Month: September 2010

FSA vs. HSA

What is an FSA?

 

  • Used to pay for medical expenses not paid for by insurance for example this deductibles, copayments, and coinsurance
  • Can also be used for qualified medical expense, such as dental and vision expenses and over the counter drugs
  • “Use it or lose it”  money must be spent by the end of the year or the money is lost

 

Healthcare Reform Impact on FSAs

  • Beginning in January 2011 over the counter drugs will require a prescription in order to be FSA eligible such as Advil
  • Beginning in January 2013 a new maximum dollars allowed into account beginning in 2013 of $2500

 

What is an HSA?

  • Must also be enrolled in a high deductible health plan
  • Unlike a FSA the funds roll over year to year if not spent.
  • Account is owned by the individual
  • may be used for any qualified medical expense.

 

Healthcare reform impacts on HSAs

  • Beginning in January 2011 – over the counter drugs will require a prescription in order to be FSA eligible such as Advil
  • Beginning in 2011, non qualified expenses will have a higher tax penalty. In 2011 the penalty moves from 10% to 20%  

Questions From Our Readers

Q: I am a healthy self-employed 48 year old that has had no health insurance for the past 7 years. I had been considering catastrophic insurance before the health insurance reform passed. I will probably qualify for subsidy under the new plan, but I’m wondering if it would penalize me or affect my qualification by already having some insurance? Also, is it possible to determine if I will qualify for a subsidy and to estimate what my cost for health insurance will be under the mandate?

 

A: Great question.  The answer is no.  By getting insurance today, even if only catastrophic, you do not impact any benefits you will receive in 2014 when the insurance exchanges kick in and the subsidies become available.

The subsidies will be based on your income levels as a percentage of the poverty level at the time.   It will be a sliding scale with eligibility for a subsidy decreasing as you get to 400% of the poverty level.   You can go to www.healthcare.gov to see where you fall on the income ladder.  The costs are not out yet but stay tuned.

 

 

Q: Hi Andrew. My husband and I never miss you on doctor radio on Thursdays. My son, who has a few medical problems, has an insurance plan in our state, but he recently moved to across the country. Is there a comparable plan or pool for people with pre-existing conditions in every state? An insurance broker there quoted him a plan for about $12000 per year with a high deductible. Can he keep his current insurance if he still owns property here? Or is he just out of luck?

 

A: He will have to go online to find out if his current state has a high-risk pool.    The Department of Health will have the rules.   That being said, most high risk pools are for those who cannot get insurance on their own.

Keeping the current insurance will be tough if he is not a legal resident of the state.   So if he is really moved, and it’s not for school, he will need to find new health insurance.   Did he move for a job?  If so, do they offer insurance?   While this problem goes away in 2014, it remains a big issue for many Americans who want to move to a new state.   Thinking about health insurance is usually not something people consider when making such a big decision.  Have him call into the show and I will talk to him.  His options are somewhat limited.  I wish I had a better answer.

Thanks for listening.   We are here to help.

 

 

Q: Right now, I have health insurance through my employer. I was wondering if I change employers, can their insurance company deny me coverage because I have a pre-existing condition?

 

A: Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), you are entitled to certain protections when you change jobs and enroll in your new employers health insurance plan.  First, I want to point out that some states have additional protections (above and beyond the Federal HIPAA rules) so you should check with your state department of health website or the National Association of Insurance Commissioners at www.naic.org.

First, if you have coverage now and you have not broken your coverage for at least 63 days, your employer must enroll you in their group health plan.  The below information applies when you have not had insurance with your previous employer for at least 63 days or are just starting work again after being without a job (and health insurance in a group plan).

In general, if the new employer’s health plan provides coverage to its employees but denies benefits to you because of your preexisting condition, then HIPPA applies.   Under HIPAA, your employer can only look back 6 months for a condition that was present before you enrolled in the insurance plan.  If you have not sought treatment for the preexisting condition in the past 6 months, then your employer cannot deny you coverage.    If you have sought treatment in the past 6 months, then the employer can (at their choice) hold back on the coverage for that condition only – all other illnesses would be covered.  The good news here is that if you have had treatment in the past 6 months, the exclusion period for the condition is 12 months.  Meaning, after 12 months, you will be covered.  Keep in mind, many large employers may not impose any waiting period but they have a right to do so if they apply the policy to all employees.

In summary, you are good to go and should not worry about your new job.  Thanks for sending in this email – I will read it on the show tomorrow as I think its important information to share with others.

 

 

Q: Two years ago my adult son had a policy that was voided when he moved from one county to another in our state due to non-payment of one premium (the bill was not forwarded to the new address). He has been without insurance since. He is unemployed and both therapist and psychiatrist told him to get on disability and Medicaid due to his medical diagnoses and need for heavy medications. He has been denied both after applying. I’m going broke paying his medical bills. I have called other insurance companies and they won’t cover his conditions. The state plan is highly expensive. What now?

 

A: Yes, there is hope.  Under healthcare reform, individuals who have been denied health insurance because of a pre-existing condition and have been without insurance 6 months can apply to either their state’s high risk pool or the federal high risk pool if the state does not have a program.   In your state, the program is run by the U.S. Department of Health and Human Services.  You can go online and apply at healthcare.gov

The rates are market based for a healthy individual and run about $365 a month for the insurance and the plan has co-pays and deductibles.  This is going to be your best option.  There are no subsidies for the premiums beyond the rates being established by the high risk pool.  True relief will not come until 2014, but this is a very good start for people like your son.

Go to www.healthcare.gov and select your state.  They will give you all the information needed for your son to apply.  Good Luck!

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