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Medical Savings Accounts: "Three Cheers for the IRS"
Wall St. Journal ^ | July 2, 2002 | Editorial

Posted on 07/02/2002 2:33:38 AM PDT by The Raven

Edited on 04/22/2004 11:46:44 PM PDT by Jim Robinson. [history]

We can already feel Ted Kennedy's blood pressure rising. He and New York Senator Hillary Clinton are slowly but steadily trying to build support to nationalize American health care. So when Congress passed Medical Savings Accounts back in 1996, he succeeded in restricting their terms and limiting the total number of policies allowed to 750,000. Suffer your HMOs, he said.


(Excerpt) Read more at online.wsj.com ...


TOPICS: Culture/Society; Editorial; Government
KEYWORDS: msa; socializedmedicine; taxreform
Wow!!! They kept this quiet, didn't they??
1 posted on 07/02/2002 2:33:38 AM PDT by The Raven
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To: Molly Pitcher
ping
2 posted on 07/02/2002 2:33:59 AM PDT by The Raven
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To: The Raven
They sure did. The beauty of this plan is the rollover. Without it the old plans were great if you wanted to schedule something during the year, but worthless for catastrophic illness. This could go a long way toward self-insurance for the average Joe. Excellent. Putting away $500 or so per month can realize a huge medical savings account in only a few years. And putting away $500 per month isn't as hard as it sounds, since about two thirds of it would be covered by reduced taxes. This is way cool. If the Bushmeister was behind this, he deserves huge kudos.
3 posted on 07/02/2002 2:50:28 AM PDT by DoughtyOne
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To: DoughtyOne
This sort of plan can make a huge diference in the costs of care and to some extent the way we get our care. It is a major step forward, but it all seems that it came about too easily. After fighting about MSAs for years can this just suddenly be okay?

Is it Begala's 'stroke of the pen, law of the land' in action?

4 posted on 07/02/2002 3:00:01 AM PDT by RJCogburn
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To: The Raven
FROM THE OFFICE OF PUBLIC AFFAIRS

June 26, 2002
PO-3204


Treasury and IRS Issue Guidance on Health Reimbursement


Today the Treasury Department and the Internal Revenue Service issued guidance that clarifies the tax treatment of health reimbursement arrangements (HRAs) in which the employee’s health benefit arrangement provides for employee-controlled reimbursement of medical costs.


"With this new guidance, we clear the way for employers to adopt health plans with patient-directed features so that employees have more choice and greater control over their health care coverage," stated Treasury Secretary Paul O'Neill.

The guidance, consisting of a notice and a revenue ruling, provides that medical benefits paid by Health Reimbursement Arrangements (HRAs) that meet certain requirements are not taxable. The guidance also clarifies that HRAs generally are not subject to the complex design requirements for health Flexible Spending Arrangements funded through salary reduction under a cafeteria plan.

The primary requirements for an HRA are that (1) the plan must be funded solely by the employer and cannot be funded by salary reduction, and (2) the plan may only provide benefits for substantiated medical expenses. If the plan provides for payments or other benefits irrespective of medical expenses, all amounts paid by the plan become taxable, including prior medical reimbursements.

Under this guidance HRAs can:

Allow the carryover of unused amounts to later years (i.e., the "use-it-or-lose-it rule" does not apply) and
Reimburse employees for the purchase of health insurance.
In addition, the guidance provides that:

HRAs may allow former employees, including retirees, continued access to unused reimbursements;
HRAs may provide that an FSA funded by salary reduction reimburses expenses before the HRA; and
HRAs are group health plans subject to the COBRA continuation requirements.
The text of the notice and revenue ruling are attached.

Part 1-Section 105.–Amounts Received under Accident and Health Plans




5 posted on 07/02/2002 3:00:08 AM PDT by kcvl
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To: The Raven
Participants in such plans will have plenty of reason to consume health care wisely, since they get to keep any unspent funds.

If they would do something like this to Medicare we would see the cost of the system drop.

Not to be cynical, but I'm dealing with four elderly folks (parents and inlaws) and can't believe the number of dr. visits that are taking place.

Not for real health issues, just check ups.

But when you've got specialists (cardiologist, ENT, dermatologist, opthamologist, allergist, gynecologist, urologist, pulmonary dr., regular MD, and in one case a psychiatrist) and check ups on a regular basis, there seems to be a dr. visit per week, and sometimes more for each of these elderly folks.

No acute healh issues are being dealt with at these appointments (I know because I've been in the room), but because the doctor says they need a check up (and granted he's probably just doing it because of the liability if he didn't and something came up), they insist on keeping the appointments. If there were some financial incentive not to, maybe things would change.

6 posted on 07/02/2002 3:02:10 AM PDT by dawn53
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To: RJCogburn
Well, you've got me there. Sounds like it doesn't it. And on principle I don't like the old EO or PDDs.
7 posted on 07/02/2002 3:03:54 AM PDT by DoughtyOne
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To: dawn53
When you get someone 65 or up, regular checkups are probably a good idea. A lot of things can go south pretty quickly the older people get.
8 posted on 07/02/2002 3:05:30 AM PDT by DoughtyOne
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To: DoughtyOne
...putting away $500 per month isn't as hard as it sounds...

Unless that figure represents two weeks pay.

9 posted on 07/02/2002 3:07:03 AM PDT by snopercod
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To: dawn53; DoughtyOne
When you go to that many doctors how can you be sure each one knows what the other one is doing? That could cause more health problems than seeing one doctor who handles it all unless they have a specific problem that needs addressing. But, that should be taken care of by the "regular" doctor once the initial problem is found.

Do each of those doctors know what the other is prescribing? If not, that could cause a HUGE problem.

10 posted on 07/02/2002 3:10:36 AM PDT by kcvl
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To: The Raven
Thanks so much! This is an issue near and dear to my heart.

A few years ago, discussing MSAs with a liberal friend, her reply was: "But people wouldn't know how to manage them."

Typical answer...for a lib....

11 posted on 07/02/2002 3:34:45 AM PDT by Molly Pitcher
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To: snopercod
That's a good point.  And this system will have holes in it like the others do.  But it is a tremendous step in the right direction.  If it doesn't help the guy that makes $500 every two weeks, it will still help over a hundred million middle income workers.  This will take a big load off the system.  Those folks would need a catastrophic policy to cover the gaps, but regular run of the mill checkups up to minor surgeries could be handled without insurance.  Now there's an idea I like.

Take the middle man out, provide a descent profit to the healthcare providers and you'll see a healthier healthcare industry right away.  This is way overdue.

Let's not forget that this healthcare fund could be used for retirement when the time came if it was untapped.  At least part of it could.  And policies with a $25k deductable would be cheap and prevent the whole nestegg from being eaten up by one illness.  This could remove the insurance industry from a lot of healthcare.  Those billions would be freed up to be paid directly to healthcare providers or kept in reserve at the employees disposal.  Not bad.

Even if a person did make only $500 per every two weeks, if they spent $25 a paycheck, that would be $50 a month to save $150 per month.  That's not too bad.  They could develop a pretty descent little nest egg over the years.  It wouldn't be a whole lot, but it would still be more than the current system provides.  A supplimental policy for another $25 per pay check could provide some pretty decent coverage.  That's certainly a lot better than today.

12 posted on 07/02/2002 3:41:32 AM PDT by DoughtyOne
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To: kcvl
That's true. It's the patient's responsibility to make sure each of his physicians knows exactly what the other's have put him on.
13 posted on 07/02/2002 3:42:56 AM PDT by DoughtyOne
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To: The Raven
While I am in full support of MSA's, I am not sure how well they will work at first. Trying calling around 10 and saying "How much do you charge for X,Y, and Z". The nurses will say "What?" don't you have insurance? They can't quote you prices. There is no market.
14 posted on 07/02/2002 3:53:08 AM PDT by Rodney King
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To: Rodney King
They have price lists. There will be new advertising pushes for health provider loyalty, count on it. But the consumer will be more in control now, rather than having to follow his health plan around to this or that participating doctor to avoid facing uncovered megabills.
15 posted on 07/02/2002 4:02:40 AM PDT by HiTech RedNeck
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To: DoughtyOne
OK there has to be an insurance salesman here in cyberspace(you can't get away from them if you wanted to).

My employee's plan rolls over August 15. How do I sign-up??? How does it get set up????

16 posted on 07/02/2002 4:13:23 AM PDT by Quick Shot
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To: kcvl
Oh yeah, they all know about each other and each one hands out a different med, but supposedly all the meds are coordinated.

I have my doubts, medications to treat side effects from other medications seems bizarre.

For instance, after one TIA at the advanced age of 85, my mother in law was prescribed some hugely expensive medicine called Plavix (I think) which is supposed to prevent strokes. Now I've read studies that say it's not much more effective than aspirin, but try to convince her of that, after all the doctor told her to take it, and all this with no prescription coverage on the insurance, so it comes out of their pocket at $145/month for one med.

Same with prostate meds for minor aging prostate problems, and I've read that saw palmetto can do just as good a job.

In one way, it seems the docs and the pharmaceutical companies are way too cooperative.

17 posted on 07/02/2002 4:34:59 AM PDT by dawn53
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To: dawn53
Same with prostate meds for minor aging prostate problems, and I've read that saw palmetto can do just as good a job.

That may be true, but what is really needed is an entire lifestyle and diet change. I see tons of people washing down expensive drugs with coffee or coke. Then there are the unfortunate souls who use their doctor visits and pile of daily pills to alleviate boredom. Many have no relatives or friends.

The health care system is only too glad to keep "treating" these cash cows.

18 posted on 07/02/2002 4:42:42 AM PDT by palmer
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To: palmer
The health care system is only too glad to keep "treating" these cash cows

I have my own theories, and like I said, I'm dealing with four elderly "test cases" for my theories ages 75,76,85, and 92 whom I speak with on a daily basis and see twice a week, at least.

One theory is that when a patient complains about "so and so" or "such and such", or just not feeling normal, the doctor feels obliged to hand out a med, or perform a test. They don't have the "guts" to look the elderly in the eye and say, it's because you're getting older, and "No" there is no cure for old age. Of course, one is not going to feel at 80 like they felt at 60, why should they expect to, but I've yet to run into a doctor that will tell them so. And hearing it from your kids doesn't seem to register.

My other theory is that the pharmaceuticals and medical industry have managed some slick advertising to make people believe that there is no such thing as "aging" in our modern world. You can stay young, do all you want to do, etc. until you are well advanced in years. So you look to the doctors and the meds to create this illusion and shield you from the fact that you are getting older.

It's a way of trying to "control" your grasp on life itself, which is slowly ebbing away.

19 posted on 07/02/2002 4:53:33 AM PDT by dawn53
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To: The Raven
I have a MSA account now. Family plans have a $3300 per year deductible and are limited to $200 per month contribution. What you don't spend you keep tax fre. I would love to be able to contribute more, I have been told that this limitation was a Kennedy ammendment.
20 posted on 07/02/2002 5:02:48 AM PDT by junebug58
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To: Quick Shot
That's a question I'll be asking ASAP. I'll want to take advantage of this.
21 posted on 07/02/2002 5:19:54 AM PDT by DoughtyOne
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To: dawn53
it's because you're getting older, and "No" there is no cure for old age.

At that point the patient would probably die from the shock of being told the truth!

The pharm/med industry pushes their fountains of youth as you say but I know somewhat younger people just as dependent on medications that they don't need. They seem to be conditioned to believe that medicine will heal their minds and bodies without any effort on their part when the fact is that very few medicines heal, most are crude bludgeons to suppress or enhance some bodily function without regard to consequences, and ignoring the ability of the body to regulate itself

22 posted on 07/02/2002 5:28:13 AM PDT by palmer
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To: HiTech RedNeck
Here's an interesting question about the MSA.

Will the consumer be able to get the same deals as the HMO's and PPO's?

In other words, if I'm on a PPO and I go into the hospital, my bill may be $9,000, but the hospital accepts a $2,000 payment from the PPO because it is their contracted price.

Will I, as a consumer, be charged the $9,000 and be responsible for that entire amount? If so, it seems like the hospitals will be "taking it out" on those that choose to use the MSA's.

I do know one individual who chooses not to carry health insurance, and when he gets a bill from a hospital, he walks in, carrying cash, and negotiates a payment. He usually gets at least a 50% reduction on his bill, but I'm sure not many people are aware that the hospitals are willing to work this way, and I don't think the doctors will be willing to negotiate on their fees.

23 posted on 07/02/2002 5:31:42 AM PDT by dawn53
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To: dawn53
Medicare savings accouints were set up in the tax code and I tried to implement these with some people. One of the quirks with msa was the insurance requirement. Most policies where written with a 1,000 or 3,000 deductible but the msa plan required a policity with 1,500 to 2,500 deductible so no company had an existing policy that met the requirement. They had to write new policies......good points and bad for that i imangine.

Anyway, two years ago, no company wrote a policy that met requirements for medicare......I think this was a $5,000 deductible. If I remember correctly, in the medicare savings account, you opted out of the normal coverage and medicare paid the policy plus deposited certain amounts in the medicare savings account for the recipient to pay as they saw fit.

Anyone else have experience with medicare savings accounts?
24 posted on 07/02/2002 5:36:49 AM PDT by PeterPrinciple
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To: dawn53
docs and the pharmaceutical companies are way too cooperative

Wasn't there an article awhile back about doctors charging salesman for the cost of the office call.......times are a changing, maybe we will get some entreprenurial doctors out there who don't want to do business with the govt. To bad Home Depot backed down.
25 posted on 07/02/2002 5:43:56 AM PDT by PeterPrinciple
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To: Beelzebubba
ping
26 posted on 07/02/2002 6:48:24 AM PDT by Henrietta
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To: Rodney King
While I am in full support of MSA's, I am not sure how well they will work at first.

I've had a medical savings account for years, and i like it because it saves me a lot of money. I pay out of pocket for medical care, but usually go to a nurse practiciioner; it's less than a dr.

For dental, vision, and chiropractic care I use a discount plan called Ameriplan that I really like. You can go here for more info: www.SaveOnBenefits.cjb.net. I bought my plan here.

27 posted on 07/02/2002 7:09:06 AM PDT by TryMe
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To: dawn53
and I don't think the doctors will be willing to negotiate on their fees.

They do negotiate. I've had an MSA for years and this is what I do. When I go to a dr. that I have not visited before, I call to make an appoiintment. I tell them I will pay cash at the time of service and that I will pay at their highest reimbursement rate. They always agree, because they get what an ins co would pay them without the ins co paperwork.

Frugal FReepers, you must visit these sites: SimpleCare: www.Simplecare.com for discounts on MD visits, and www.SaveOnBenefits.cjb.net for discounts on dentist, chiropractor, and eye dr. visits (and also prescriptions). These 2 plans plus an MSA with high deductible medical insurance (required with an MSA) and you are set!

28 posted on 07/02/2002 7:19:59 AM PDT by TryMe
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To: kcvl
Do you have a revenue ruling number for this?
29 posted on 07/02/2002 7:23:03 AM PDT by Henrietta
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To: Henrietta
It's at the very bottom of the page

The text of the notice and revenue ruling are attached.

Part 1-Section 105.–Amounts Received under Accident and Health Plans

30 posted on 07/02/2002 7:51:23 AM PDT by kcvl
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To: The Raven
The HMO model cannot be fixed. the only way forward is to go back to indemnity insurance for catastrophic cases and MSA/HRAs for everyday expenses. Watch how quick the medical costs "problem" shapes up when this happens.
31 posted on 07/02/2002 7:55:07 AM PDT by eno_
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To: *Taxreform; *Socialized Medicine
Bump
32 posted on 07/02/2002 8:53:15 AM PDT by Free the USA
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To: The Raven
The little-noticed ruling is a great leap forward for patient-directed health care. Over time it could signal the end of double-digit increases in employer health-care costs, and thus the end of the era of stuffing employees into unpopular health-maintenance organizations.

Shout it from the roof-tops!

33 posted on 07/02/2002 9:05:27 AM PDT by Salvation
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To: The Raven; *Taxreform
Ho, hum.

Just another meaningless ploy by the IRS and it's supporters (including Duh-bya) to try and make the gullible forget for a while, that the IRS is a much larger problem than all of the health care problems combined.

Sure it does have a positive effect in the health care arena.  But, the IRS doesn't give away a benefit, without knowing that they will receive a much greater benefit on the back side.  As a result of the terrorist attacks and the USA Patriot Act, the IRS is now waging a virtual war on wealth and they know that many people in the US are crying foul, as a result.  This is nothing more than a token move aimed at exactly those people - conservatives - who have been opposed to the recent IRS intrusions.  It gives conservatives something that they dearly desire, but will have little effect on taxes collected, while diverting the unwanted attention from their recent treachery, that has been coming from those same conservatives.  Furthermore, since this ruling came from the IRS and not from legislation, the IRS can easily revoke it at a convenient later time.

Cheer this ruling.  But don't act like it makes the IRS any less treacherous.  In fact, it just shows how devious they really are.

 

34 posted on 07/02/2002 12:44:25 PM PDT by Action-America
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To: DoughtyOne
This sounds like a great plan to me. Most people in the construction industry have nothing at all, other than workman's comp.

I wonder if it covers dentistry and eye exams/glasses? IOW, how do they define "medical"?

35 posted on 07/02/2002 3:10:59 PM PDT by snopercod
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To: Molly Pitcher
>>Thanks so much! This is an issue near and dear to my heart.

Yep...and it's voluntary

36 posted on 07/02/2002 4:16:55 PM PDT by The Raven
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To: snopercod
See post #28
37 posted on 07/03/2002 7:41:10 AM PDT by TryMe
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To: kcvl
When I click on the links at the bottom, it says "error, file not found." Too bad they don't mention the number in the press release.
38 posted on 07/03/2002 7:44:03 AM PDT by Henrietta
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To: TryMe
What is the level/quality of care from a "nurse practitioner?"
39 posted on 07/03/2002 10:04:13 AM PDT by donozark
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Comment #40 Removed by Moderator

To: TryMe
My wife tried this with her endocrinologist, who charged $180 for a 10 minute visit and drawing blood. He told her to stick it.

That's because he's the only one within 200 miles of where we live, I guess.

OTOH, my chiropracter gave me a break ;-) because I paid in cash.

41 posted on 07/03/2002 3:05:26 PM PDT by snopercod
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To: snopercod
...A new health care system is a little like vouchers.....we won't see the effect until time has passed with the new system. Won't be much time, however.
42 posted on 07/04/2002 12:41:28 AM PDT by The Raven
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