Health Savings Accounts (HSAs)

Written by Michael G. Kirwan, ChFC, CLU
Published Fall 2009 in the New Jersey Union County and Morris County Medical Societies’ Newsletters

Is there a Doctor in the House?… or Anywhere!

I can vividly recall the debacle that was malpractice insurance in Pennsylvania in the early 90’s, when many of my physician clients, who had not already retired or left the State, posted a sign in unison in their offices’ stating:

“Will the last patient please turn the light off when leaving the office?”

The poster bore the names of literally hundreds of disgruntled physicians in protest.

A mere nearly twenty years later, we are facing a “Change” that we would have never contemplated, even a year ago!

In retrospect, having spent nearly my entire professional career serving the financial needs of physicians, the Brooklyn cynic in me began to wonder last night if the creation of HMO’s wasn’t merely the beginning of the ultimate conspiracy to herd our physicians, and ultimately our citizens and country, into the prospective bondage of Government Controlled Healthcare!

Your respective practices’ have experienced the ever increasing intrusion of governmental rules and regulations that have not only impaired your ability to “practice medicine”, but have now restricted and limited your “right” to make a living.

As many of you know, a part of my multi-faceted practice has been devoted to the promotion of HSA-Health Savings Account Programs. Like your own practice, as it may pertain to our health insurance services, we are on the cusp of having our office lights turned off.. Much like my cynical retrospective on the creation of HMO’s, the health insurance profession is currently experiencing potential elimination.

My office is currently receiving client Group Health Insurance renewal premiums in the unprecedented area of 25% to 30%, at the very time we are experiencing one of the most devastating economic times that most of us have seen in our lifetimes. Could the carriers have already sold out to the government by conspiratorially agreeing to invade your practice, and disproportionately increase our premiums, in an effort to force the ultimate resignation of the employers financial ability to sponsor such plans, thus eliminating the service representative, leaving the government “as the only recourse to provide everything”? Can you recall your college reading of George Orwells’, Animal Farm?

I am writing this heartfelt contribution on the eve of the House vote on H.R. 3962, the 1990 page colossus known as the Affordable Health Care for America Act, which could make turning the light off, secondary to even having electricity!

Written by Michael G. Kirwan, ChFC, CLU
Published Summer 2009 in the New Jersey Union County and Morris County Medical Societies’ Newsletters

As we hurtle toward a National Health Insurance Plan and ever increasing Health Insurance Premiums, we would like you to be aware of certain Consumer Driven/Cost Savings Programs available to your practice.

HRA-Health Reimbursement Arrangement

A Program available to all eligible employers, used in conjunction with a Low/High Deductible Health Plan (not necessarily an HSA), which may also have “first dollar benefits”, such as prescription drugs and/or doctor co-pay’s.

The employer establishes a limit/threshold level of “Reimbursement”, typically not greater than the deductible, and the employee/participant is responsible for their Rx and doctor co-pay’s and all amounts, if any, in excess of the chosen level/threshold. The savings attributable to the High Deductible should be sufficient to not only cover the “Reimbursement”, but should also produce an overall healthy savings to the employer.

HSA-Health Savings Account

Similar to HRA’s, but “first dollar benefits” are reimbursed by making “Tax Deductible” contributions to an HSA/IRA Account, which is available to individual participant’s who make “Tax Free” withdrawals from their respective accounts to pay their qualified medical expenses, prior to meeting the chosen Low/High Deductible.

Unused contributions made to these HSA/IRA Accounts, by either the employer or employee, are rolled over year to year and accumulated to pay for future qualified medical expenses. Accumulated funds become an incentive for the employee to manage his/her health care, since unused funds may also be used to pay for Long Term Care and can ultimately be used as a Supplemental Retirement Plan. Contributions are “in addition to” any other Retirement Plan contributions. Individual Accounts belong to the participant.

Review a Health Savings Account Case Study.

NEW: Select carriers are now offering Fiscal Year HSA/HRA Deductibles.
Current plan deductibles are from January to December (Calendar Year).

Large Group (20+) Medicare Participants

Groups with 20+ fulltime employees (not insured’s) fall under TEFRA/DEFRA guidelines and are subjected to different grounds rules than the under 20 groups for purposes of Medicare eligibility/benefits. If your group employs 20 or more people, you must allow your Medicare-entitled members, and their spouses who are age 65 or over, to retain their group coverage as their primary insurance, with Medicare as the secondary payor.

If members over age 65 reject the group coverage, Medicare becomes the primary payer. However, for employees with spouses that are under 65, if you were to reject the Group plan, your spouse’s would be without coverage and we have already determined that most Individual Plans in NJ are too costly, even when pricing in the assumption of those 65 and over applying for Medicare A+B+D+ Supplemental.

*Age 65 HSA Plan participants would be able to continue to contribute and deduct their HSA contributions!

Written by Michael G. Kirwan, ChFC, CLU
Published Winter/Spring 2009 in the New Jersey Union County and Morris County Medical Societies’ Newsletters

In these extraordinarily difficult economic times, if you are not getting the same Professional Advice from your Advisors, as you deliver to your patients, it’s time to seek a second opinion

Cost Cutting or Sharing, in an effort to achieve desired Benefits, is paramount. An independent professional should be able to provide the following surgical services in an effort to diagnose your medical insurance condition, otherwise, for your financial health, you MUST seek a second opinion

• Independent and represents “all” of the carriers in your State or, seek a second opinion
• Familiar with all of the available plans — PPO, DA, POS, EPO, HMO, HSA, HRA. If you, or more importantly, your representative, are not conversant with these initials, seek a second opinion
• Provides you with your Renewal at least 30 days in advance and calls to review and/or suggest alternatives, or, seek a second opinion
• Prepare a written Cost/Benefit Analysis to assure that your plan is the most Cost Effective it can be, or, seek a second opinion
• Discuss the use of “Classes” to provide for Multiple Plan availability, or, seek a second opinion
• Encourage you to initiate a Pre-Tax employee Cost Sharing Plan, or, seek a second opinion
• Educate you and your valued employees in the “wild kingdom” of Out-of-Network Services, or, seek a second opinion
• You DO NOT have to wait until your renewal to change your plan and/or save on premiums and your representative should show you how to switch plans “Before” your renewal month, or, seek a second opinion
• Promote Self-Advocacy with Consumer Driven Health Products, which traditionally save sufficient premiums to cover the plan deductible, allowing the consumer to KEEP the savings. These are the only “Use It or Keep It” Plans in the country. seek a second opinion
• Provide a Non-Commissionable “Investment Management” full brokerage platform for the Tax Deductible Savings available through Consumer Driven HSA Plans, or, seek a second opinion

Written by Michael G. Kirwan, ChFC, CLU
Published Winter 2008 in the Bergen, Union and Morris County Newsletters

Over the last, now nearly four decades, I have been privileged to have worked with the Medical Community and, in particular, with the engines and drivers of the most resourceful, brightest and finest HealthCare givers in the World, our physicians.

As we hurdle into the next decade(s), things will have to change. Many of us can recall the late 80’s and early 90’s, when the physicians fell prey to the lure of the hospitals taking over their practice, relieving the practitioner’s from the bondage of expenses, and headaches, and returning their hectic lives to normalcy? The minute the entrepreneur, self–employed, self–motivated, proud and involved owner was removed from the equation, the business, yes business, began to fall apart and if you were there in the beginning, you will recall the end, or is it the beginning AGAIN!

Next to your Payroll and perhaps Malpractice Insurance, are the abhorrent and ever escalating costs of Health Insurance. Much like the physician practitioner’s who successfully recaptured their practices, HSA’s, Health Savings Accounts or HRA’s, Health Reimbursement Accounts can achieve similar results in recapturing your bottom–line.

• HSA’s– 40%–50% savings over current PPO/POS plans. In and Out of Network Benefits, No Referral
• Can be structured for the highly compensated
• Available in combination with (in addition to) your current plan and carrier
• HSA/IRA Optional Contribution–up to $7,650 per year –“Tax Deductible” and Deferred Savings”
• “Use It or Keep It!” vs “Use It and Lose It” – your account is yours to keep
• “Tax Free Withdrawals” to pay optical, dental, orthodontia and more!
• “Tax Free Withdrawals” to pay for Long Term Care on a “Tax Deductible” basis

Our firm has been on the cutting edge of these avant–guard HSA and HRA Programs since their inception in 1997 and the success we have achieved for our clients is directly attributable to the Savings and Services we have been privileged to provide, as one entrepreneurial service provider to another.

Continuing to expand our cutting edge services, we are constantly in pursuit of new ideas and partners that can further enhance the products and services we uniquely provide exclusively to our clients. In this regard, we will shortly be launching a first in the HSA industry. Our HSA clients will now be able to combine the availability of a Full Service Brokerage Account with the assistance of a Professional Money Manager to enhance the performance of their ever accumulating, Tax Deductible and Tax Deferred Savings in their HSA/IRA Accounts.

Anticipated additional services this year will include the promotion of Discounted Association Group and Individual Disability Plans, with “True Your Specialty” definitions and Discounted Association “Tax Deductible” Long Term Care (LTD) Programs with several of the premier carriers in the business.

Let us show you how we can assist in keeping more in your wallet!

Written by Michael G. Kirwan, ChFC, CLU
Published Fall 2008 in the New Jersey Union County and Morris County Medical Societies’ Newsletters

As most of our readers are aware, we have been one of the most vocal advocates of HSA’s (Health Savings Accounts) since their inception as MSA’s (Medical Savings Accounts) in 1997.

According to the recent Census prepared by AHIP, interest and participation in HSA’s has exploded in the past three years. Here are the results of their Census regarding the number of people with HSA/HDHP’s:

In just the last two short years, the expanded interest in HSA’s represents an increase of nearly 91%, with the fastest growing market between January 2007 to January of 2008 coming from the Small Group Market (under 50 employees).

The Census indicates that these dramatic increases do not include any HSA/HDHP’s for which the company/practice or participant did not open a corresponding Tax Deductible HSA(IRA) Account, as this is the only real way that the Federal Government can count the number of HSA’s in existence. There are any number of HSA Health Insurance Plans, that are being used as catastrophic coverage, for which the participants have never opened an HSA(IRA) Account, that are excluded from the aforementioned Census.

Age demographics appeared to be equally spread with 46% age 40 or over and 54% under the age of 40.

During the year 2007, 83% of those reporting HSA(IRA) Accounts, had an average balance of $2,500 or less with 7% having balances of approximately $5,000.

Having specialized in the medical market since the early 70’s and specifically with the HSA since 1997, our clients are avid savers of not only the significant premium savings that they enjoy but Tax Deductible” contributions they make yearly to their HSA(IRA) Accounts. By contrast, our clients average balance is in excess of $20,000, with 70% of our clients having balances in excess of $5,000 and some as much as $75,000.

As a result of strong demand, we have recently concluded the formation of a partnership with one of the largest Clearing Houses in America, along with our Money Manager to provide Advisory Management on a non-commissionable trading platform that will allow our clients to enjoy the ability to purchase stocks, bonds, ETF’s, index and mutual funds on an open platform. They will also receive quarterly/monthly performance reports that will keep them on track with their investment portfolio, all for a nominal yearly fee.

If you would like a copy of the AHIP Report or would like to learn more about how your practice might benefit from having your own HSA or, if you already have an HSA but might be looking for an investment alternative, please contact us.

Written by Michael G. Kirwan, ChFC, CLU
Published Winter 2007 in the Union and Morris County Newsletters

Would you consider the Change?

If your auto insurance agent called and told you that if you were willing to accept a $2,500 deductible that he could save you $3,000, would you consider the change?

If he then told you that if you elected to invest the $3,000 savings in a secure account that he would be able to provide you with a 100% Tax Deduction, sanctioned by the IRS, would you consider the change?

If he told you that he would give you a “free” debit card and a check book so that you could pay for your “bents and dents” from this account “Income Tax Free”, sanctioned by the IRS, would you consider the change?

If he told you that you could use this “Income Tax Free” account to pay your dentist, opthamologist and/or orthodontist, would you consider the change?

If he told you that you could use this “Income Tax Free” account to pay for your Long Term Care Premiums, would you consider the change?

If he told you that you could use this “Income Tax Free” account to pay for your Medicare Policies and other expenses, would you consider the change?

If he told you that any balance remaining in your account at the end of the year would be yours to keep, while accumulating tax deferred earnings for your use at Retirement, would you consider the change?

If he told you that you could have the benefit of a personal Money Manager to assist you in the diversification of your accumulated savings, would you consider the change?

Now for the bad news and More Good News!

We can’t help you with your auto insurance but we can certainly show you how your Health Insurance Plan could be providing you with every one of the considerable enhancements itemized above that your current plan prohibits you from having.

HSA’s, Health Savings Accounts have been in existence through its’ predecessor program, MSA’s, Medical Savings Accounts, since 1997 and we have been there since the beginning.

Due to our very highly educated clientele, our physicians have been saving premiums and investing the difference for years. We currently take in nearly $2,000,000 per year in Tax Deductible HSA Contributions, with average account balances in the area of $25,000 and growing. As a result of the patience of our loyal clients and the popularity and rapid growth of our HSA Plans, we will now be providing our clients with access to a full investment brokerage platform and a personal Money Manager to assist in the Investment Direction and Diversification of their HSA Accounts, which is another first in the rapidly expanding HSA Market.

Written by Michael G. Kirwan, ChFC, CLU
Published Fall 2007 in the Union County Newsletter

We have been in the vanguard of promoting and supporting HSA Programs to our physician clients for years and we are delighted to report that we will finally be able to offer our clients a “full investment platform” through one of the premier Clearing Firms in the country.

Our clients will now be able to have a virtually unlimited array of investment alternatives, in addition to online access to their account, check writing and a debit card to access their funds and /or payments. Currently, the majority of HSA Account offerings only provide for some modest interest earnings in the equivalent of a bank savings account and may, or may not, provide ready access to your account.

We have been extolling the virtues of alternative Health Insurance coverage through the use of HSA’s–Health Savings Accounts, since 1997. Industry experts predict that by 2010, there will be 15–25 million HSA’s holding over $75 billion in assets and here are just some of the reasons why our clients have chosen to make the change:

• HSA Premiums are typically 25%–40% less expensive than most PPO’s and POS plans and the savings should be equal to or greater than the chosen deductible.
• Annual Well–Care Checkups for you and your family are FREE.
• Annual Mammograms, Pap and PSA tests paid 100% (no Co–Pays).
• Your HSA/IRA Plan will provide you with a Tax Deductible IRA Savings Account of up to $6,450 per year, in addition to any other Retirement Plan!
• Your HSA/IRA Plan belongs to you and any unused monies will be rolled over for future years expenses or can be accessed as an additional Retirement Plan.
• Your HSA/IRA plan will allow you to pay “Out–of–Pocket Expenses”, such as Co–Pays, Deductibles, Co–Insurance, Dental, Optical and Orthodontia with a 100% Tax Deductible payment?
• Your HSA/IRA plan will allow you to pay for Long Term Care Premiums on a Tax Deductible basis?

Another First for The Kirwan Companies, Ltd. and HSA Specialists of America

Written by Michael G. Kirwan, ChFC, CLU
Published Spring 2007 in the Union and Morris County Newsletters

Proposed Regulation Will Increase Your Health Care Costs! This is the current lead story on the MSNJ web site, alerting physicians and consumers of the proposed regulation by the DOBI (NJ Dept of Banking and Insurance) that would significantly reduce the payment for out–of–network non–hospital provider claims.

In reviewing some of the stated “Social and Economic Impact” cited in the Proposed DOBI Amendments N.J.A.C. 11:22–5.2 and 5.6, I continue to cite the necessity for both providers and consumers to take charge of their own Health Care by participating in their personal education and understanding of the costs associated with, “what has been”, the finest Health Care System the world has ever seen.

There are reasons why consumers determine that they have a need to seek out–of–network services, just as physicians have found that their financial survival has required that they, too, go “out–of–network”.

I believe that we (both the consumer and physician) would significantly change and control the intrusion of government and the stability of our Health Care System, as well as the runaway cost of health care insurance to both the Employer and Individual. If the consumer had to manage their own health care costs by being responsible for a larger portion of the initial costs, we would redirect the conscientious and educated consumer to avoid “unnecessary” office visits, testing, and brand drugs, solely because “they are covered by their plan”. By asking the consumer to pay the initial costs of their “necessary” health care needs, we encourage and promote both a responsible and educated consumer, alleviate the swollen hospital and physician patient burden, improve health care and restore quality and integrity to the system.

One of the most “avant–garde” Programs that has been promoting self–advocacy since 1997 and promulgated into law in 2004, are HSA’s (Health Savings Accounts), originally known as MSA’s (Medical Savings Accounts). These plans carry higher deductibles in exchange for substantially lowered premiums. The initial criteria for considering such a change, is to compare your current premium to the HSA premium and if you can save enough in premium to cover the deductible then you are at least a candidate. You would then be able to take a “tax–deduction” by investing into an HSA–IRA Account, while maintaining the ability to withdraw your savings “tax–free” to reimburse yourself and your family for your expenses. The best news is that this is the only “Use It and Keep It” Program in the country today, since unused funds remain in your account for future use, Retirement and even for the “tax deductible” payment of Long Term Care coverage.

Ancillary ways to reduce your costs would be the utilization of some, or all, of these medicinal/financial solutions:

• Multiple Plans by the same employer. This gives you the freedom to design your plan to conform to the needs of your participants and pocket book by utilizing not only different types of plans but even multiple carriers. New Jersey permits such a solution.
• Cafeteria Plans (Section 125) will permit your employees to take advantage of paying their share of premiums “pre–tax”, typically saving the employee at least 25% and the Employer another 10% in unnecessary taxes. Having employees participate in their own health insurance premiums is part of the educational process of being an informed consumer. Give–a–ways aren’t working.
• HRA–Health Reimbursement Accounts are a recent and welcomed addition to the Small Employer. They can be used in conjunction with HSA’s to allow the employer to only pay (reimburse) for those expenses that are necessary and covered within the plan limits that they have selected, obviating the need to contribute “Well–Care” contributions to HSA Accounts.

Written by Michael G. Kirwan, ChFC, CLU
Published Winter 2006 in the Camden & Berks County Newsletters

The Kirwan Companies, Ltd is one of the largest producers of HSA’s for physicians in the State of NJ and we have recently experienced an overwhelming interest by our PA physicians for this “New/Old Program”, designed to allow you, the consumer, to control your own Health Care Costs!

HSA’s were formally signed into law in November of 2003, effective for 2004. They are really not new but rather the Big Brother of MSA’s, which have been available since 1997.

With the passage of the new law and the increased popularity among both the public and the carriers, many varieties of HSA Programs have evolved. Plans having both PPO and Managed Care models, which will dictate how your provider will be paid and what might be applied toward your deductible, with confusing co–pay’s, deductible’s, co–insurance’s and varying maximum “OOP – Out of Pocket” costs, are now available, and you need to carefully investigate more than just the 35% – 60% discounted premiums.

The Fortune 500 Companies do not purchase insurance, they “self–insure”. The HSA permits the small business/practice to do so on an affordable basis by selecting an agreed upon deductible limitation to our risk sharing.

While the High Deductibles associated with the HSA may be scary, approach your financial concerns like you would in the selection of your auto insurance deductible. If I increase my automobile deductible from $500 to $1,000, but realize a savings of at least $500, then the “risk–shifting” makes sense. Your HSA savings should equal or surpass your deductible, otherwise, it is probably not worth your consideration BUT!

The HSA/IRA Account should also be taken into consideration. This unique opportunity permits HSA’s to be the only “Use It and Keep It! Program in the country today. You and/or your Employer are eligible to make a “tax deductible” contributions, up to 100% of your selected deductible, into your own HSA/IRA Account. Any unused funds will be rolled over for your use in future years. In 2007, the maximum will be $5,700, with an additional age 55+ Catch Up of $800.

In addition to being “tax deductible”, monies may be withdrawn “tax free” to reimburse you and your family for your Deductible and other medically related expenses, even though the contributions were “tax deductible”.

Monies may also be withdrawn “tax free” for a number of expenses that you may not currently be covered for, such as Optical, Dental and Orthodontia. This is arbitrage at it’s best!

Example: Child’s appointment alone $2,000 In a 40% tax bracket, you would need to earn $3,333 “before taxes”.

Withdrawing the “tax deductible” $2,000 contribution from your HSA/IRA, with an “after tax” cost of only $1,200, saves you $2,133 ($3,333 before tax–$1,200 after tax).

Additional Retirement Plan – Unused funds are invested on a “Tax Deferred” basis and may be used for Retirement. A maximum yearly contribution of $5,700, invested at 4% over:

• 10 years, would be worth $50,000
• in 20 years, would be worth $100,000

LTC (Long Term Care) – Funds may be withdrawn “tax free” to pay for LTC Premiums, making the cost “tax deductible”!

Before considering any changes, it is important for you to know that your practice may have “more than one plan”, and we can assist you in determining who may most benefit from participating in an HSA plan. For those who may not benefit from, or simply are not interested in, managing their own health care, we can structure alternative plans to be offered in conjunction with your HSA Program. In addition to Group Plans, Individual HSA Plans are available for the medically insurable in PA.

Our Corporation has enjoyed over a 30 Year working relationship with the Medical Community, and we are available for telephone discussion, or in person meetings at your office, and we would welcome the opportunity to explain the extraordinary savings and tax benefits/arbitrage associated with the adoption of an HSA (or HRA) and the Tax Deductible HSA/IRA Account.

Written by Michael G. Kirwan, ChFC, CLU
Published Summer 2005 in the Union and Morris County Newsletters

The Kirwan Companies is one of the largest producers of HSA’s in the State of NJ and we have experienced an overwhelming interest in this “New/Old Program”, designed to allow you, the consumer, to control your own Health Care Costs!

HSA’s were formally signed into law in November of 2003, effective for 2004. They are really not new but rather the Big Brother of MSA’s, which have been available since 1997, through the Kennedy–Kassenbach legislation. MSA’s were initiated on a trial basis, and while they initially only enjoyed mild attention, MSA’s were never part of the Federal Law but survived a number of Federal Sunset provisions, which were continually extended every 2 years, until the passage of the HSA, which is now finally a part of the Federal Law.

With the passage of the new law and the increased popularity among both the public and the carriers, many varieties of HSA Programs have evolved. Plans having both PPO and Managed Care models, which will dictate how your provider will be paid and what might be applied toward your deductible, with confusing co–pay’s, deductible’s, co–insurance’s and varying maximum “OOP – Out of Pocket” costs are now being offered, and you need to carefully investigate more than just the 35% – 60% discounted premiums.

Before considering any changes, it is important for you to know that your practice may have “multiple plans”, and we can assist you in determining who may most benefit from participating in an HSA plan. For those who may not benefit from or simply are not interested in managing their own health care, we can structure alternative plans to be offered in conjunction with your HSA Program.

On the reverse side of your insert, we have attempted to provide you with an overview and comparison of the New Version and Traditional Plans being offered.

Our Corporation has enjoyed over a 30 Year working relationship with the Medical Community, and we are available for telephone discussion, or in person meetings at your office, and we would welcome the opportunity to explain the extraordinary savings and tax benefits/arbitrage associated with the adoption of an HSA and the HSA/IRA.