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A shame of U.S. health care afflicts more than 100 million |
The sky-high costs of health care in this country are pounding patients with pervasive, pernicious medical debt. It’s not acceptable. Punishing finances have become part and parcel of the American way of health care, with “more than 100 million people in America ― including 41% of adults ― beset by a health care system that is systematically pushing patients into debt on a mass scale,” according to a deep dig by the independent, nonpartisan Kaiser Health News service and National Public Radio. As they reported: “[Our] investigation reveals a problem that, despite new attention from the White House and Congress, is far more pervasive than previously reported. That is because much of the debt that patients accrue is hidden as credit card balances, loans from family, or payment plans to hospitals and other medical providers. To calculate the true extent and burden of this debt, the KHN-NPR investigation draws on a nationwide poll conducted by KFF (Kaiser Family Foundation) for this project. The poll was designed to capture not just bills patients couldn’t afford, but other borrowing used to pay for health care as well. New analyses of credit bureau, hospital billing, and credit card data by the Urban Institute and other research partners also inform the project. And KHN and NPR reporters conducted hundreds of interviews with patients, physicians, health industry leaders, consumer advocates, and researchers.” The findings of this work are “bleak,” KHN and NPR reported: “In the past five years, more than half of U.S. adults report they’ve gone into debt because of medical or dental bills, the KFF poll found. A quarter of adults with health care debt owe more than $5,000. And about 1 in 5 with any amount of debt said they don’t expect to ever pay it off … The burden is forcing families to cut spending on food and other essentials. Millions are being driven from their homes or into bankruptcy, the poll found. Medical debt is piling additional hardships on people with cancer and other chronic illnesses. “Debt levels in U.S. counties with the highest rates of disease can be three or four times what they are in the healthiest counties, according to an Urban Institute analysis. The debt is also deepening racial disparities. And it is preventing Americans from saving for retirement, investing in their children’s educations, or laying the traditional building blocks for a secure future, such as borrowing for college or buying a home. Debt from health care is nearly twice as common for adults under 30 as for those 65 and older … Perhaps most perversely, medical debt is blocking patients from care. About 1 in 7 people with debt said they’ve been denied access to a hospital, doctor, or other provider because of unpaid bills, according to the poll. An even greater share ― about two-thirds ― have put off care they or a family member need because of cost.” This initial segment of the multipart series by KHN and NPR reported that a “highly lucrative” and “shadowy” industry is growing by targeting and hounding those with medical debt, which patients, loved ones, and friends take on — and then can’t ever seem to shed, whether the sums are small or whopping. The huge toll this takes on debtors affects not only the poor and working poor but also those in the middle class and even the relatively well-to-do, the news organizations found. Because of big flaws in the way health coverage works in this country, notably with high-deductible policies that force folks who can’t afford even slight out-of-pocket costs to pay often sizable sums before they can get care, medical debt is a menace both to the insured and uninsured. This is occurring, despite the beneficial changes brought about by the Affordable Care Act. |
Tax-advantaged accounts can help with medical costs |
Savvy consumers can gird their finances against high health care costs with the tax advantages in two savings programs: Flexible spending accounts, or FSAs, and health savings accounts, or HSAs. Because most Americans get health insurance via their jobs, they likely have become familiar with FSAs — an employer-related benefit. Under this program, you and your employer (optional for the latter) can contribute up to $2,850 tax free over the course of a year. If you are married, your spouse also can have an FSA amounting to $2,850 annually. As the federal government explains: “You can use funds in your FSA to pay for certain medical and dental expenses for you, your spouse if you’re married, and your dependents. You can spend FSA funds to pay deductibles and copayments, but not for insurance premiums. You can spend FSA funds on prescription medications, as well as over-the-counter medicines with a doctor’s prescription. Reimbursements for insulin are allowed without a prescription. FSAs may also be used to cover costs of medical equipment like crutches, supplies like bandages, and diagnostic devices like blood sugar test kits.” The big catch with FSAs is that you must estimate carefully how much you want to accrue in them. That’s because you get a year or so to spend all that money — or lose it, or most of it (some FSAs allow a $570 maximum rollover into the next year). Consumers should monitor FSA statements and study what the accounts cover to maximize their benefits. The use-it-or-lose-it component of FSAs often comes into play near year’s end, when workers suddenly decide to get their teeth cleaned and checked, or to buy glasses and hearing aids, or to find other acceptable expenses. You can see the IRS-permitted FSA spending rules by clicking here. Consumers should know that unspent FSAs typically revert back to employers —and the sums can be big, Money magazine reported: “[FSA] holders forfeited an estimated total of $7.2 billion in 2019 and 2020 … More than 40% of workers with FSAs forfeited at least part of their account contributions in recent years, according to new data that the nonprofit Employee Benefit Research Institute (EBRI) shared with Money. On average, they lost between $339 and $408 a year … All that forfeited FSA money isn’t tracked closely by the federal government, and it’s likely those billions of forfeited dollars ended up going right back into employers’ pockets.” In contrast, health savings accounts do not have annual must-spend requirements. They are portable, meaning they do not end, and you keep them, even if you change jobs. Your employer can help you with FSAs, for example, by contributing to them on your behalf. This is not required. You can open your own if you are eligible. This makes the accounts popular for the self-employed, especially gig workers who struggle with health care costs and taxes. Everyone is not eligible for HSAs, as the New York Times has explained: “The accounts are available only to people with health insurance plans that meet specific criteria, such as a high deductible, which is the amount a person pays for non-preventive medical care before insurance. For 2020 and 2021, the amount is at least $1,400 for an individual or $2,800 for family coverage. The high deductibles could make HSA-eligible plans (which are usually labeled as such) unattractive for those with chronic conditions or costly health needs, even if monthly premiums are lower. But the accounts could also significantly reduce your tax bill.” As a leading human resources organization has noted, the sums the eligible can contribute to HSAs are higher than for FSAs: “The annual inflation-adjusted limit on HSA contributions [in 2022] will be $3,650 for self-only and $7,300 for family coverage. That’s about a 1.4% increase from 2021.” Those older than 55 can sock away $1,000 more annually in “catch-up” HSA contributions. “[T]hey offer three valuable tax breaks: Money is deposited pretax, can grow tax-free, and is not taxed when you spend it, as long as the expenses are eligible. It is rare for so many tax advantages to be wrapped into one benefit, financial advisers say. ‘It’s a great deal,’ said Neal Van Zutphen, a certified financial planner in Tempe, Ariz., ‘even if you don’t invest the money.’” HSAs can be spent on IRS-eligible health costs, the newspaper reported, such as: “The accounts can pay for a variety of medical and health expenses, including doctor visits, hospital stays, surgery, and vision or dental care. The money can also go toward long-term-care insurance premiums and services. The federal government’s pandemic relief program expanded what HSAs can pay for, including nonprescription medicine like pain relief and allergy pills, and menstrual products like tampons and pads. (The IRS has a full list of eligible items.)” For those earning more and who can afford it, HSAs — with sums available for investment — can provide a way besides traditional IRAs or 401ks to plan for retirement and its health care costs, experts say. |
Recent Health Care Blog Posts |
Here are some recent posts on our patient safety blog that might interest you:
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HERE’S TO A HEALTHY 2022!
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Sincerely, Patrick Malone |