Health Savings Accounts are coming in 2004
Monday, December 22nd 2003, 12:00 am
By: News On 6
Something that is certainly not going down is the cost of medical care, nor is the cost of insurance to pay for if.
Earlier this month the President signed the Medicare Reform Act. News on 6 consumer reporter Rick Wells tells us the bill offers us more than just a prescription drug plan.
When the president signed the Medicare Reform Act , he opened the door on a new way to pay for medical expenses, something called a Health Savings Account, this is different than Flexible Spending Accounts many people already have.
"You can roll over the funds from year to year, you don't have the use it or lose it scenario you have with a section 125 or Flexible Spending Account." So it really will be a savings account. John Thomas is Vice President of finance at Blue Cross And Blue Shield of Oklahoma.
He says there are some specific rules. "You must be in a plan a group on individual plan and you must have a deductable of at least $1,000 for an individual or $2,000 for a family."
Once the account is established contributions to it are tax deductible. Withdrawals from the account for elegible medical expenses are tax free. "Once you become elegible for Medicare you cannot contributre to an HSA." But he says if you have one already you can use the money that's in it.
Here's some additional information. This isn't effective until the new year so there are no companies offering these accounts yet but there will be many. They will be competitive, so it'll require some shopping around, like finding someone to manage your IRA or mutual fund. As he said not everyone is eligible, but Blue Cross-Blue Shield estimates about a quarter of its Oklahoma customers will be. That's thousands of people and thousands more from other insurance carriers.
Health Savings Accounts look for more information in the new year.