High Deductible Health Plans, Health Savings Accounts and Future of Healthcare

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As we enter the changing world of healthcare insurance and High Deductible Health Plans (HDHP), it is critical for patients to understand policies which the United States Government has implemented to help protect employees.  At the Kraus Back and Neck Institute (KBNI), the commitment to help patients remains the highest priority. As deductibles and maximum out of pocket expenses are increasing with high deductible health plans (HDHP), it is important for patients to understand Health Savings Accounts (HSA), Flexible Spending Arrangements (FSA), and Health Reimbursement Arrangements (HRA).  Without the full and proper understanding of these, patients might not be aware of how to continue to receive excellent healthcare, at an affordable price.  In order for patients to receive the best healthcare possible, they must be well versed in the arrangements which the government has set in place to help them.

Patients who are enrolled in insurance plans with high deductibles, are undergoing fewer imaging studies, according to research performed by Kimberley Geissler,  assistant professor of health policy and managementat the School of Public Health and Health Sciences at the University of Massachusetts Amherst.  http://www.umass.edu/newsoffice/article/patients-high-health-insurance-deductibles      In fact, according to the study, patients in these health plans undergo about 7.5 percent fewer diagnostic procedures including MRI, X-ray, and CT scans than patients with lower deductible plans.  In this study, insurance plans with an annual deductible of at least $1,000 for individuals and $2,400 for families were considered high deductible.

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High deductible plans are increasing in popularity due to the appeal of lower premium costs.  Initially, the high deductible plans were felt to have lower costs, as far as patient premiums were concerned.  The reality of these coverages occurred when it came time for patients to use the plans.  Then, significant costs were incurred, as patients had to often meet high deductibles, before the benefits of the plans kicked in.  Patients must understand how to utilize the opportunities of HSA, FSA and HRA accounts, to counteract this, and make the high deductibles and high maximum out of pocket expenses affordable.

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The good news is that the Federal Government has implemented several programs to help protect patients, and shield them from some of the rising costs of healthcare.  The three programs which will be discussed are 1) health savings accounts (HAS) , 2) health reimbursement accounts (HRA), and 3) flexible spending accounts.   https://www.irs.gov/pub/irs-pdf/p969.pdf

• Health savings account (HRA) : According to the Federal Government, a health savings account (HAS) is a tax-exempt trust or custodial account which an employee can set up with a qualified HAS trustee to pay or reimburse certain medical expenses which they incur. The contributions remain in the employee’s account until they are used, and the interest or other earnings on the assets in the account are tax free.  The HSA is “portable,” and remains with the employee if they change employers, or leave the workforce.  To quality for an HSA, and employee must be covered under a high deductible health plan (HDHP).  For 2015, the definition for an individual was a minimum annual deductible of $1,300 up to a maximum annual deductible and out of pocket expenses of $6,450.  For a family, these numbers increase to $2,600 and $12,900, respectively.  In 2015, the maximum contribution for individuals was $3,350, and $12,900 for families.  Employees can receive tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses.  It is not necessary to make distributions from the HSA each year, and the money which is in the HSA of the employee remain with that employee.  Qualified medical expenses which are covered by the HSA are those expenses which would generally qualify for medical and dental expenses deduction.  Medications are considered a qualified medical expense if it requires a prescription, or, in the case of an over the counter medicine, the employee receives a prescription for it.
• Flexible Spending Arrangement (FSA): A health flexible spending arrangement (FSA) is a program which allows employees to be reimbursed for medical expenses.  They are typically funded through voluntary salary reductions, which are arranged with the employer.  Contributions made to an FSA by an employer can be excluded from the employee’s gross income.  There are no employment or federal income taxes deducted from the contributions.  Employees can withdraw funds from the account to pay qualified medical expanses even if funds have not yet been placed in the account.  Health FSA’s are employer established benefit plans, and may be offered with other employer-provided benefits as part of a cafeteria plan.  For plans beginning after December 31, 2012, salary reductions contributions to an FSA cannot exceed $2,500 per year, or a lower amount if set by the plan.  Money in the FSA which is not used by the end of the plan year is forfeited.  Distributions from an FSA must be paid to reimburse for qualified medical expenses.  An employee is entitled to receive the maximum amount of reimbursement at any time during a coverage period, regardless of the amount which had been already contributed.  Payment might be made with debit cards, credit cards, and stored value cards given by the employer.
• Health Reimbursement Arrangement (HRA) : A health reimbursement arrangement (HRA) is funded solely by an employer, and cannot be paid through a voluntary salary reduction agreement on the part of the employee. With an HRA, employees are reimbursed tax free for qualified medical expenses, up to a maximum amount for the coverage period.  Any unused amounts in the HRA can be carried forward to reimbursement in future years.  There is no limit on the amount of money an employer may contribute to the HRA.  Payment for qualified medical expenses are often made with debit cards, credit cards, and stored value cards.

The physicians and team at the Kraus Back and Neck Institute in Houston, TX, are committed to helping patients with their care.  They have significant experience with helping patients protect themselves, and curb expenses, through the utilization of their Health Savings Accounts (HSA), Flexible Spending Arrangements (FSA), and Health Reimbursement Arrangements (HRA).  They understand that difficulty with finances can cause significant emotional stress on patients, and this effect is compounded when patients are already trying to heal recover from pain or other illnesses.  Health insurance agents may also advise patients about HSA, FSA and HRA accounts.

The Kraus Back and Neck Institute treats patients in Houston, TX and the surrounding areas, including Pearland, Tomball, Katy, Sugarland, the Woodlands, Spring, Humble, Kingwood, Sealy, Conroe, Baytown, Beaumont, Port Arthur, Galveston, and neighboring cities of Dallas, Ft. Worth, Austin and San Antonio.

Patients suffering from neck pain or lower back pain, and who seek expert advice, or a second opinion, or who have been told they may require a spine surgery, are welcome to schedule an appointment at the Kraus Back and Neck Institute:

…….  281-713-6296

…….  Or visit www.SpineHealth.com to SCHEDULE AN APPOINTMENT ONLINE

……. KBNI VIDEO on Back and Neck Pain Treatment : Don’t Live in Fear and Pain

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