I'm not up to speed on this topic, at all. Are these available now or is this something that's availability will be determined by legislation?
Your thoughts? Availability to the "masses"?
We have had a health savings account for a year and a half now. It's a great tax break. My husband's employer withholds $200 a month from his paycheck(it can be any amount up to that). As we accrue medical bills we can be reimbursed from that account. I wait until I have the full $2400 which is usually at the six month mark and then my husband's employer reimburses us - otherwise it is an awful lot of paperwork - but you can do it however you like. We can have the full 2400 as soon as we have spent that much even though the employer has not yet received that much from us - so it's a bad deal for them and that might be something that gets changed down the road. The $2400 is not reported for tax purposes so depending on my tax bracket in any given year we save between $360 and 672. The kicker is that any unused money becomes the property of your employer so you want to be careful when you estimate your expenses. I ask my dentist if he sees any expensive dental work in my future and add the $800 deductible we have for medical and pharmacy and guestimate from there. For the last couple of years, the feds have given people a break and given them an extra 4 months into the next year to use up their money. I don't suppose that will always be the case.
They are usually available through the a company set up with the employer. Commonly called a cafeteria plan or a 125 plan. Through my employer, it's a "use it or lose it" deal so it's hard for a healthy family to always guess how much to withhold. We can have up to $3,000 a fiscal year, which for me is July 1-June 39th.
I believe the Health Savings Acoounts are different and used for self-employed or those without a cafeteria plan. My understanding is that the money is not a use it or lose it, but it can roll over. Also, since the money can be used by individuals without health insurance the amount of money allowed to be put aside is higher.
I still need to do more reading, since we'll be switching from an employer 125 plan to using a HSA.
Here is a link that might be useful: Kiplinger's FAQ on HSA
I'd love to ditch our cafetria plan for a real HSA. I hate health cost roulette. Get pregnant in October? Great, estimate the costs and get a great tax deduction. Get pregnant in January? Sorry, too late. What, that October baby miscarried and now you have no medical bills next year? Sorry, better find something to spend it on or you lose it. Decide in December that you want Lasik and that you're going to quit your job in a couple of months? Sign up to have $3,000 taken out next year, spend it all in January, and quit leaving your former employer holding the bag. What an incredibly stupid system.
I suspect that a lot of people complained when they took away the tax deductibility of most medical expenses, so the bizarre cafetria plan scheme was cooked up to placate the complainers without costing the government much money.
"quit leaving your former employer holding the bag" If you read the fine print, you'll see that you have to pay that back if you leave employment. The employer doesn't hold the bag. We deal directly with the reimbursement company, our employer doesn't write a check or get in the middle. Frankly, I don't remember a time when I could deduct any medical expenses and I really appreciate being able to take out these funds in pre-tax dollars. It was a big help with the daycare situation, also.
I'm assuming that you really meant Health Savings Accounts and not the medical reimbursement programs everyone else has been posting about. The biggest difference is that the HSA is YOUR own account. The money you put in, stays there, until you take it out for qualified medical payments. Some people with excellent health are using these as extra savings accounts. They are building up their savings and planning on using them when they are retired. The accounts are not tied to your employer, you can open an account with banks and other financial institutions offer these accounts. USBank offers a debit card with their account, so the money goes straight to the doctor or whomever.
But, there are rules. The first qualification is that you have to have a high deductible insurance plan, $1,050 for singles, $2,100 for family, I believe. I found a pamphlet from the Treasury Dept. that explains it.
Here is a link that might be useful: Helpful pamphlet here
I'm pretty sure that the rules on a section 125 cafeteria plan flexible spending account allow an employee to get reimbursements ahead of their contributions. If they do that and quit, they aren't liable for any additional payments.
"For the medical expense reimbursement account, your employer is at risk with a cafeteria plan. When you submit a voucher for an allowed medical expense, your employer must reimburse the expense even if your account does not yet have a sufficient balance to reimburse the expense. If you quit before you have had time to repay your employerÂs advance with plan contributions, your employer may lose the money advanced."
Here is a link that might be useful: MSN Money
"If they do that and quit, they aren't liable for any additional payments. "
Very clear in my employer contract that we will repay anything which has not been deducted from our paycheck. I know some companies are writing the check themselves and then submitting it, but not mine. The employer is out nothing.
My company deducts a certain amount each pay period of my choosing. Then I am reimbursed to the extent of the balance in that account. It is impossible to be reimbursed above the balance. I am not sure the poster with the $3000 example is correct. Why would any company allow this set up? no company is left holding any bags.
Late getting back here, but yes, Clemrick, I'm talking abut something the helpmeet and I can set up because neither of us have any company based plan available to us.
We have a high deductible insurance plan and both of us enjoy good health. We don't earn a fortune, but are good at setting a savings goal and living on "what's left over". I think the tax break could prove to be quite useful, too. We are coming to ages where expensive preventive tests are looming large (colonoscopy) and it would be nice to have the cash set aside in advance.
Thanks for your thoughts, and the links.
"Very clear in my employer contract that we will repay anything which has not been deducted from our paycheck."
That's illegal. The section 125 cafeteria plan code doesn't give employers that option.
"Why would any company allow this set up?"
Because they want to off flex spending plans and the law says that's the way they work.
I agree that it's a stupid law. It's also stupid that contributors should forfeit unused contributions to the plan. My understanding is that the stupidity in the law is deliberate. It was set up to disincentive people from contributing more than they were sure they would spend and to encourage companies to set relatively low spending caps.
Why do we put up with being forced to play "medical roulette" with these stupid plans where you have to guess how much you'll spend? And you only get to play this stupid game if you work for a larger employer! So everyone else gets to pay "full cost", no deduction. Why do we put up with this idiotic game? Doesn't anyone realize how dumb this is? Where are our brains? Just give everyone a deduction! Quit the game! Let's do something about it, it's driving me crazy! Arrrrrrghhhhhhhhh!!!!!!!!!!!!
You have Senators, don't you? And Members of the House of Representatives for your districts?
They have phones and mailing addresses, don't they? It would be a shame to have them paying for them, and have them sitting there, unused. Give them a piece of your mind!
Better yet ... work up the wording for a sensible petition, including outline of a workable alternative and have a couple of hundred persons at your workplace/social or sports gathering/church, etc. sign it.
That'll get their attention.
Good wishes for achieving a more satisfactory medical system, including means of paying for it.
P.S. Actually, if they're going to bail out the poor, needy bankers ...
... maybe they should offer support to the folks who suffer the misfortune of having serious health problems ...
... and aren't making (note that I didn't say, "earning") several million a year.
P.P.S. Plus stock options.
Why do we put up with being forced to play "medical roulette" with these stupid plans where you have to guess how much you'll spend?
It sounds like your pretty naive in your understanding of HSAs. HSAs are a great way to save tax deferred money for health costs. They shouldn't be confused with all the other flexible spending accounts (such as, HRAs).