Health Savings Accounts Receive Help from Mini-Meds
(ContentDesk) August 15, 2006 -- William Short, Senior VP at First Horizon Msaver (http://www.firsthorizonmsaver.com) recently published this essay on mini-meds and their effects on HSA usage for the The Flint Hills Center for Public Policy:A universal fact that plagues every business from nuclear switch manufacturers to widget producers is the rising cost of providing health benefits to their workforce. The cause of this rise in healthcare costs can be attributed to over utilization, unhealthy life styles, and a third party payment system that does a poor job of managing the payment cycle.
Employers cannot continue to shoulder the burden associated with the rising cost of healthcare. As a result, they have begun to investigate more consumer-centric solutions designed to reduce cost by engaging the individual in his or her own health care decisions.
The Health Savings Account (HSA), enacted as part of the Medicare Modernization Act of 2003, when coupled with a qualified High-Deductible Health Plan (HDHP) presents such an opportunity.
Individuals can manage their healthcare risk below a set deductible. In addition, they gain a financial incentive in the form of pre-tax and/or post-tax funds that roll over from year-to-year and grow on a pre-tax basis. Above that deductible, an HDHP kicks in that serves to hedge against catastrophic risk.
The HDHP-HSA combination does, however, create a gap between dollar one and the deductible. The realization that there is no first dollar coverage can scare some employers and consumers off of the product.Fortunately, help may be available from a more traditional insurance product.
To mitigate the first dollar exposure risk, it is possible to develop a program utilizing Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA), and a mixture of indemnity plans (mini-meds).HSAs and FSAs have garnered a decent bit of attention of late, but many people are unaware of mini-meds. The mini-med, though, is hardly a new concept. It is a product that flourished right up to the introduction of the Health Maintenance Organization (HMO) and then fell out of favor with consumers. The HMO was an initial success because it offered the consumers the opportunity to have a third party manage their risk for a set premium price plus low office visit co-pays. However, with time consumers have grown to view HMOs as a poor benefit with an ever-growing price tag.The min-med is a defined benefit that pays a predetermined cash amount for medical services, which may or may not cover the entire medical bill.
This defined benefit feature allows for a mini-med plan coupled with an HDHP-HSA plan, which could soften the financial burden if a medical event were to occur and individuals did not have the needed funds in their HSAs.
The mini-med accomplishes three goals. It helps individuals reduce their risk of covering their high deductible, helps reduce the overall cost of health care benefits by motivating individuals to become more efficient users of their health plan, and it still manages to provide a rich healthcare benefit. On average an HDHP costs anywhere from 25 to 30 percent less then a traditional health plan, for instance. A plan could therefore include an HDHP, funds contributed to an HSA on a tax-preferred basis, a mini-med plan, and a limited-use FSA.For example, an individuals plan could have the following components:"????A $2,500 deductible HDHP that covers all medical expenses once the deductible is met"????A mini-med that pays a fixed benefit of $500 per day if admitted to a hospital with a maximum of seven days"????A limited-use FSA that is set up to pay for vision and dental expenses below the HDHP deductibleHSAs have the potential to empower consumers and restore a true marketplace in healthcare.
Right now, there is an unfortunate disconnect between buyer and seller in the medical marketplace. For too long, Americans have not had to think about the cost of healthcare beyond their co-pays and rising insurance premiums.Consumer-driven healthcare is the best way to re-establish this relationship. In the process, it will improve the quality of care, reduce the uninsured, and drive innovation. This potential for change, however, will fall short of its promise if employers and consumers fear taking advantage of the benefits due to perceived financial risk.Mini-meds provide a particularly helpful tool when combined with the powerful HSA. As it turns out, the biggest ally of HSAs and consumer-driven change in healthcare may in fact come from an old insurance product whose time has finally arrived -- the defined medical benefit plan.William C.
Short is an adjunct scholar with the Kansas-based Flint Hills Center for Public Policy and Senior Vice President of First Horizon Msaver (http://www.firsthorizonmsaver.com)..
Why Public Schools Hate Home-schooling Parents
Home-schooling is a great success. That's why many public-school authorities hate home-schooling parents.Home-schoolers are a direct challenge to the public-school monopoly. This monopoly makes it almost impossible to fire tenured public-school teachers or principals. As a result, tenure gives most teachers life-time guaranteed jobs. They get this incredible benefit only because public schools have a lock on our children's education.If public-school employees had to work for private schools and compete for their jobs in the real world, they would lose their security-blanket tenure.
That's why school authorities view home-schooling parents who challenge their monopoly as a serious threat.Many school officials also can't stand the fact that average parents who never went to college give their kids a better education than so-called public-school experts. Successful home-schooling parents therefore humiliate the failed public schools by comparison.Home-schooling parents also humiliate...
Why Public Schools Hate Home-schooling Parents
Tax help > Why Public Schools Hate Home-schooling Parents
Ten Top Tax-saving Ideas at Year-end
Popular techniques for individuals and business ownersNow is a good time to figure out how to cut your 2004 tax bill. Although everyone's situation is different, the National Association for Black Accountants www.nabainc.org (NABA) offers ten popular year-end strategies for individuals and small-business owners:1. Charitable donations: As a general rule, the full amount of a cash donation is deductible on the donor's personal tax return. If a donation is made by credit card at year-end, the gift is deductible in 2004, even if the charge is not actually paid until next year. Added tax break: For donations of property, the full fair-market value is deductible if the property has been held for more than one year.2.
Alternative minimum tax liability: The alternative minimum tax (AMT) can sneak up on unsuspecting taxpayers. It applies if your AMT liability, based on a special tax computation involving tax preference items, exceeds your...
Ten Top Tax-saving Ideas at Year-end
Tax help > Ten Top Tax-saving Ideas at Year-end
Six Ways Under Your Nose To Finance Your Home-Based Business
There are lots of ways to get additional capital to expand a home-based business. But before you look outside for financing, leaving the decision about your company's progress and merits to someone else, consider these six ways under your nose to finance your home-based business:Personal Savings Savings are easy to tap and involve no paperwork. The negatives: if you use the money in your business, it eats into your safety reserve and is no longer there for emergencies. It diverts funds from a very low risk investment to a high one. Whole-Life InsuranceWhole life policies accumulate tax-deferred cash value that you can tap for your business.
But the only way you can tap this cash without paying taxes is to borrow against your policy. As long as you keep your policy intact and pay premiums when due, loans remain tax-free.The negatives: you will be converting a low risk investment into a high one; if you decide to terminate your policy or if you default on repaying your loan, taxes...
Six Ways Under Your Nose To Finance Your Home-Based Business
Tax help > Six Ways Under Your Nose To Finance Your Home-Based Business
Becky Schmitz Receives Award as Top Tax Problem Solver
Billings, MT (ContentDesk) June 15, 2006 -- The American Society of Tax Problem Solvers (ASTPS) is pleased to announce Becky Schmitz the recipient of the coveted ASTPS Top Practitioner Spring 2006 Award.The ASTPS Top Practitioner Award recognizes distinguished members for their exemplary professional accomplishments, dedication, and contributions to the organization and the profession.Becky submitted her first Tax Problem Resolution offer in 1994. For the past seven years she has devoted a substantial portion of her practice to tax problem resolution as a Certified Tax Resolution Specialist. She employs a staff of four in her firm, Cent$able Accounting, Inc., "The Tax Problem Solvers." She and her staff provide the customary array of tax preparation and tax planning services for individuals and businesses, in addition to Tax Problem Resolution.
The firm's website has a page - http://www.centsableaccounting.com/tax-services/...
Tax help > Becky Schmitz Receives Award as Top Tax Problem Solver
Election Truth
Yes, it is true that George W. Bush received the most votes of any elected President in our history. He also received more votes against him than any other elected President in the history of our country. The margin of difference between those who want Bush as our President and those who do not is a measly 3%. The fact is that the electoral map is almost identical to that of the year 2000.
Bush did win the popular vote by 3.5 million votes but he nearly lost the election, had just 68,001 votes switched in Ohio. The 3.5 million more votes came entirely from small states that have predominantly rural voters that typically vote Republican or lean Republican but don't always vote. Who voted for whom? If you are young (18-29), a working woman or a non-working woman, black, latino, Asian, or other, belong to a union, make under $100,000, have a post-graduate education, are a moderate or liberal, never voted before, a Jew, a Buddhist, or a Hindu, a single civilian, homosexual, don't...
Election Truth
Tax help > Election Truth