A Tale of Two Families
This is a "could-happen" story of two families.     If you don't read anything else, at least scroll to their legacy.
Henry Olsen  has a wife, a two year old boy and plans for more children.  He has  a great job at a corporation that provides comprehensive health insurance benefits through an HMO.  He has opted to have an additional amount taken out of his paycheck towards the family coverage.   
msaman.gif (10757 bytes) Mark Anderson has a wife,   a two year old boy and hopes to have more children.  He and his wife are entrepreneurs who derive their income from various activities:  selling products, landscaping, typing, and house painting.  They would like to see some of these start-ups grow to the point where they can hire more workers.  Their cash flow of course varies with their contracts but they both work hard and can expect to do well as their work reputations are established and their businesses grow.  

Mark thought it would be prudent to purchase health insurance to protect their assets against the event of an accident or illness that would require a high amount of medical care.  He cannot commit $600 a month to purchase a low deductible plan; but he can afford $250 a month for a high deductible health insurance plan.  He figures that in an emergency he could either pull from savings or borrow the amount to cover expenses up to the deductible.  Mark buys the insurance and sets up a Health Savings Account.  

That is the beginning of the story, below are some glimpses of how their stories might differ from there .....

The stories begin, Mark and Henry are both 25 years old
Mark had a rocky first year.  He managed to pay all his premiums, but only had about $2,000 to put into his HSA.  He paid for routine dental care, pediatric visits, and his wife's OB appointments (she's expecting the next baby).  At the end of the year he had only $700 left in his HSA.   He deducted  the premium costs plus $2,000 from his income when he computed his taxes.  Henry was really glad he had such comprehensive coverage.  His wife was expecting another baby.   She was signed up with the Health Plan's physicians.  Henry decided to sign up for the dental plan also through the payroll deduction.  It would pay most of the costs of routine visits and 50-80% of other dental needs.
The landscaping business was doing quite well.  Mark was able to put pay his $250/month premiums and by the end of the year had contributed an additional $3000 to his HSA.  His second baby came with no difficulties.  Mark even paid an additional day's stay in the hospital out of his HSA just to give her an extra day's rest.   By the end of the second year he had only $500 in his HSA; but now two healthy kids.  Henry started to read some of the small print of his HMO.  Found out that there was a limit on the number of days his wife could stay in the hospital after the baby was born.  He started paying more attention to the legislative mandates he read about in the paper.  He wrote his congressmen insisting that they force the HMO's to allow for more days in the hospital after delivery. 
The year after that, business was growing, Mark hired an additional employee and began him on his own Health Savings Account.  It took a little explaining until the new employee saw his HSA debit card and learned how easily he could pay his routine medical bills.  He liked having a savings account in his own name.  Mark deducted all these expenses from his business income and saved on taxes.  Mark paid for routine dental and medical visits.    He even paid a little extra to be able to use the pediatricians in the classy clinic near his house.  He now had $2,700 in his HSA.  The premiums for his HDI were stable.  This year Henry got a letter from his company saying that premiums were going up again in both the dental and medical.  The employee contributions to be deducted from his paycheck was increased by another $80/month.  Still Henry and his wife enjoyed being able to go to their PCP and the Plan's approved  pediatricians whenever then needed.  He was glad to have such good coverage. 

Jump ahead.  Now they are 35 years old
Mark's costs for the HDI have remained stable.  Over the past few years he hired a few more employees and began them on their HSA's.  Only one medical mishap in the group went above the deductible and required them to make a claim to the insurance company.  All other costs were handled within their deductibles from savings or from their growing HSA accounts.  Henry and his wife were dismayed when their company had to once again change medical plans.  They had seen 4 different primary care physicians and had to change their pediatricians three times in the past several years.  Still they're glad to only have to pay those co-payments at the doctors office.  His payroll deducted partial contribution to his health and dental plans only goes up by $50-60 a month in most years. 
Jump ahead.  Now they are 40 years old
Mark's business has grown.  The employees and their families have grown.   Their annual HSA contributions of $500-2,000 have accumulated to quite impressive amounts.  Some accounts now have $22,000; others who had a few more medical expenses only have $12,000.  But it is their own money to use toward health, dental, vision expenses, even trips to the doctor.  They can also use it to fund premiums for long term care plans.  If they change to another job they take the savings account with them.  Henry and his wife are getting more involved petititioning the government to mandate certain kinds of coverage by the HMO's.  More and more is getting deducted from their paycheck to pay the employee's family portion of the benefit.  It seems the plans are cutting services.  Their doctors seem to go through periods of frustration over what services are covered; and there seems to be quite a turnover among the primary care physicians they are assigned to.  Henry wonders what his family would do if ever he had to quit his job. 
Jump ahead 30 years.   Now they are 70 years old.
Mark has been enjoying a somewhat retired status with income from two of the businesses he began years before.  He decided to continue his private health insurance and his HSA, which now has about $800,000.  His wife had a major medical setback for a few years but they was able to afford first class care and the associated travel expenses from the HSA. Henry was glad he had the company's retirement plan as well as Medicare.   He had to wait a few years longer  to begin his retirement but now he had a modest income to live on and health care at the approved clinics.  Sadly it usually takes several weeks to get an appointment and often the wait at the clinic takes up most of  the day. 
Their Legacy
Mark and his wife have passed on; but they were able to leave for their children over $1.5 million from that medical savings plan that Mark started when he was just 25 years old.  Their children of course have HSA's of their own and are on the way to good health and a healthy investment in their future. Henry and his wife have passed on.  Their children hope that they can keep jobs at corporations that provide comprehensive health care benefits.  They're involved in petitioning the government for a national health care system as they learn that  premiums will eat up most of their paychecks - but at least they don't have to pay for those doctor visits. 

 

Coming soon maybe:    A tale of two businesses