Health Savings Accounts can benefit veterinarians
posted February 1, 2005
Affordable health care is an issue that transcends profession, gender, economic status and age, and one that American policy-makers have long been attempting to address. The Medicare Prescription Drug legislation signed into law in December 2003 included countless other insurance reforms, the effects of which will continue to play out for years to come.
With most veterinarians self-employed and/or employed in a small business, affordable health insurance has always been a prime concern. This issue is likely to continue to gain increasing attention within the profession as current gender trends begin to have an impact. With more than 70 percent of veterinary students now being female, the gender balance, which has already started to tilt toward a more predominately female profession, will no doubt continue to move in that direction. The ramifications of this tilt are likely to be keenly felt in the need for available and affordable health care.
Why? To begin with, it's well-known that women live longer than men. This longevity does come with a price, one being the fact that women are more likely to live with a chronic medical condition. But the issue is not merely one of age: Women tend to be larger consumers of health care throughout their lives, partly because they bear children. This fact of life also contributes to the trend of women spending fewer years in the work force, sometimes resulting in gaps in quality health insurance coverage, and often in less retirement income resources to pay for care at a time when need may be high.
Women "have an even higher stake than men in ensuring that health care reform is done right," asserts Michael F. Cannon, director of health policy studies for The Cato Institute, a nonprofit public policy research foundation.
"Boosting retirement health savings is particularly urgent for women, who live longer, spend more time on Medicare, have lower incomes, and spend a larger share of those incomes on medical care after age 65," says Cannon in his report "How To Make Health Insurance Work For Women."
Self-employed individuals and small business owners (i.e., many veterinarians) have also felt the pinch of rising health care costs more keenly. These groups also have a big stake in health care reform.
One of the more promising reforms enacted by Congress—the creation of Health Savings Accounts in December 2003—may provide some important options for veterinarians seeking better control of health care costs now, and a way to help plan for the future.
Health Savings Accounts offer many potential advantages, including tax savings, more control over the cost of health insurance, and more control over personal health care expenditures. Also, HSAs create a means of accumulating money in a savings account for future health care.
The concept works by combining a high-deductible health insurance plan with a "savings account." The higher the deductible, the lower the insurance premium, and an amount equal to the deductible—but not more than $2,650 for an individual or $5,250 for a family—can be deposited into a savings account to help offset future medical expenses. (If money is withdrawn before age 65 for nonmedical expenses, a penalty must be paid.) And, because employer and employee contributions are deductible, the plan is especially attractive to self-employed veterinarians.
A quick review of statistics from the AVMA Group Health and Life Insurance Trust reveals that more than 1,300 HSA-qualified plans were issued to AVMA members during the first year of availability. Of this total, 28 percent of the plans were purchased by women. When the group is segmented by age, the figures reflect gender trends currently observed in the profession: In the 45-and-under group, 46 percent of the plans were purchased by women.
Interest in HSAs continues to grow. According to a report released by the National Center for Policy Analysis, tens of thousands of Americans purchased HSAs during the first six months the plans were available. While 20 percent of 1,000 employers surveyed by Mercer Human Resource Consulting already offered a high-deductible plan by mid-2004, more than 70 percent of them said they are "very likely" or "somewhat likely" to offer HSAs by 2006.
Veterinarians desiring to take advantage of an HSA will first need an HSA-qualified, high-deductible insurance plan. The AVMA GHLIT makes available HSA-qualified plans at several high deductibles. The plans are underwritten by New York Life Insurance Company (New York, NY 10010). The AVMA GHLIT can also provide additional information about financial institutions* to contact to establish an HSA. For more information on the GHLIT HSA-qualified plans—including exclusions, limitations, rates, eligibility, and renewal provisions—call GHLIT at (800) 621-6360.
*The GHLIT and New York Life bear no responsibility for the establishment or administration of any Health Savings Accounts.