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Health accounts may help limit costs
Doug Moore, of Seubert and Associates in Bellevue, asks a question Monday
James Knox/Tribune-Review
Rick Stouffer can be reached via e-mail or at 412-320-7853.
The third-generation owner of industrial equipment distributor Harwood J. Cranston Co., in Sewickley, Cranston was searching for a way to reduce the monthly health insurance premium for himself and one of his five employees not covered by a spouse's plan. He found what he was looking for earlier this year in a health savings account, or HSA, combined with a different health insurance plan that has a higher deductible.
Health savings accounts were approved by Congress and went into effect 15 months ago. The account is funded by an employee using payroll deductions, by the employer or both, and all contributions are tax-free. Interest accrued also is tax-free and when the funds are accessed from the account to help pay for approved medical bills, disbursements are tax-free. Unlike the predecessor, flexible medical savings accounts, the new health savings accounts are portable and any funds unspent in a particular year automatically are rolled into the new year.
"I was paying a $740 per month premium under my old plan, and now am paying $250 per month, but have a $5,150 family deductible," Cranston said.
"I'm putting part of the monthly savings, $400, into an HSA. Now, in essence, I won't have a deductible ($400 a month for 12 months is $4,800) and if I hit my deductible, I will have 100 percent coverage."
Cranston was one of 100 people who attended a question and answer session Monday at the Sheraton Station Square, South Side. Sponsored by the trade group America's Health Insurance Plans, the program gave an opportunity for three Western Pennsylvania legislators to praise HSAs and for a three-person expert panel to field audience questions.
Sen. Rick Santorum, R-Penn Hills, and U.S. Reps. Melissa Hart, R-Bradford Woods, and Tim Murphy, R-Upper St. Clair, told the audience that using a health savings account in tandem with a high-deductible health plan will make Americans more aware of how health care dollars are spent -- because they will be paying more of the bill -- and thus help hold costs down.
That was the case with Cranston. "We have an infant that a few weeks ago was sick," Cranston said. "My wife knows we are accumulating $400 per month in the HSA, so she said, 'Let's wait a day and see what happens.' The next day, the sickness went away on its own."
Panelists admitted there remain some glitches with HSAs, and that education on how the system works remains critical to the savings accounts' success. One key to making HSAs work is to give consumers accurate information regarding the true cost and quality of care from health care providers. Without that information, consumers cannot make an informed decision.
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