HSA Update—Legislative Change(s) for 2012

Written by Michael G. Kirwan, ChFC, CLU
Published Spring 2012

 

To our Valued HSA/MSA Clients:

We are pleased to inform you of yet another major enhancement to your HSA/MSA Program regarding your ability to make “Tax Deductible” contributions for 2012 and beyond.

HSA/MSA Plan participants will be now permitted to contribute up to:

2011* 2012
Single Participant $3050 $3100
All Others $6150 $6250

*2011 Contributions available until 3/15/12 for C Corporations and 4/15/12 All Others, plus extensions

Additionally, there is an “Optional Spousal HSA” and, much like Retirement Plans, there is an optional “Catch–Up” provision for those age 55 and older, as follows:

  • 2011 Spousal HSA $1000
    Catch–Up Provision: $1000
  • 2012 Spousal HSA $1000
    Catch–Up Provision: $1000

(In tax years prior to 2009, your ability to maximize your HSA/MSA contributions was limited to the amount of your deductible.)

Keep in mind that your Contribution is 100% Tax Deductible, it remains in your account for future use and is “Tax–Free”, when withdrawn for Medical/Dental and an assorted number of other benefits, including premiums for “Long Term Care.”

Refer to IRS Publication 502, which can be found under the Resources tab of our dedicated HSA web site.

We are including our list of Products & Services and would welcome the opportunity to be of additional assistance to your Group or personally, for you and your family.

Thank you again for the privilege
and confidence of your business.

 

HSA’s Empowering Employers and Consumers

The “2011 Employer and Account Holder Surveys,” commissioned by ACS, A Xerox Company (NYSE: XRX), and conducted by Buck Consultants, show a majority of small employers (77 percent) believe that High Deductible Health Plans (HDHP) with an HSA are key in controlling health care costs. Additionally, more than half (56 percent) of account holders have found that their HSA–qualified plan provides an affordable health care option.

HSA’s accomplish for Employers and Consumers what all parents want from and for their children, appreciation and self–direction. Parents understand that if you continue to provide for your children without expecting them to work toward objectives and goals, all you will be able to accomplish is the perpetuation of the same, leaving your children with nothing more than the continued expectation of support, financial and otherwise.

This survey has shown that educating the consumer with responsible and wellness decisions and empowering them to manage their health care expenses, not only is saving both the Employer and Consumer money but providing a shift in behavior in helping them to make better decisions regarding their health care needs.

The survey points out that 54% of HSA account holders are setting aside more money than before they had an HSA to cover potential medical needs, 18% are engaging in healthier lifestyles and researching preventive care programs, 28% shopping for lower priced prescription drugs and 31% are planning health care better throughout the year.

This very positive report is in direct contrast to the potential issues posed by the (MLR) Medical Loss Ratio Rules, which mandate that 80% of all premiums charged to Small Groups (50 and under–85% of all Large Groups) MUST be spent on health care.

HSA’s pay fewer claims than low deductible plans, which corroborates the results of the study. However, when HSA’s finally pay claims, they tend to be larger. This higher claims/lower frequency is a major concern to the actuaries in predicting their carriers’ exposure/pricing from year to year. If the consumer is fortunate in managing their health care expenditures, resulting in low claims experience not meeting the 80% MLR, the carrier is mandated to pay rebates. Conversely, during high claims years they may lose money, while unable to “make it up”, all of which could cause distortions in pricing HSA premiums.

Additionally, the current MLR formula DOES NOT account for HSA contributions, which pay for a large portion of the “first–dollar” expenses that would otherwise be attributable to the MLR, which would have otherwise been available to perhaps even further reduce the costs of this very valuable and important “cost–saving” product.

If you would like to review your current plan structure and the potential savings you may achieve, please simply call our office and identify your Society affiliation for a free evaluation.

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