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Issue #3 - 9.22.06
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Health Savings Accounts
Health Insurance That Won’t Break The Bank
With the cost of health insurance premiums an increasingly significant concern for small business owners, including dentists, more and more practices are offering or considering Health Savings Accounts (HSAs) for employees. HSAs in combination with high deductible health insurance plans are a less expensive alternative to traditional healthcare plans, and they are designed to give consumers more flexibility in how their healthcare dollars are spent.
Cora Telaz, CEO of Sterling HSA describes them as medical Individual Retirement Accounts (IRAs). “Health savings accounts allow individuals to pay for qualified health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. Contributions remain in a savings account and can be used to pay for medical care, dental care, vision, long-term care services, as well as insurance premiums. An HSA is similar to an IRA in that an HSA is established for the benefit of an individual, is owned by that individual, and is ‘portable.’ If the individual is an employee who changes employers or leaves employment, the HSA stays with the individual,” explains Ms. Telaz.
To qualify for an HSA you must be enrolled in a high deductible health insurance plan. In addition, you cannot be enrolled in Medicare nor can you be claimed as a dependent on someone else’s tax return. You are also ineligible for an HSA if you are already covered by another major medical plan, such as through a spouse.
The deductible for HSAs is set by the federal government and is subject to change each year. According to the US Treasury Department, for 2006, the minimum deductible for an individual is $1,050 and a maximum of $2,700. For a family the minimum is $2,100 and the maximum is $5,450. In 2006, annual out-of-pocket expenses cannot exceed $5,250 for individuals or $10,500 for families. Out-of-pocket expenses include deductibles, co-payments, and other amounts the participant must pay for covered benefits, but do not include premiums.
Employers and employees can contribute up to a specified amount each year to health savings accounts. Money saved in purchasing a high deductible health insurance plan, which is more affordable, can be funneled into the HSA account to pay for future healthcare needs. And unlike premiums, unused HSA dollars remain in the HSA. Employer contributions are made on a pre-tax basis while employee and individual contributions can be deducted from the federal tax return. Interest accrued is non-taxable and withdrawals for qualified medical expenses are also tax free.
For further information on health savings accounts contact Sterling HSA toll free at 800-617-4729 or visit the website at www.sterlinghsa.com.
Sally McKenzie is CEO of The McKenzie Company, Inc. a nationwide dental management, practice development and educational consulting firm. Working “on-site” with dentists since 1980, McKenzie Management provides knowledge, guidance and personalized systems that have propelled thousands of general and specialty practices to realize their potential. Sally can be reached directly at 1.877.777.6151
Interested in speaking to Sally McKenzie about your management concerns? Email her at Sally@thedentistsnetwork.net
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