Make your health plan a money maker

Has the federal health insurance hunting season got you bewitched, bothered and bewildered? Senior Correspondent Mike Causey says it'd be worse if you didn't wo...

Are you bewildered by the number of health plans and options you’re supposed to check out during the current open enrollment season? If so, it could be a lot worse. You could have fewer choices (like the one and only offered by your employer) and you wouldn’t have the option of picking a health plan that would fund a health savings account for you, which, over the years, could be worth relatively big bucks.

Federal and postal workers and retirees aren’t the only people in the middle of a health insurance hunting season. Millions of private-sector employees are also picking their 2017 plan, but the contrasts are very different.

Most feds have 20 to 30 plans and options to choose from. Including plans that offer H.S.A.s (Health Savings Accounts) that permit them to grow a tax-free nest egg with all the contributions coming from their health plan. They can use the money to pay health-related bills or premiums. Or let it pile up and grow. Health insurance expert Walton Francis says that some long-time H.S.A holders now have $20,000 to $30,000 in their accounts. They are open to all active duty civil servants and half a dozen plans offer the accounts.

By contrast, less than 30 percent of private sector employers offer employees health plans with the H.S.A. option. And none offer the variety or number of health plans available to active and retired feds or their survivors.

Now comes a new study, from the Employee Benefit Research Institute, about H.S.As in the American insurance industry. EBRI is a private, nonpartisan nonprofit based in D.C. focuses on health, retirement, savings and economic security issues. It has a just-the-facts-ma’am (as in Dragnet) reputation for accuracy.

According to a new study by the Institute, the average H.S.A. balance in 2015 for Americans who have them was $1,844. That’s up from $1,332 at the start of 2015. Account balances vary according to the age of the policyholder. Last year, the average was $759 for policy-holders 25 and under and $3,623 for those 65 and older. The Institute said that 4 out of 5 H.S.As have been opened in the last 5 years.

Overall about 3 percent of the H.S.As had invested assets beyond cash. The EBRI
said those without investments had a balance of $10,000 or more in 2015 compared to those opened in 2005 had an average balance of $27,903 in 2015.

While that’s a lot of numbers, the bottom line is Health Savings Accounts can be a money-maker. But you have to be in a health plan that offers them. And you have to enroll. They do the rest. They give you (in effect) tax-free money you can use for medical expenses, if necessary, or not. If you are an ‘or not’ type person whose typical medical year is nothing more than a physical, you can pile up an account over the years that is yours, tax-free, when you retire.

Walton Francis, editor of Checkbook Guide to Health Plans for Federal Employees and Annuitants, talked about H.S.A.s on last week’s Your Turn radio show. He says some long-time H.S.A holders have accounts worth $20,000 to $30,000. He talked about the pros (and cons) of the health saving accounts. Lots of good information and you can listen anytime, or pass it along to a friend. To listen, at your convenience, click here.

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