by Ron Dorner
God’s Word tells of one of the largest insurance plans in the world. We read in Genesis 41:34-36 of God’s divine plan to accumulate grain to preserve life through Joseph during his stay in Egypt. God’s plans always work out well.
Unfortunately, the same cannot be said for some of the health insurance plans offered in our county today. Health costs continue to rise at unreal rates. Most health insurance plans take decision-making away from the patient and give it to a third party. If there ever was a time to re-evaluate the health coverage for your family; now is the time.
There is good news. You have another option. You can take control of your health insurance. Your policy can be independent of where you work. Job changes do need not be a concern. Health coverage can be more reasonable.
The federal government has passed legislation that allows a new way of obtaining health insurance. It is called the Health Savings Account (HSA) and is available now. Actually, your health insurance consists of a federally-approved high-deductible health insurance policy and a HSA.
To qualify for this plan you must be under age 65, not be claimed as a dependent on someone else’s tax return and not be covered by another health plan. This plan allows you to choose to have your own insurance independent of where you are employed.
A HSA plan gives you control of how you spend some of your health care “premiums.” You must first obtain the high-deductible insurance. You place into your HSA an amount equivalent to your policy deductible each year. Your contributions to the HSA are not included in your taxable income. The amount in the HSA can be used for medical deductibles, vision and dental needs, glasses, prescriptions, alternative therapies, over-the-counter drugs and long-term care insurance. Any amount left over at the end of the year rolls over for future needs. All interest and excesses accumulate tax-free and at age 65 are treated like an IRA. If you are over age 55 you can make additional contributions to your HSA ($500 in 2004).
The high-deductible policy must have at least a $1,000 deductible if you are single and $2,000 deductible for a family. The deductible can be as large as $,2600 (single) and $5,150 (family).
You can see that your total cost of health insurance should be less using this plan. Your high-deductible policy will cost less because the company does not have to cover all those “nuisance” expenses. And if you are frugal and health-conscious, you will pay out little in deductibles. Your HSA account can grow tax-free into a nice retirement nest egg. If you are self-employed, all health insurance policy premiums are 100 percent deductible.
A word of caution, however. Be sure that the insurance policy you purchase is a “qualified” high-deductible health plan. Not all high-deductible plans qualify. Your HSA account needs to be from a U.S. Treasury qualified provider. The trustee fees should be reasonable and provide interest when the accumulated amount reaches a certain size. Options should be available to invest in funds, stocks and bonds just as you would in an IRA.
More and more companies are beginning to offer qualified policies and health savings accounts. If you are looking for health insurance that is portable, lower cost, and allows you to accumulate excess funds tax-free for a future health need or retirement, this new plan might be for you.
Ron Dorner has worked in Grace Brethren financial and estate planning for more than 17 years. For more information, or to schedule a Financial Planning Seminar in your church, e-mail firstname.lastname@example.org.