Medical Savings Account

[StoneHeartFarm]

Terry

So, you set aside 50% of the cost of the braces, but then you had to make sure the work was done before April or you would lose the deposit and have to start over?

SHF

 

[cowboydoc]

SHF,
No a flex spending acct. is completely different. A flex spending acct. lets you pay medical expenses that aren't covered under your basic insurance with pre-tax dollars. You can get eyeglasses, dental work, non-covered medical expenses etc., anything healthcare related. You have to put a set amount in for the year and you can't take it out at the end of the year. If you don't use it all you lose it. An MSA is a much better deal insurance wise. Make sure you get in on them before the end of the year though or you may be out of luck. Insurance companies don't like them and are trying to get rid of them. Mainly because they can't charge the high premiums on them like they do for other healthcare. It also takes alot of the control out of their hands as well because most people will never even use their deductible as the deductibles are at least $3k. With this people have a choice on who to go to for healthcare, not what the insurance company wants. They want to control where you go and say what you can and can't have. In my opinion they are the best form of insurance out there.

 

[StoneHeartFarm]

Cowboydoc

I noticed that mention that these accounts are going to disappear the end of this year. Will that mean my account goes by-by, or does it stay active until I close it or turn 55? In other words, will these accounts be grandfathered for people who have them?

SHF

 

[cowboydoc]

Nope you'll be grandfathered and can keep it as long as it doesn't lapse.

 

[StoneHeartFarm]

Okay, how about if I get mad at the Insurance Co, can I switch companies or do I lose the account?

SHF

 

[cowboydoc]

unfortunately yes that will be the case. When you switch ins. comp. you open up a new file. If the govt. does away with them then they won't be able to open you up a new file.

 

[StoneHeartFarm]

So, basically, that would be the only way to allow the account to "lapse", would be to stop making the insurance payments or switch companies... still, a regular savings account coupled with a high deductible insurance policy should accomplish the same thing, shouldn't it? Except for the deduction?

SHF

 

[DVerbarg]

Richard,

Are you familiar with the PSA plan that Aetna introduced last fall? As I understand it is a variance on the MSA idea that combines the savings part of an MSA with a high deductible health plan. Aetna does not have approval from the IRS (last I heard) to have it qualified as a pre-tax contribution. The potential savings from it will probably offset lack of pre-tax status.

The basic gist, as I understood, is that your "premium" is split between funding the "savings account" and paying for a high deductible healthplan. The savings kick in during the second year as the savings account is now fully funded (assuming that you were relatively healthy) and the premium drops to a level that just maintains the "savings account". In my case my employer and I could possibly save hundreds a month and the carrier would still be making money. I like this program conceptually as it puts an incentive in place for the consumer to self-regulate our use of healthcare and moves away from the "entitlement" mentality. If I use healthcare less, I spend less.

Unfortunately Aetna has not done a good job of training the sales force about this healthplan and has been primarily used by Aetna employees, last I heard.

What do the rest of you think?

 

[DVerbarg]

SHF,

Another way, as a self-employed person, to deduct health expenses is to setup your business as corporation with you and your wife as employees. The corporation can have great health benefits that cover optical, dental, normal health care, chiropractic, etc, etc. These can become legit expenses against profits for the corporation. Ask your tax advisor about this. This is one reason many self-employed incorporate.

 

[cowboydoc]

Yes you are right there about incorporating Dave but for some that is alot of expense and paperwork if you don't have alot to pay for it all. We are an ESOP and a corporation and I still choose the msa. Why? Because it's the cheapest thing out there and has the best coverage. With my MSA I have a $4800 deductible and for a family of four our premiums are only $120/month. I can keep as much or as little in the msa as I want. Also most insurance has a copay after the deductible. With the msa after the $4800 it's 100% coverage. Also most ins. comp. have a 2 mill. cap, my msa has a 5 mill. per person. The MSA even beats the physicians plan that I can get. For your money I have not found anything that comes close to equaling it.