Health Savings Accounts Fund Health Care During Unemployment

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In this retention of Kentucky, water runs on, around and through the slate rock geology that surrounds and supports the construction phase of Pikeville Medical Center (PMC) expansion project, on Tuesday, July 12, 2011, in Pikeville, KY.
After months of infrastructure construction and rain delays, one of Kentucky’s largest American Recovery and Reinvestment Act (ARRA) projects is under way. The .6 million Community Facilities Loan will finance construction of a new medical office building and parking garage. The new medical office building will house outpatient surgery, endoscopy and surgical support and provide exam, waiting and office space for 23 primary and specialty care physicians. It also will contain a medical research center to support existing research – in conjunction with Pikeville College – on health disparities, genetic research related to the prevalence of cancer and other areas, including drug and treatment trials. The new seven-floor parking garage with more than 1,000 spaces will be built adjacent to the new medical building. This will eliminate the need to shuttle patients back and forth from remote parking areas, as the center’s current parking areas are filled to capacity on a daily basis. The new garage will provide closer and easier proximity to medical and hospital services for all patients.
Wayne Rutherford, County Judge-Executive for Pike County, says funding from ARRA is a boon for his county because it will create jobs.
“This is great for Pike County’s economy. We know we have a great hospital, and with this support, it will be even better,” said Rutherford. “The unemployment rate here is above the state average and this will stimulate jobs. There will be construction, which means lots of jobs on the front end – and even more once it is built.”

Pike County is one of Kentucky’s persistent poverty counties and the current medical facility provides health care services for a rural population of more than 68,000. This project will create 1,430 direct and indirect construction jobs, in addition to 97 long-term jobs. It is scheduled to be completed in December 2012.

“This project is a prime example of the ARRA monies being utilized for much-needed health care facility expansion in an economically-depressed region of Eastern Kentucky and Appalachia,” said Tom Fern, State Director for Rural Development in Kentucky. “This hospital has received national recognition for its quality of care, and this money will allow them to expand and build upon their success and continue providing quality health care services to the region.”
PMC was named National Hospital of the Year by the American Alliance of Healthcare Providers in November 2009. The hospital was among 400 elite health care facilities to apply for this prestigious honor. To earn this recognition, PMC competed against more than 400 hospitals, including the Mayo Clinic, the John Hopkins Hospital, Cedar-Sinai Medical Center, the Cleveland Clinic, Duke University Medical Center and Vanderbilt University.
Pikeville City Manager Donovan Blackburn said the medical center is the largest employer in Pikeville and contributes nearly million to the city through the payment of occupational taxes. He went on to say that Pikeville Medical’s success is also the city’s success because as other cities struggle with dwindling revenues, Pikeville has actually seen growth.
“This is a regional medical center that is very important to the city. Pikeville is a legal, financial and education hub for Eastern Kentucky and a gateway to rural communities in Virginia and West Virginia. There are half a million within a 50-mile radius – so it’s not just local people that depend on this facility,” said Blackburn. “From a regional standpoint it adds volume from a jobs standpoint. Everybody in this county knows someone or has family that works for Pikeville Medical Center.
“People in this area used to have to go out of the area for good jobs and quality medical services, but Pikeville Medical has changed that,” added Blackburn. "And it has impact on other parts of the city’s economy – hotels, restaurants and retail. It increases the quality of life tenfold.”

The Recovery Act was designed to spend money gradually over time in order to sustain a true recovery – with peak spending to occur early this year. While the experts agree that ARRA is already responsible for creating or saving approximately two million jobs, about 75 percent of recipients that reported on their Recover Act spending indicated their projects are less than half complete, meaning there is even more job impact from those dollars to come.
USDA Media by Lance Cheung.

Health Savings Accounts are getting a reputation for making health insurance more attractive. That’s because health insurance plans that let you start an HSA often cost less than traditional co-payment plans. HSA plans also lag way behind traditional plans in terms of frequent rate hikes, too.

Low premiums make it more affordable to maintain coverage during periods of unemployment, but that’s not the only way HSA plans can bridge gaps between jobs. As you’ve probably guessed, a Health Savings Account is specifically designed to pay for health care with benefits that standard accounts don’t provide.

Health Savings Accounts Reduce Taxes

Health Savings Accounts allow you to pay for health care with pre-tax dollars. The money you contribute to your HSA can be used to directly reduce your taxable income with an “above-the-line deduction.” That basically means you won’t need to itemize deductions to lower your income taxes. That works for federal tax returns and for all but three state returns.

After you get that tax deduction, you have a choice about how to use your HSA funds. If you use the money for health care, withdrawals won’t be taxed as long as you only spend them to pay for health care that’s deemed to be eligible. Most things are with the exception of over-the-counter medicines, like aspirin. A purchase like that would trigger a 20-percent penalty fee on the HSA withdrawal and it would become taxable income.

You can spend HSA money on things your high-deductible health plan probably won’t cover, such as dentistry or homeopathy. You can also pay for health care for family members who are not covered on your insurance policy.

HSA Plans Foster Saving For Retirement

Your other choice is to invest HSA dollars and let the balance grow with tax-free earnings as you would with an IRA. If your employer contributes to your HSA, that money is yours to keep even after that job is history. Once you turn 65, you can use HSA funds to buy anything without incurring a penalty, but it’s still taxable as income when spent on something other than qualified health care.

Many different financial institutions will let you open an HSA. Some restrict what they offer to interest-bearing savings accounts, but others will allow you to invest in stocks and bonds, or mutual funds. These accounts are becoming big business, so HSA administrators are competing with perks to attract your business. Many make it as simple to withdraw HSA money as it is to use a regular checking account. Even credit cards linked to HSA money are on the horizon.

After your HSA balance reaches an amount that you’re comfortable with, you might even consider starting a second Health Savings Account that you use strictly for the investment options. Keep one liquid for medical emergencies and devote the second one to letting the tax-free earnings help you prepare for retirement.

By Wiley Long – President, HSA for America – Professional advisors offering personal assistance on Health Savings Accounts. Run instant HSA quotes, compare HSA insurance, apply online and save!

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