Residents appreciate health saving account plans

Business Writer
Daytona Beach News Journal

NEW SMYRNA BEACH -- A middle-aged real estate saleswoman is enjoying near-perfect health but happily pays nearly $400 a month for medical insurance.

Ann Concannon says she's getting a good deal. What she likes about her arrangement is that more than half her monthly payment stays in her own personal savings account, gradually building a nest egg that can be used either for medical care or her future retirement.

"I also like having a choice about my care," she said. "I'm not forced into using just certain doctors, and the plan is accepted by all of our local hospitals."

Concannon is among the first few dozen residents of Volusia and Flagler counties who have enrolled in a "health savings account" -- the Bush administration's solution for encouraging middle-class workers to shoulder a greater share of their own routine medical expenses.

The account works like this: If a worker is willing to accept an insurance plan with a yearly deductible of at least $1,000 for a single person, or $2,000 for a family, then he or she escapes taxes on an equal amount of their income, provided the money is deposited into a savings account reserved for medical expenses. Whatever portion of the savings account isn't used on medical bills can accumulate, earn tax-free interest and roll over from year to year. When the worker reaches 65 and becomes eligible for Medicare, he or she can then spend their medical savings account any way they like.

"This is part of the 'ownership society' the government is trying to promote," said Tom Evers, a New Smyrna Beach insurance agent who set up Concannon's plan with Golden Rule Insurance Co., an Indianapolis-based insurer that specializes in health savings accounts.

Evers, who started selling the accounts in March, said he has placed about 40 so far in the Volusia-Flagler area. Nationally Golden Rule customers have set aside more than $110 million in such accounts since the government authorized them in January.

Other insurance companies are starting to take notice. Aetna, for one, already has begun selling several types of group plans based on the health savings account concept.

Florida Health Care Plans in Daytona Beach received permission last week to sell three plans. Deductibles range from $1,200 to $3,500 a year for individuals and $2,400 to $7,000 for families. Humana plans to introduce a plan in January.

So far, most of the action has been at the individual level. Most enrollees are either self-employed, early retirees or people like Concannon, who had to arrange her own health insurance after moving to a company that didn't offer benefits.

Concannon opted for a plan with the highest single-person deductible allowed -- $2,600 a year. Under that plan, she pays $168 a month for insurance to cover any extraordinary expenses she incurs above the $2,600 level, plus $216 a month that goes into her account.

But health savings accounts aren't for everyone.

People with a history of heart attacks, cancer or other serious illness usually aren't accepted. And workers lucky enough to have a low-deductible plan provided by their employer aren't eligible for an HSA.

Proponents of health savings accounts say they will prod consumers to pay closer attention to the costs of medical care. But Bert Reames, a Daytona Beach insurance broker, questioned whether many consumers are going to feel comfortable quizzing doctors and hospitals about the cost of a proposed treatment.

Pam Mims, membership director of Florida Health Care Plans, warned that health savings accounts may encourage some people to skimp on preventive health care, particularly more expensive procedures. To avoid that, Florida Health Care has structured its accounts so annual physicals and other wellness tests are included at no charge to the patient.


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