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A 401K for Health Care?

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  • Description

    Kevin McKechnie, The HSA Council executive director, on alternative ways to pay for health-care coverage.

  • Duration 4:19
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-- -- Now with Obama kept kicking in companies -- looking thing anyway they can save some money on the health insurance costs sum -- considering giving employees a set amount of money.

Eleven and just go out and get the health insurance settled on the road.

Joining us now is Kevin McKesson and executive director of the HS -- council Tenet -- I wanna make sure got this -- As a way of saving money some companies will give employees his 101000 dollars.

You get out that and you copy your own health insurance costs -- this money a set amount of money.

Is that what some of.

-- doing -- about it right.

Well good morning -- and yes I assume some are going to do that it's that a voucher system the you've heard something about but that's not exactly what word doing we're going to make sure people have.

Affordable major medical insurance and HSAs are that product.

But I have no doubt that in response to the high cost you're going to see a voucher system in some places take hold now you'll talk about the health savings account the HSA.

Yes that's that's -- that's what you law.

It is that that's exactly right that the amount of money that I comported to -- HSI has just been restricted announcement.

Well it has been limited the Affordable Care Act did impose some limits on that but.

Every year these accounts are indexed for inflation and so the amount of money that everyone else can put in is going up.

But it's a maximum of 2500 dollars a year business that's it.

But just for an individual for a family it's much higher than that and the contribution limits are higher still and so there is an ability and NHS say.

To save meaningful amounts of money for your future health care -- limited if I'm and -- my employer.

On -- it breadwinner in the from a 41 of about Iowa and I cannot put more than 2500.

Dollars and to that HSI can.

Well no you you can in that you can in NHS say you can put as much as 6000 dollars that sure family.

There is a product called a flexible spending arrangement which was severely capped by the Affordable Care Act.

And that is the -- that is the account that is capped at 2500 dollars.

So -- supposed to -- the HSA.

That's 6000 box for a family.

But it BH SI have to be offered by be employed got that right.

Well they do the employer environment is where most of the H essays are and that's where we've seen such spectacular growth this is a response to the escalating costs.

Both insurance generally but also because of the recession.

Companies are looking for savings anywhere they can.

They are offered by your employer and your employer puts money in this account as you might on a tax free basis it grows over time.

And you're supposed to use it to pay for your routine medical expenses and of course the expenses you might incur in the future -- -- -- -- I'm sought out a little unclear about exactly what this is essentially you're talking about a like a 401K.

Pension plan.

Related to just health care coverage that's what is it is that a health savings account is something like that it is a savings account and a bank -- paired with a qualifying medical plan the major medical insurance and what happens is you pay for things like doctors -- -- -- -- -- out of your account.

It grows over time tax -- -- the insurance is always there in fact you can't have a house things account.

Without the qualifying insurance OK so my employer gives me health insurance I pay into its -- -- -- the employer pays into it.

And senselessly I can have one of these eight USA is -- build up and build up and up.

You know welcome put my money in in the employer put some money and it builds -- and builds up what I needed for health -- -- I can spend it.

And I don't pay any tax on the money in that HS I I got that right.

That's absolutely true but it's better than that because no matter who puts money your account.

The contributions the account are deductible to you.

And they grow over time tax free and so the interest gains or tax free as well and as long as you spend that money on qualified medical expenses.

It comes out of the time and added the account tax rate.

Until you're 65 and then you can continue to pay for qualified medical expense expenses.

Or you can take it out -- regular income and simply pay income taxes on the money get a look at me I'm glad his friend that went out and that's very -- at all I love the 401K principal and if you can get it applied to health gap like it too thanks so much Kevin Fisher thank you for having me sir okay.

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