HSAs - Handsome Subsidies for the Affluent???

I hate to keep picking on Joe Paduda’s blog and his thoughts, but here is another example of just how far off Joe can be on www.joepaduda.com. In his recent post, Joe states the following:

“I (and others) have long opined that HSAs are thinly-disguised tax breaks for the well-to-do. Touted as a solution to the growing number of the uninsured and cited as the plan of choice for the newly-insured, HSAs have been the darling of the conservative think-tank set.”

He also writes the following:

“The article notes that the “biggest beneficiaries” of health savings accounts “are proving to be well-to-do investors looking for another way to fund their retirement savings.”

My company offers an HSA plan to all of our Full –Time employees. As I have said on this blog before, a single employee only pays a net of $31 a month in premium, which of course is one of the benefits of the HSA. The trade off for lower premiums is that the policy holder has to pay a high deduction, $2,500 prior to any financial coverage kicking in for the calendar year. For example, every Jan 1 all of my employee’s deduction starts over and they must meet the $2,500 threshold before the plan kicks in paying on medical bills. They do receive PPO discounts on the first $2,500, but these are first dollars out of their pockets.

This is where the actual HSA account comes to play. Each of our employees holds a MasterCard and or checks to be used to pay for the $2,500 deductible. Thus, many of our employees get into a cycle to where they never have to pay out of their normal assets for medical care. Instead, they have saved money in the HSA account, (We, the employer deposit money in their HSA account along with the employee) to pay for their expenses. Once the $2,500 has been met, the insurance plan pays 100% of any medical expenses including pharmacy.

In reality the HSA plans are better than a traditional 80/20 plan. As a single employee, you know in our company that the most you will spend out of pocket in a year is $2,500. Under an 80/20 plan like so many have, a $30,000 hospital and related expenses bill will mean the employee would pay $6,000 out of pocket. The HSA is a better deal.

So, how can HSAs be a disguised tax break for the well to do? I have no idea. Our employees with health insurance range from employees that make below 20K a year to ones that do very well. I don’t know of any employee of our company that believes HSAs are for their retirement. Come on Joe, the HSA money is for medical expenses, not retirement. Real companies that have HSAs know they are a good deal for all.

One Response to “HSAs - Handsome Subsidies for the Affluent???”

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