By choosing a Health Savings Account, one is betting on themselves... in a way. If you stay healthy, then with a typical health insurance plan you're just out a lot of money. With a Health Savings Account, not only will you pay significantly less in premiums, but at the end of the year you have a nice deposit of up to $5,650 sitting in your account. Money which you didn't pay any federal income taxes on, state income taxes (with the exception of four states) on, or social security taxes.
Let's say a 30-year old man with a family opens a Health Savings Account and has a high-deductible health plan that allows him to fund the account with $5,650 each year. If he takes $1,000 or less out each year for medical expenses, and earns a 10% return on his money, he'll have $1,422,878 when he retires.
The best way to accumulate this much money in your Health Savings Account is to stay healthy, so that you don't need to access those funds to pay for medical expenses. The good news is that the vast majority of diseases and disorders people have are the direct result of their lifestyle choices. High blood pressure, cancer, diabetes, Alzheimer's, digestive disorders, endometriosis, osteoarthritis, osteoporosis, and more, are all largely preventable.
The Average Guy Doesn't Get It
The average American lives as if social security, a few prescriptions, and some good luck will take care of him in his later years. So he saves little for retirement. He eats packaged foods like French fries, chips, cokes, pasta, and cold cuts. And over the years he puts on "a few extra pounds", and he gets out-of-shape, and he gets high blood pressure, and high cholesterol, and eventually heart disease, cancer, diabetes, or Alzheimer's.
Insurance Companies Get It
Some insurance companies do understand the tremendous impact lifestyle can have on health, and are beginning to institute programs to encourage healthy lifestyles among their customers. Healthy policyholders will use their coverage less, resulting in lower rates for them, and better customer retention and higher profitability for the insurance company. Some insurance companies started new programs designed to help reward their customers for staying healthy. The programs provide health risk assessments, personalized health-improvement plans, email access to trainers, counselors, and nutritionists, and even credits that can be redeemed for health-related merchandise.
HSA Owners Get It
People who open Health Savings Accounts are proactive. They act ahead of time, and think about how their actions now will affect their future. That is why they put away tax-deferred money for future possible health expenses, and that is why many are also interested in taking a proactive approach to their health. Choosing to live an extraordinarily healthy life, and actively making lifestyle changes, is an activity that will bring tremendous returns. Tax-free, just like an HSA.
According to annual statistics collected by the National Coalition on Health Care, the cost of healthcare will continue to increase at a rate of least twice the rate of inflation. Experts project that Medicare funds will be extinguished by 2019, requiring the U.S. government to foot the bill for all U.S. citizen healthcare expenses. The result would overwhelm the healthcare industry, leading to decreased healthcare accessibility and private sector affordability.
However, thanks to tax-incentivized Health Savings Accounts (HSA), U.S. citizens can start setting aside money now that will help cover their future healthcare expenses. According to some experts, the only way to get reliable and speedy healthcare in the future may require that citizens pay for it out of pocket - especially if healthcare becomes nationalized. Having tax-deferred healthcare funds set aside an HSA may help citizens gain access to medical resources that are quickly becoming scarce.
Before you decide whether an HSA is right for you, consider the facts:
The High Cost of Healthcare
- The current national deficit has surpassed $500 billion with no signs of reversal in the coming years.
- The U.S. spends 4.3 times the national defense budget on healthcare.
- 2008 healthcare expenditures were expected to increase by a rate of twice the rate of inflation.
- Total healthcare spending in 2007 totaled $2.4 trillion. That's $7,900 per person.
- U.S. healthcare spending amounts to 17 percent of the U.S. gross domestic product (GDP).
- By 2017, healthcare is expected to cost $4.3 trillion per year - 20 percent of the GDP.
- There is an imbalance in money going into and coming out of the Social Security, Medicare, and Medicaid funds. These funds are quickly shrinking and Baby Boomers aren't even accessing them yet. (They'll start accessing their awaiting funds in just two years, which will cause the funds to be used up even faster.)
- Experts predict that the Medicare hospital insurance trust fund will be non-existent by 2019 at current spending rate.
Healthcare Burden on Families Leads to Problems for U.S. Government
As health care costs rise, many individuals become unable to pay for health insurance. If they cannot pay for health insurance, but require medical attention, they run the risk of having to file for bankruptcy, have assets repossessed, or foreclosing on their homes. As a result, the federal government will be forced to take on the additional financial burden of their unpaid healthcare expenses.
- About 46 million Americans are uninsured, causing those uninsured individuals to rely on the government help to pay for their healthcare expenses.
- 50% of individuals that file for bankruptcy file, in part, because of large medical expenses. Only 68 percent of those individuals had health insurance, according to a study by Harvard University.
- Approximately 1.5 million families foreclose on their homes each year citing unaffordable medical expenses.
- According to the national average, experts believe that retiring elderly couples will need to have saved $300,000 just to pay for medical expenses.
As healthcare becomes more and more unaffordable for businesses and U.S. citizens, the government is continues to lean towards a nationalized healthcare plan, such as the healthcare plans implemented by many socialize Western European nations. However, free healthcare for all will not guarantee access to healthcare services. Instead, a system of free healthcare has proven to actually decrease access to healthcare because of an increase in healthcare-related requests for service. Simply put: evidence has shown when people have access to something for free, they will use it far more than they need.
In a nationalized healthcare system, the only solution for the government to control costs is to limit access. This precedent of limiting of access is normal in countries that have socialized medicine. As a result, these country's citizens often do not receive adequate coverage.
The Trouble with Socialized Healthcare
- In Britain, nearly 1 million people are on waiting lists for public healthcare services.
- Canadians often seek healthcare in the U.S. for urgent or specialized issues.
- Many individuals in countries with socialized healthcare die while waiting to be treated because of limited access to public programs.
- Per capital, one-third fewer people are able to get bone marrow transplants in Britain through the nationalized healthcare program.
- Seventy-five percent fewer British citizens had access to nationalized bypass surgery services.
- Also in Britain, 20 percent of colon cancer patients died because of treatment delays. These cases are thought to have been curable with earlier treatment.
- Already in the U.S. in places where healthcare is required by the government, citizens are encountering decreased access to medical resources (such as in Massachusetts where there is a government requirement for health insurance).
In Britain, where healthcare is largely inaccessible because of the nationalized system, one out of every five operations is paid for out-of-pocket. Even while projected public healthcare services in the U.S. threaten to decrease access to healthcare, many individuals will still have the option to access private healthcare resources in order to get immediate and individualized attention.
One way of ensuring that individuals have the financial means to pay for these necessary private services is to maintain an HSA, which will grow in value as individuals age.
Using an HSA to Afford Healthcare Services
An HSA is a safe solution to help individuals pay for expensive medical costs. Furthermore, having an HSA can help you to protect yourself against decreased healthcare access that will correspond to the future nationalization of healthcare.
An HSA works like any savings account, in which you deposit money for safekeeping. Through your HSA, you can invest that money into high-interest stocks, mutual funds, CDs, or other growth opportunities. You will get an immediate tax break for investing in an HSA. Additionally, your money will grow tax-deferred and will be tax-free when you withdraw it to pay for medical expenses.
If you had a HSA qualified health insurance plan in place by December 1, 2008, you can make a financial contribution to your HSA through April 15, 2009. As of January 1, 2009, you can make contributions to your plan for the 2009 year.
Remember: though the federal government is available to offer a financial safety net in times of great need, each individual is responsible for his or her own healthcare costs, living expenses, and lifestyle costs.
Take action now to protect the health of your family by contributing to an HSA. Anticipating future healthcare needs will help to secure lifelong health and well-being.
Wiley Long has sinced written about articles on various topics from Politics, Finances and Health. By Wiley Long - President, HSA for America () - The nation's leading independent health insurance firm specializing. Wiley Long's top article generates over 9900 views. to your Favourites.