President Bush used the State of the Union address to argue that individual Americans should be given more control over their health care dollars. One proposal is to expand health savings accounts, making decisions about health care more consumer-driven and making workers control spending in an effort to bring down rising costs.
The Health Savings Account is just one incentive Bush has made to encourage employees to drive their own care.
Eric Kok is taking more control of his health care this year. The newly married, 32-year old printing company manager from Lancaster, Penn. has switched to a new health plan that has lower monthly premiums. And he's putting part of his pay into a tax-free health savings account -- or HSA.
"I actually put money into an account that's set up for me and it’s pre-tax,” he said. “It comes out of my payroll and is held in there for the time that I need the money for doctors.”
You can set up a health savings plan through your employer or independently through an insurance company. Here's how it works: there are two parts -- a high-deductible insurance policy and a savings account.
An HSA can save employer's money, since workers have to pay a larger portion of their health care costs out-of-pocket under a high-deductible insurance policy. The plans could translate into big savings for workers, too, since you can put pre-tax dollars in a health savings account that grows tax free.
For 2006, individuals can contribute up to $2,700 to the account and nearly $5,500 hundred for families. The money can be used for medical expenses this year, next, or down the road. That was a big incentive for Kok.
“I will have money toward my retirement that I can use toward my premiums, those type of things, once I retire,” he said.
HSAs should be a big draw since there are no income restrictions on these savings plans.
“Many high net worth individuals are able to afford the best insurance that is out there,” said Thomas Melcher, a financial advisor with PNC Advisors. “It might be in their best interest to raise the deductible and put money into a health savings account.”
In his State of the Union address, Bush called for raising the amount one can contribute to these accounts. He also wants to make them "more available, more affordable and more portable."
Yet since Bush signed them into law in 2003, HSAs have been rather slow to catch on. United Health Group is the largest provider, yet of the 24 million people insured under its array of policies, only about 650,000 have signed up for HSAs.
“This is a different kind of health plan and a different kind of account mechanism,” said Tracy Bahl at United Health Group. “And you have to learn a fair amount about being a health care consumer.”
So Eric Kok is doing just that: researching fees for doctors and treatments.
“I see the costs upfront,” he said. “I know what it's costing me.”
Kok says that will help him make better choices: another reason he's glad to be in control.