October 2004
HSAs a tool for practice growth
by Roy Smith
Many chiropractors are
discovering the benefits of the new Health Savings Accounts (HSA) which were
first made available in January.
An HSA works like a
traditional IRA, except that monies are used to pay for health care costs.
Participants first enroll in a relatively inexpensive high deductible health
insurance plan. They then may open a tax‑deductible savings account which is
used to cover current and future medical expenses. The money deposited, as
well as the earnings, are not taxable and may be invested in stocks, bonds,
mutual funds, etc. Funds can be withdrawn tax‑free to pay for qualified
medical expenses. Unused balances roll over from year to year.
The primary use of the
HSA is to cover out‑of‑pocket expenses while you're meeting your deductible.
However, it may also pay for qualified medical expenses which traditionally
are not covered by a health plan. Examples include dental and orthodontic
services, vision care, certain types of alternative medicine, long term care
insurance and non‑prescription drugs. An HSA also may be used as a
retirement income supplement. At age 65, accumulated funds can be withdrawn
tax‑free to cover medical expenses not covered by Medicare. Funds for
non‑qualified expenses are subject to federal income tax upon withdrawal.
Essentially, the HSA
allows you to have your health care subsidized by the federal government by
using tax‑free dollars to pay for it. If you are in the 28% federal income
tax bracket, 28% of your health care may be paid for by Uncle Sam. For a
family contributing the maximum allowance of $5,150 per year into their HSA,
this results in a tax savings of $120 per month. That recovered tax money
can then be used on health services or accumulated as savings through your
HSA. If your tax liability is higher, you will save even more.
The idea of paying for
health services with tax‑free dollars should be particularly attractive to
chiropractors and their patients. Because chiropractic patients experience
higher out‑of‑pocket expenses than other forms of health care, they can
benefit the most by having an HSA. Paying for chiropractic treatment with
tax‑free dollars means that every third or fourth treatment is being paid
for by Uncle Sam. This makes it much easier to schedule that extra
appointment each week. Additionally, the premium savings by enrolling in a
high deductible health insurance plan puts more money back into the pockets
of the participant. This means more dollars are free to spend as one sees
fit. For chiropractors with a large cash business, this is even more
apparent.
Chiropractors are often
faced with objections from patients who do not wish to come in for
treatments more that once a week. Often these objections are based on
economics. Savvy chiropractors understand that by using health savings
accounts, their patients can come in more often for the same amount of
out‑of‑pocket expense. The only thing that changes is how they pay for their
chiropractic care. The HSA administrator usually will provide debit cards or
checks to be used at the point of service. When paying for these services
through an HSA, these services are being paid for with tax‑free dollars. The
next time you are faced with objections to coming in several times a week
for treatment, ask your patient, "How would you like me to cut your cost of
chiropractic care by 20‑35%? And while I'm at it, I'll cut your costs for
dental, vision and medical care as well." Every patient is going to want to
listen to what you have to say.
Unfortunately for
chiropractors, they do not have time to sit down with each patient and
explain the benefits of the HSA. Fortunately for chiropractors, however,
there is an insurance company which specializes in helping chiropractors and
their patients with their insurance needs. Chiropractic Insurance Services
is one of the industry's largest providers of HSA qualified insurance plans.
Their website, www.ChiropracticInsuranceServices.com, is a great source of
information for chiropractors and their patients. Included on their website
is an eight minute audio‑visual presentation on the HSA. You can even apply
online. They may also be reached at 800‑582‑4989.
Congress estimates that
40‑million Americans will be enrolled in HSAs within the next 10 years.
Whether the consumer wants them or not, this is the future direction of
health care in this country. Employers cannot continue to pay for
traditional health plans with their expensive doctor office copays and
prescription copays. Chiropractors are beginning to benefit personally from
the savings offered by plans which feature the HSA. Those chiropractors who
are thinking ahead are learning to grow their practice by introducing their
patients to these plans as well.
(Roy Smith is a
fully‑licensed insurance broker representing more than 30 companies in 48
states. He specializes in the areas of life, disability and health insurance
and retirement planning. After a successful 12‑year sales management career,
Roy started his insurance career in 2001 while working in a well‑established
Guardian Life Insurance agency of over 20 years. He is one of the leading
producers of Health Savings Account insurance plans in the southeast. A
long‑time advocate of chiropractic, Roy resides in Nashville with his wife,
Jennifer, and two children, Shelby and Emily. His website is at
www.ChiropracticInsuranceServices.com.)
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