Synonyms for this usage include "health coverage," "health care coverage" and "health benefits" and "medical insurance." In the 1970's most people who had health insurance had indemnity insurance. Consumer-directed health plans allow individuals and families to have greater control over their health care, including when and how they access care, what types of care they receive and how much they spend on health care services.
Consumer driven health care plans include Health Reimbursement Plans (HRAs), Flexible Spending Accounts (FSAs), high deductible health plans (HDHps), Archer Medical Savings Accounts (MSAs) and Health Savings Accounts (HSAs). WHAT IS A HEALTH SAVINGS ACCOUNT?
A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States. According to the U.S. Treasury Office, 'A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care.
HSA's enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.' Thus the Health Savings Account is an effort to increase the efficiency of the American health care system and to encourage people to be more responsible and prudent towards their health care needs. It falls in the category of consumer driven health care plans.
Origin of Health Savings Account
The following individuals are eligible to open a Health Savings Account -
- Those that are covered by a High Deductible Health Plan (HDHP).
- Those not covered by other health insurance plans. What is a High Deductible Health plan (HDHP)?
Enrollment in a High Deductible Health Plan (HDHP) is a necessary qualification for anyone wishing to open a Health Savings Account. A High Deductible Health Plan is a health insurance plan which has a certain deductible threshold. It does not cover first dollar medical expenses. Opening a Health Savings Account
However not all insurance companies offer HSAqualified health insurance plans so it is important to use insurance company that offers this type of qualified insurance plan. Contributions to the Health Savings Account
The individual must pay income tax on the excess withdrawn amount.
Contributions by the Employer
Withdrawals from the HSAs
Normally the money also cannot be used for paying medical insurance premiums.
- To pay for any health plan coverage while receiving federal or state unemployment benefits
- COBRA continuation coverage after leaving employment with a company that offers health insurance coverage.
- Qualified long-term care insurance. Growth of HSAs
In the Individual Market, 1.5 million people were covered by HSA/HDHPs purchased as on January 2008. Benefits of HSAs
This, it is believed, will reduce the growing cost of health care and increase the efficiency of the health care system in the United States. HSA-eligible plans typically provide enrollee decision support tools that include, to some extent, information on the cost of health care services and the quality of health care providers. Experts suggest that reliable information about the cost of particular health care services and the quality of specific health care providers would help enrollees become more actively engaged in making health care purchasing decisions. These tools may be provided by health insurance carriers to all health insurance plan enrollees, but are likely to be more important to enrollees of HSA-eligible plans who have a greater financial incentive to make informed decisions about the quality and costs of health care providers and services.
It is believed that lower premiums associated with HSAs/HDHPs will enable more people to enroll for medical insurance. No doubt higher deductibles are associated with HSA eligible HDHPs, but it is estimated that tax savings under HSAs and lower premiums will make them less expensive than other insurance plans. The earnings on savings in the HSA are also exempt from income tax. Health
Savings Accounts are also advantageous for the employers. The benefits of choosing a health Savings Account over a traditional health insurance plan can directly affect the bottom line of an employer's benefit budget. For instance Health Savings Accounts are dependent on a high deductible insurance policy, which lowers the premiums of the employee's plan. Also all contributions to the Health Savings Account are pre-tax, thus lowering the gross payroll and reducing the amount of taxes the employer must pay.
Criticism of HSAs
The opponents of Health Savings Accounts contend that they would do more harm than good to America's health insurance system. According to the Commonwealth Fund, early experience with HAS eligible high-deductible health plans reveals low satisfaction, high out of- pocket costs, and cost-related access problems. Another survey conducted with the Employee Benefits Research Institute found that people enrolled in HSA-eligible high-deductible health plans were much less satisfied with many aspects of their health care than adults in more comprehensive plans People in these plans allocate substantial amounts of income to their health care, especially those who have poorer health or lower incomes. Congressman John Conyers, Jr. issued the following statement criticizing the HSAs "The President's health care plan is not about covering the uninsured, making health insurance affordable, or even driving down the cost of health care. A study titled "Health Savings Accounts and High Deductible Health Plans: Are They an Option for Low-Income Families? a) Premiums for HSA-qualified health plans may be lower than for traditional insurance, but these plans shift more of the financial risk to individuals and families through higher deductibles.
b) Premiums and out-of-pocket costs for HSA-qualified health plans would consume a substantial portion of a low-income family's budget.
c) People with chronic conditions, disabilities, and others with high cost medical needs may face even greater out-of-pocket costs under HSA-qualified health plans.
d) Health savings accounts and high deductible plans are unlikely to substantially increase health insurance coverage among the uninsured.
