As I Was Saying

I mention in this post that the cost of health care is growing at super speed rates and that if this continues, people are going to be forced to start paying a lot more for it out of their pockets than a free (or close to free) ride that we've been getting thus far.

This article talks about changes that employers are making to their health insurance options.

The article states that according to a recent poll of employers:

The poll found that 5 percent of companies offered only a high-deductible plan in 2007, and that figure will rise to 9 percent in 2008.

A high-deductible plan works pretty much like this:

Depending on whether you have a single person plan or a family plan, the participant involved in the plan has a high annual deductible (over $1000). Whenever you go to the doctor, you've have to pay for the services out of pocket. Once you reach that deductible amount, then your insurance covers it from that point on.

But, there are tax advantages to this. What you are allowed to do is take money and put it in a health savings account (HSA) pre-tax (works similar to your 401k) and after you go to the doctor and pay the bill, you send a copy of the bill to the HSA provider and they then take money out of your account and cut you a reimbursement check. So you essentially paid for the medical services pre-tax.

One last thing about those accounts. You can also take a portion of the money in that account and place it into a separate account that is moved in and out of markets like what you have with your 401k.

There's a limit a the amount you can put in an HSA every year. And until you reach a certain age, you can only take money out of that account for "qualified medical expenses." But, after you reach a certain age, you can start taking that money out for any reason you want.

The good news is that it gives you another pre-tax shelter for your earnings. The bad news is, it's a pretty high deductible to meet before your insurance kicks in.

But, the reality from what the article says is that it's starting to gain traction among employers because it can substantially decrease their monthly health insurance premium that they pay for their employees. I don't think it's going to take long for more and more employers to change to only making this type of policy available to employees.

If this trend continues, I think you know what it means. Those that are healthy and just don't have the need to go to the doctor much are going to be able to take advantage of the tax shelter to save for retirement. For those that are not healthy, well, it's going to end up costing you.

So again, here's your choice. Start exercising and eating healthy, and in the long run, it's going to save you money. Don't start exercising and continue to eat unhealthy and take on other unhealthy activities in your life, and well, I think you can figure out what happens.

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