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President Bush Signs Bill to Make Health Care more Affordable, Accessible
US Treasury Press Release ^ | 12/20/2006 | US Treasury

Posted on 01/09/2007 6:29:46 AM PST by oblomov

President Bush Signs Bill to Make Health Care more Affordable, Accessible

Washington, DC- President George W. Bush signed the Health Opportunity Patient Empowerment Act of 2006 today, enhancing Americans' access to tax-advantaged health care savings. The law, part of the Tax Relief and Health Care Act of 2006, provides new opportunities for health savings account (HSA) participants' to build their funds.

"Health savings accounts are improving the way Americans obtain the care they need. This bill makes HSAs more flexible and makes it easier for participants to put money aside for their personal health care," said Treasury Assistant Secretary for Tax Policy Eric Solomon.

HSA provisions of the Act include:

Allow rollovers from health FSAs and HRAs into HSAs through 2011. Employers can transfer funds from Flexible Spending Arrangements (FSAs) or Health Reimbursement Arrangements (HRAs) to an HSA for employees switching to coverage under an HSA-compatible health plan. The amounts rolled over to HSAs from FSAs or HRAs are over and above the amounts allowed as annual contributions. The maximum contribution is the balance in the FSA or HRA as of September 21, 2006, or if less, the balance as of the date of the transfer. The provision is limited to one distribution with respect to each health FSA or HRA of the individual. If an individual does not remain an eligible individual for the 12 months following the month of the contribution, the transferred amount is included in income and subject to a 10 percent additional tax.

Increase in annual HSA contribution. Previously, the maximum HSA contribution was the lesser of the deductible of the individual's HSA-eligible plan or a statutory maximum. The new rules make the limit the statutory maximum contribution, regardless of the individual's deductible. For 2007, the maximum contribution for an eligible individual with self-only coverage is $2,850, and the maximum contribution for an eligible individual with family coverage is $5,650. These limits are indexed for inflation.

Full HSA contribution regardless of month individual becomes eligible. Normally, the HSA contribution is pro rated based on the number of months that an individual during the year a person was an eligible individual. The new provisions provide an exception to this rule that will allow individuals who become covered under an HSA-eligible plan in a month other than January to make the maximum HSA contribution for the year based on their coverage in the last month of the year. This eliminates a common barrier to switching to HSA-eligible coverage. If an individual does not stay in the HSA-eligible plan 12 months following the last month of the year of the first year of eligibility, the amount which could not have been contributed except for this provision will be included in income and subject to a 10 percent additional tax.

One-time transfer from IRAs to HSAs. The new rules allow for a one-time contribution to an HSA of amounts distributed from an Individual Retirement Arrangement (IRA). The contribution must be made in a direct trustee-to-trustee transfer. The IRA transfer will not be included in income or subject to the early withdrawal additional tax. The transfer is limited to the maximum HSA contribution for the year, and the amount contributed is not allowed as a deduction. Generally, only one transfer may be made during the lifetime of an individual. If an individual electing the one-time transfer does not remain an eligible individual for the 12 months following the month of the contribution, the transferred amount is included in income and subject to a 10 percent additional tax.

Certain FSA coverage treated as disregarded coverage. Under previous law, if an FSA had a grace period following the end of the plan year allowing participants to incur additional reimbursable expenses, participants were treated as having disqualifying coverage, reducing their HSA contribution for that year, even though they had switched to HSA-eligible coverage at the first of the year. The new rules treat certain FSA coverage during a grace period as disregarded coverage, eliminating any resulting reduction in the HSA contribution for the year. First, the coverage is disregarded if the balance in the health FSA at the end of the plan year is zero. Second, the coverage is disregarded if the year-end balance is transferred directly to an HSA fom the FSA, as noted above.

Earlier indexing of cost of living adjustments. Previously, indexing was based on a 12-month period ending on August 31. The new rules change the base period to the 12-month period ending on March 31 and require that adjusted amounts for a year be published by June 1 of the preceding year. This change will provide employers and health plans with more time to design qualifying HSA-eligible plans and individuals with more time to make decisions about their health care for the next year.

Allow greater employer contributions for lower-paid employees. Previously, employer contributions under the comparability rules had to be the same amount or percentage of the deductible for all employees with the same category of coverage. Consequently, employers could not contribute higher amounts to lower-paid employees. The new rules provide an exception to the comparability rules allowing employers to contribute more to the HSAs of non-highly compensated individuals. For this purpose, the definition of "highly compensated employee" is based on same definition used for qualified retirement plans.


TOPICS: Business/Economy; Front Page News; Government; News/Current Events
KEYWORDS: healthcare; hsa
Did not see this, or any news article on this new law, posted. I switched to an HSA this year, and am very pleased with it, and with this expansion of HSA flexibility.
1 posted on 01/09/2007 6:29:49 AM PST by oblomov
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To: oblomov
I have a HSA and I love it because I don't have to fear meeting my deductible if I have a major medical emergency and it can be used for co-pays and medicines.
2 posted on 01/09/2007 6:34:19 AM PST by tobyhill (The War on Terrorism is not for the weak.)
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To: oblomov

Demand side solutions will do nothing to increase availability of healthcare. We need a supply side solution.


3 posted on 01/09/2007 6:40:03 AM PST by Brilliant
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To: oblomov

Hooray President Bush!


4 posted on 01/09/2007 6:41:52 AM PST by PGalt
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To: oblomov

Now we need a tax deduction for those who put a lot of $$ into a catastropic health insurance and/or nursing home policy so the government and health care system doesn't take a lifetime of savings in the blink of an eye .


5 posted on 01/09/2007 6:48:46 AM PST by Renegade
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To: Renegade

"Now we need a tax deduction for those who put a lot of $$ into a catastropic health insurance and/or nursing home policy so the government and health care system doesn't take a lifetime of savings in the blink of an eye."

Also wouldn't hurt to get rid of the 12% mandatory contribution to Social Security and instead let us invest that into our own retirement funds.

Nahhhhh.....


6 posted on 01/09/2007 6:52:16 AM PST by EQAndyBuzz ("Give me four years to teach the children and the seed I have sown will never be uprooted." Lenin)
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To: oblomov

If this is the type of insurance I think it is and that is if you do not use the put aside money in a year, you lose it. Is this correct?


7 posted on 01/09/2007 6:53:03 AM PST by AIC
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To: EQAndyBuzz

I think I have the solution to medical care.

At the age of 21, you MUST buy an insurance policy that gets paid annually till age 65. You will either pay for it with either pre-tax dollars or the government will pay for it.

At age 65, the cash from the policy becomes yours to keep for medical expenses till death. If you die before 65, the face value of the policy is paid to your beneficiary, tax free.

If the government paid for your policy for let's say 5 years, they will get paid back from the policy. If you die before 65, the government gets back what it paid in, plus interest and the beneficiary gets the face value of the policy, tax free.

Of course the other option is the government buys the policy in your name, you get to use the cash for medical and the government gets the face value at your death. But then you would see the conspiracy theorists out and the NY Times Headline:

"BUSH KILLS CHILDREN TO FUND SOCIAL SECURITY"


8 posted on 01/09/2007 7:01:25 AM PST by EQAndyBuzz ("Give me four years to teach the children and the seed I have sown will never be uprooted." Lenin)
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To: AIC

Nope, you're thinking about flexible medical spending accounts. HSA's are yours forever if you don't spend the money. You can also take the funds to the next employer.
Think 401K for healthcare expenses. Money is not taxed going in, can grow tax free, and is not taxed coming out if spent on qualifying healthcare expenses. They can also roll into retirement to pay your portion of Medicare and Long-term care.


9 posted on 01/09/2007 7:25:02 AM PST by WilliamWallace1999
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To: WilliamWallace1999

I've come up with an odd idea for health care and I'd be interested to know people's thoughts. It's just a rough sketch.
Here are the main elements.

1. People can purchase health insurance a year in advance, if they pay the yearly bill in one sum instead of monthly payments.

2. Those who do this will gain a 10% subsidy from the government, and a 10% subsidy (or price reduction) from the insurer.

3. Individuals can purchase multiple plans, which are then transferrable to any person within their "tier" (for instance, 20-25 single white males).

4. If a person chooses to take part in this system, they must retain one insurance plan for themselves. Thus, if they purchase 5 plans, they can only sell 4 for profits (the sale of these plans will likely take place over various online networks).

Expected Effects: Most of those making significant amounts of money, who are not yet insured, will purchase at least one plan. Many of them will purchase multiple plans, then, because of the 20% discount they received, re-sell the plans for profit, yet cheaper then the price the insurer was offering. This will bring additional people into the system; those wishing to make a profit, and those who are now able to afford health care at it's cheaper price. This will, in turn, likely cause the market price to dip, because adverse selection will have been decreased. Insurers will like the plan for a few reasons. One, they'll have guaranteed sales of many plans, even though the individuals who purchased them, in the hopes of selling them off, might not be able to find a market for them. Two, they'll have significant numbers of plans paid for in lump sums. This is helpful for precisely the same reasons banks are able to function: having money that you'd otherwise have to wait for, is enormously helpful (for expansion purposes for instance). Three, more customers enter the market, many of them quite healthy.


There are a couple of problems I'm sure need addressing. For instance, there'd have to be some sort of penalty to dumping one's current plan, to purchase the new, cheaper plans. You could, for instance, purchase new plans, but you'd have to retain your current plan (or face a hefty fee). Otherwise, it'd simply become a way for the rich, who are already insured, to find cheaper plans. There are probably some other difficulties I haven't forseen.

But I think it allows the health care system to be much more of an entreprenurial enterprise.


10 posted on 01/09/2007 7:37:02 AM PST by Obilisk18 (E)
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To: EQAndyBuzz

I did the calulator for private investment vs soc. security payments and if I was allowed to PERSONALLY invest, I would receive $5,200 MORE per month at age 62 .


11 posted on 01/09/2007 9:18:06 AM PST by Renegade
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To: Brilliant

"Demand side solutions will do nothing to increase availability of healthcare. We need a supply side solution."

I'd like to think this impacts both sides if it continues to gain popularity. You'd be amazed at the increased efficiencies when it's your own money you are spending. I sit here with a chest cold, at work and unlikely to waste $150 to see the doctor. It does work both from the premium side as well as the efficiency side. Give me an example of what you mean by a supply side solutin that doesn't ential larger government or regulation.


12 posted on 01/09/2007 10:31:16 AM PST by Bogeygolfer
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To: Bogeygolfer
"Give me an example of what you mean by a supply side solutin that doesn't ential larger government or regulation."

Eliminate the laws that require me to visit a physician in order to purchase medication.

I have asthma. Albuterol, one of the mildest medications available to treat asthma, is only available with a prescription. Epinephrine and all it's nasty side effects is available over the counter, however.

I'm educated and know how to read the Physicians' Desk Reference. I do not want or need someone else's permission to self-medicate. If someone less knowledgeable wishes to obtain a physician's opinion first, they are more than welcome.

This will also free-up time for doctors to treat the serioulsy ill.

13 posted on 01/09/2007 10:58:41 AM PST by 10mm
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To: Bogeygolfer

It is true that if your supply is fixed (as it is), then cutting demand will cause the price to decline. So a demand side solution that reduces demand might cause a price decline. But that's not what they've got planned. They are planning to find new ways to finance demand, and that means more demand. On occasion, they try to suppress demand, but while that might reduce the price, it does not increase the overall welfare. Telling people they cannot get healthcare that they want is not a positive result. The purpose of the economy is to satisfy wants, not to decide what the wants should be. In a free society, people make their own decisions as to how much healthcare they will demand.

My supply side solutions are basically to reduce the regulation that has restricted the number of doctors and other healthcare professionals. Also, get the government out of the business of telling people that they can't invest in the healthcare industry. Our healthcare regulations are designed to stifle production. It doesn't take an economist to see that reducing supply is a sure fire recipe to drive up costs.

The current regulatory scheme is based on the fundamentally false theory that if you restrict how much producers pay for the inputs they use to produce healthcare, then you can pass the savings on to the consumer. But regulating how much people can spend on producing healthcare does nothing to reduce price. The price of a commodity only reflects costs of production in a purely competitive market, and the healthcare industry is far from that.


14 posted on 01/09/2007 10:59:38 AM PST by Brilliant
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To: 10mm; Brilliant
Good points from both of you. For my part I'm not sure how much actual savings would be generated from allowing self medicating since we're talking about the inexpensive visits and I'm not sure that we don't do this to some extent already. My families' docs don't require us to see them to write the scrip for maintenance drugs. That's a common practice even today. That said I'll take all savings.
As for reducing regs I'd agree 100%, especially from the medical profession. We could churn out doctors at twice the rate we do today without sacrificing quality IMHO.
I think you miss the effectiveness of the supply side solution presented by the high deductible model as illustrated by the health savings plans. This has nothing to do with dictating when, where, type, or how often someone seeks to utilize medical care. It is all about taking advantage of one of our greatest skills...we are some of the best consumers on the planet. The combination of our consumer efficiencies along with it being our money does wonders. First it eliminates waste, perhaps the largest single expense in the system. Additional we move the efficiency frontier as doctors are forced to compete on price as well as service. It can work. In the end I'd like to see us make some moves on all sides. More doctors, more competition, more self reliance by way of high deductibles, etc.
15 posted on 01/09/2007 11:13:11 AM PST by Bogeygolfer
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To: Bogeygolfer

think you miss the effectiveness of the supply side solution ...........s/b demand side.....


16 posted on 01/09/2007 11:14:36 AM PST by Bogeygolfer
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To: PGalt

Why is it he has suddenly started acting more conservative now that we have a Dem Congress?


17 posted on 01/09/2007 11:15:47 AM PST by RockinRight (To compare Congress to drunken sailors is an insult to drunken sailors. - Ronald W. Reagan)
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To: oblomov

A very good move. Who says lame-duck status is the pits?


18 posted on 01/09/2007 11:52:19 AM PST by blitzgig
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To: Bogeygolfer

I don't think that high deductibles are really a supply side solution, though. They might be a successful demand side solution, but they really don't do anything to increase supply.

I am not opposed to the idea of a demand side solution that shifts a greater responsibility to the consumer to pay the cost of his own healthcare. My point is that it's not going to happen. All of the demand side solutions that are even remotely on the table are plans to increase demand, or perhaps to shift demand from one group to another. There isn't really anyone who's pressing for significant increases in deductibles as a solution. When deductibles are increased, they are typically increased because there is no choice due to cost increases that have already filtered into the system. In other words, they are reactive--not reformatory, and I don't expect that to change.

But the interesting thing is that in a purely competitive model, if you can expand the level of input without driving up the cost of the inputs, then in the long run, the level of demand is irrelevant anyway. If demand increases, then the price goes up temporarily, suppliers enter the industry, and the price then comes back down. In the long run, there is no increase in price associated with an increase in demand, so it's irrelevant whether you demand a lot or a little, and we don't get into this debate over whether we're demanding too much, etc.

The problem, though, is that if you restrict supply (as we've done) then the process doesn't work that way. Price goes up, but no one enters the market, and it stays up. That's the problem we've got.

I think it would be better to shift the responsiblity for payment to the consumer, so that the consumer could himself deal with the question of whether this high level of service is really worthwhile. But at the same time, I don't think that we'd be seeing inflation in the healthcare industry if it weren't for the fact that the supply is restricted. People aren't demanding more this year than they did last year because the deductibles are too low. If anything, the deductibles are higher this year than they were last.


19 posted on 01/09/2007 12:10:04 PM PST by Brilliant
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To: neverdem; Howlin; Congressman Billybob; oblomov
How come every time health care becomes "more affordable" my expenses go up, and every time it becomes "more accessible" my paperwork goes up?
20 posted on 01/09/2007 12:12:09 PM PST by Robert A. Cook, PE (I can only donate monthly, but Hillary's ABBCNNBCBS continue to lie every day!)
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To: Brilliant
"My point is that it's not going to happen. All of the demand side solutions that are even remotely on the table are plans to increase demand, or perhaps to shift demand from one group to another. There isn't really anyone who's pressing for significant increases in deductibles as a solution."

I clarified I meant demand side and not supply. That said the ENTIRE purpose to the health savings account model is a reduction in utilization/demand and increased efficiency when utilized. This is not driven by increasing the deductible to save premium. It is a entirely separate buying decision.
Example: family premium on a PPO at $1100 per month with the possibility of spending another $8000 in out of pocket costs for the year. Family premium on the high ded. $650 with a deductible of $4800 but a max out of pocket of $5500 which is less than the out of pocket on the expensive PPO. You save $450 per month in premium which you dump in the savings account pre tax costing you $300 per month. Now you're sitting there having spent net $950 per month vs the original $1100 for a small savings. Now however you have $5400 in a savings acct and a max out of pocket of $5500....your bills are all paid with not even a single office visit charge to boot. Easy math. The trick then becomes going to the doctor means taking money out of your retirement savings acct to pay the bill or paying for it with after tax dollars. You wonder why I'm sitting here with a chest cold and not going to the doctor. The $150 I'd spend will be $1000 by retirement and I'm not that sick. This is just an example but the concept is purely to limit demand and improve efficiencies....this is not your dad's high deductible. Thank you GWB.
21 posted on 01/09/2007 12:44:33 PM PST by Bogeygolfer
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To: Bogeygolfer

I don't know what's going on in other states but here in Fla., the governor finally put two and two together. They approved opening two more medical schools here in Fla. The first one opens in 2009. It's going to be a long time before the dividends arrive, obviously, and by then the problem will be much worse than it is now. But at least someone has figured out what the problem is, and has actually done something to try to address it.

Of course, even if they do produce more doctors in Fla., there is nothing to prevent them from moving out of state. So I am hoping that other states will follow suit and do the same instead of raiding our state to satisfy their doctor shortages.

The worse this problem gets, the more likely it is that Hillarycare or something like it is eventually going to be forced down our throats.


22 posted on 01/09/2007 1:01:46 PM PST by Brilliant
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To: Brilliant
Here's an area of immigration I'll support. Qualified professionals who help in measurable ways. We already steal doctors from Canada at a phenomenal rate. While Canadians are waiting in line for basic services their doctors are over here making the big money. Soon we'll be able to steal doctors from Florida as well. Oh that's right, we Californians are about to tax our doctors an additional 2% on top of everything else. We need Walmart or Starbucks to get into medical schools...we'd have one on every corner. I'll take a double tall latte with that chest xray please.
23 posted on 01/09/2007 1:12:28 PM PST by Bogeygolfer
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To: Obilisk18
Interesting ideas! But the chance of passage of anything this radical by a society that won't even look at Social Security Investment Accounts (when Chile has them) is slim to none!

Net - Americans aren't smart enough for smart ideas!

24 posted on 01/09/2007 4:01:24 PM PST by HardStarboard (Give Pelosi and Reid Enough Rope to Hang Themselves.)
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To: Bogeygolfer

Only 25 percent of California Doctors were actually educated in California. Fifty percent are from other states, and the other twenty five percent are graduates of foreign medical schools. Just a little bit of trivia....


25 posted on 01/09/2007 11:56:18 PM PST by ArmstedFragg
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To: RockinRight; Southack

In addition to tax cuts which I expected, President Bush has DONE things I NEVER thought I would see in my lifetime.

1. Militarily confront radical Islam.
2. Touch the "third rail" of politics...social security.
3. Promote HSA's.
4. Put immigration reform on the table.

Please click on FReeper Southack's name for a much more expansive list of this President's accomplishments.

Hooray President Bush!


26 posted on 01/10/2007 6:00:27 AM PST by PGalt
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To: PGalt

I give the man credit!

Just wish he'd be a little more hardline on immigration reform. I don't see the wall getting built now, not so much because of him, but because of Congress...


27 posted on 01/10/2007 6:15:50 AM PST by RockinRight (To compare Congress to drunken sailors is an insult to drunken sailors. - Ronald W. Reagan)
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To: RockinRight

I certainly hear and agree with you!


28 posted on 01/10/2007 6:16:59 AM PST by PGalt
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