Enrollment in a General Purpose Medical FSA (Cafeteria Plan) by you or your spouse can also affect your ability to fund an HSA.  A General Purpose Medical FSA covers any medical expense of you or your spouse without first applying a deductible. 
 
If your FSA covers just preventive care, dental and vision (called a Limited Purpose FSA) then you are fine to open an HSA.
 

If your FSA applies a deductible before payments are made (called a Post-Deductible FSA) then you may be able to open an HSA.  It will depend on the deductible for the FSA.  For 2013, that deductible would have to be at least $3,250 if it pays benefits on just you or $6,450 if it also pays benefits on your dependents.

#5. Usage of VA Benefits:

There is one more item worth mentioning here, and that is the usage of VA Benefits.  Enrollment in VA Benefits does not affect your ability to open and HSA, but how and when you use those benefits can affect the frequency of how you fund your HSA.
 
In order to receive deposits into your HSA, you cannot have used your VA Benefits at any time during the previous three months, except for the three areas listed below:
  • Dental
  • Vision
  • Preventative Care 
 

Here’s a flyer with some examples of how your health savings account can work with your health savings account:

VA Benefits With Your HSA by American Health Value

 

That wraps up our list of the 5 most common scenarios that could potentially alter an individual's ability to open a health savings account. As you can see, the high deductible health insurance plan (HDHP) itself is the first thing you must have in place to open an HSA, but it is not the only factor taken into account when determining your overall HSA Eligibility.

As always, we are more than willing to help you navigate any of your questions about health savings accounts, whether you currently have yours with us or not.  Please feel free to contact us with any questions or comments & we look forward to hearing from you!


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Posted by HSA Admin at 4/8/2013 9:17:00 PM
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