Health Insurancce For Self-employed Mainers

by Susan Whitaker

Health Savings Accounts: Are They Right For You?
Health Savings Accounts, or HSAs, are designed to work only with an HDHP (High Deductible Insurance Plan). An HSA is an account you can open at a credit union or bank so you can sock away tax-free cash for medical expenses.

Some HSA holders, like Joy Foster of Ellsworth, are provided with a debit card to pay for medical expenses.

The state of Maine is one of only six states that assess state income tax on HSA money, but it is FREE FROM FEDERAL INCOME TAX IN THREE WAYS:
1. Tax breaks when the money goes into your account, even if you don’t itemize.
2. Any earnings & interest gained on the money is tax-free.
3. You can withdraw money tax free to pay for qualified medical expenses.

Qualified Medical Expenses
The money can’t be used to pay your current health insurance premiums unless you’re in a COBRA plan between jobs. But when you reach 65 you may use your HSA money to pay Medicare premiums.

HSA money can be used to pay any medical bills resulting from deductibles and copayments, vision care, dental care, and non-prescription drugs. Newsflash! You can pay medical expenses for family members even if they are not covered under your HDHP. If you are uncertain about whether or not an expense meets qualifying requirements, call your plan administrator who is assigned when you open your account.

The Rules:
• You must not have any other health insurance, including Medicare or Medicaid when you open your account. If you get non-HDHP health insurance, Medicare or Mainecare down the road, you keep your HSA money; you just can’t put any more in.

• There are no “use it or lose it” rules like some old medical expense accounts.

• Your deductible must be at least $1,050 for a single plan and $2,100 for a family.

• You may make annual contributions up to your deductible amount but no more than $2,700 for a single plan and $5,450 for family coverage.

• When you reach 65 and enroll in Medicare, you still pay no tax or penalties when you use HSA funds to pay qualified medical expenses.

• If you withdraw the money for non-qualified expenses, the money becomes taxable and you pay a 10% penalty, EXCEPT when you reach 65, enroll in Medicare or become disabled. At that time you would still pay taxes but the penalty is waived.

• An HSA account goes to only your spouse upon your death. If you have no spouse it is dissolved and becomes part of your regular estate.

The only individual HDHP available in Maine is the Anthem Health Choice Plan that has deductibles ranging from $250 to $15000.

Monthly Costs (PREMIUMS)
For the $5000 individual/ $10000 Family Deductible:
Age 40
One Person $188.86
Two People $377.71
One w/ Family $311.62
Two with Family $500.47
Age 50
One Person $236.07
Two People $472.14
One w/ Family $389.52
Two with Family $625.59

In this HDHP, any family members can meet the deductible. Anthem’s HDHP pretty much covers everything after the deductible is met. No copayments. There is a $3 million lifetime maximum. Chiropractic & OMT ad-justments are limited to 25 manipulations per year. Call Anthem at 1-800-585-0099 or your agent for a personal quote.

Aetna also offers an HDHP with HSA, but only to small business groups in Maine. Reach them on line or at 1-800-435-8742.

Bottom Line
If you can afford your health insurance premiums, then the HSA is a good deal, especially if you are healthy and get to keep most of your nest egg into retirement. If you are low income and don’t qualify for Mainecare, your best choice may be Maine’s Dirigo Health plan because you can apply for discounted premiums. Dirigo is not a qualified HDHP at this time, so it does not work with a Health Savings Account.

To learn more about HSAs, go to The United States Department of the Treasury website at www.tres.gov and click on “Health Savings Accounts” or talk to your insurance agent.

Next issue we’ll explore some of the jewels of our region; low cost and free medical clinics. These organizations are there to serve us and by being sharp consumers we may cut self pay costs dramatically, with or without health insurance coverage.

Susan Whittaker is a certified professional medical coder and is currently the Coding Specialist for the Health Centers of MDI Hospital in Bar Harbor. She offers private consultations to physician practices and individuals. Reach her at codermd@netzero.com.