Consumer Driven Market Report 9/13/2004

Treasury Secretary Snow told a meeting of credit union managers that they can use existing Individual Retirement Account forms for setting up Health Savings Accounts. Snow said that HSAs "are really super-charged IRAs" and thus "you won't need any new forms" although IRS now has all the forms if needed available on their website. These include two forms filed once a year: one form that shows contributions and another that shows how much was spent from the HSA.

The Snow comments are one more example of how HSAs are guaranteed to grow fast in coming years -- even if employers totally ignore them and contribute nothing. All the soothsayer predictions about whether employers will 'support' HSAs are really pretty funny if you think about it.

Over 60 million Americans own IRAs, and HSAs just became the better investment. Throw in all the possible contributions drawn out of 401ks and you're talking real money out there.

Let's face it: millions of Americans with 'high' deductibles are going to contribute billions over the coming years as a tax break, and secondarily as a way of providing a cushion for out-of-pocket costs for any IRS-defined medical services. Spend it on health care? Not if you can help it.

HSA owners still have to tell the health plan how much they spend if they go over the deductible, but employers will never know how much employees with an HSA have saved up, or how much they are contributing each year to their own private HSA. Some workers will have enough to buy their own coverage, while others will be scrimping on office visits to fund retirement.

A large percentage of HSA owners are expected to use their own checking accounts before tapping the tax-advantaged HSA funds, which accumulate tax-free and can be withdrawn tax-free at retirement. Claims paid are just as likely to come from personal checking as the HSA account.

If you have any comments on any of this don't hesitate to reply.

Story credit: Consumer Driven Market Report