At its core, Consumer Driven Health Care is about asking “Is there a less expensive way to reach the same treatment goal?” Here are three true examples: My brother, suffering from a respiratory infection asked his physician (who was suggesting more tests to confirm the diagnosis) how the treatment plan would differ based on the results of the test. The answer, no difference. The cost of the test was avoided. An employee recounted to me last week how after switching to an HDHP he discovered his prescription was not the $50.00 month he had been spending but actually $150.00. The physician didn’t even realize he had put him on  a tier 3 drug and quickly wrote a prescription for a generic. The employee saved $46.00 a month and the employer saved $100.00 per month. Lastly, an insurance agent I met recently told of how his wife had dislocated her shoulder  and needed surgery. They are on an HDHP with an HSA. When the physician ordered an MRI to confirm the diagnosis, the patient asked if the MRI would reveal anything more than a less expensive X-ray would. The answer, no. The savings: $1,000+.

All of these questions resulted in less expensive, rather than less effective, health care.  And they accomplished that with no new technology, no challenge to the physician’s expertise, just a few simple questions. That is the essence of Consumer Driven Health Care.

No; An account beneficiary may defer to later taxable years distributions from HSAs to pay or reimburse qualified medical expenses incurred in the current year as long as the expenses were incurred after the HSA was established. Similarly, a distribution from an HSA in the current year can be used to pay or reimburse expenses incurred in any prior year as long as the expenses were incurred after the HSA was established. Thus, there is no time limit on when the distribution must occur. However, to be excludable from the account beneficiary’s gross income, he or she must keep records sufficient to later show that the distributions were exclusively to pay or reimburse qualified medical expenses, that the qualified medical expenses (IRS Notice 2004-50)

Am I required to take the money out of my HSA at a specific age?

There is no maximum balance limitation. There is no mandatory disbursement age. The account is yours for life. It continues to grow for as long as you have it.

Is an otherwise eligible individual who has access to free health care or health care at charges below fair market value from a clinic on their employer’s premises eligible to contribute to an HSA?
An individual is not prohiited from contributing to an HSA merely because the individual has access to free health care or health care at charges below fair market value from an employer’s on-site clinic if the clinic does not provide significant benefits in the nature of medical care (in addition to disregarded coverage or
preventive care).
Example 1. A manufacturing plant operates an on-site clinic that provides the following free health care for employees: (1) physicals and immunizations; (2) injecting antigens provided by employees (e.g., performing allergy injections); (3) a variety of aspirin and other nonprescription pain relievers; and (4) treatment for injuries caused by accidents at the plant.
The clinic does not provide significant benefits in the nature of medical care in addition to disregarded coverage or preventive care.
Example 2. A hospital permits its employees to receive care at its facilities for all of their medical needs. For employees without health insurance, the hospital provides medical care at no charge. For employees who have health insurance, the hospital waives all deductibles and co-pays.

Because the hospital provides significant care in the nature of medical services, the hospital’s employees are not eligible to contribute to an HSA. (IRS publication 2008-59)

The attractiveness of a High deductible Health Plan (HDHP) is dependent upon three factors:

1. The difference between the employee contribution to the premium of HDHP vs. the traditional plan being offered. The greater the difference, the more the employee has to put into their HSA.
2. The employer contribution to the HSA. If #1 above is sufficient, the employer contribution doesn’t really matter. Ultimately the total employee savings and employer contribution need to be sufficient to fund the HSA to a level that makes the increased risk of the HDHP acceptable for the employee.
3. Education. If the employee (and their spouse) does not have a good grasp if the HDHP and HSA interaction they will not make a change, even if the contribution/savings numbers described above make sense. Repetition and education over time are the best methods for conveying the benefits of an HSA and for overcoming the natural fear of the unknown.

The Internal Revenue Service said that economic stimulus payments directly deposited to individual retirement accounts and other tax-favored accounts may be withdrawn tax- and penalty-free.
The relief is designed to help taxpayers who may have been unaware that by choosing direct deposit for their entire regular tax refund, they were also choosing to have their stimulus payment directly deposited as well. The tax relief is available for amounts withdrawn from tax-favored accounts that are less than or equal to a taxpayer’s directly deposited stimulus payment.

To qualify for relief, the economic stimulus funds must be withdrawn by April 15, 2009, in most cases. Without this relief, taxes, penalties and other special rules would apply to amounts removed from these types of accounts. Regular tax refunds are not eligible for this relief.

Eligible tax-favored accounts include traditional and Roth IRAs, health savings accounts, Archer medical savings accounts, Coverdell education savings accounts, and qualified tuition programs. Thus, a taxpayer whose $1,200 stimulus payment is directly deposited into their IRA can take out up to $1,200 from the IRA, tax-free and penalty-free.

In general, the deadline for these withdrawals is the due date or extended due date for filing a 2008 return. This means April 15, 2009, for most taxpayers, or Oct. 15, 2009, for those who obtain tax-filing extensions.

Details on reporting these withdrawals and claiming relief will be included in tax forms and instructions for 2008. Other details are in Announcement 2008-44 online at www.irs.gov.