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The Benefit Basics

December 2007
 
In This Issue
What Is HIPAA?
What Happens To My HSA If I Am Deceased?
What Is An Embedded Deductible and How Is It Different From A Regular Deductible?

What Is HIPAA?

By Sally Schulte
 

stethescopeHIPAA (Health Portability & Accountability Act ) is a federal law enacted by the U.S. Congress in 1996 that protects your privacy regarding your medical coverage and medical conditions.  It sets regulations and standards for healthcare providers and insurance companies to follow in order to protect you against discrimination based on your health.  


According to the Centers for Medicare and Medicaid Services (CMS) website, Title I of HIPAA protects health insurance coverage for workers and their families when they change or lose their jobs.

Title II of HIPAA, the Administrative Simplification (AS) provisions, requires the establishment of national standards for electronic health care transactions and national identifiers for providers, health insurance plans, and employers.

Regulations have been added to this act and will continue to change to protect individuals and their healthcare.
What Happens To My HSA If I Am Deceased?
By Ellen Lewis
 

When you set up your Health Savings Account you will be asked for a beneficiary.  If your spouse is your beneficiary, he/she will inherit the account and become the new owner of the HSA.  There are no taxes associated with this change in owner, and the account remains an HSA.  Funds can continue to be used tax-free for qualified expenses.  If your spouse uses the account funds for non-qualified expenses, the amount will be subject to income tax and penalties. 

 

If your spouse is not the beneficiary, it ceases to be an HSA account.  The account balance becomes part of your estate and is subject to estate taxes.  If your beneficiary is your estate, the account balance becomes taxable income on your final income tax return filed by the estate.  If you name another individual as the beneficiary, the account becomes taxable income to the recipient. 
What Is An Embedded Deductible and How Is It Different From A Regular Deductible?
By David Noe
 

Once one family member has satisfied the individual deductible, that family member may begin receiving full benefits.  The remainder of the family deductible has to be met with the cumulative expenses of the other family members to receive the same benefits.

 

Example:  Sally is in a car accident and ends up with a bill of $10,000 in medical expenses.  Her medical plan has a $2,000 single deductible and a $4,000 family deductible.  She only needs to meet $2,000 before the plan begins to pay.  Her son Johnny and husband Mark together have to meet the rest of the family deductible of $2,000 in order to receive full benefits.

 

doctor

In some cases, a family can save a large amount of money with an embedded deductible.

 

In the situation of a non-embedded deductible, a family deductible has to be met by either one person, or accumulated in full, to receive full benefits.  In the example above, Sally would have to pay the family deductible of $4,000 after the accident instead of the individual amount of $2,000.  Her accident allows everyone in the family to receive full benefits, even though she is the sole contributor.  Please note that if an employee takes single coverage then they are only responsible to meet the individual deductible amount.
 
QUESTIONS OR COMMENTS?
 
Do you have a question you would like addressed in our next issue?
Please email Laura Lauber at laural@horanassoc.com or call (513) 745-0707

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This eNewsletter is a digest of information published by a variety of web-based sources and is published as a service to our users. Horan Associates, Inc | Horan Securities, Inc. is not the author of the material unless specifically noted. We review each article to ensure that it is related to the interests of our subscribers. Horan Associates, Inc | Horan Securities, Inc. does not endorse the individual authors of these articles, although Horan Associates, Inc | Horan Securities, Inc. has reviewed these articles, for accuracy and completeness and your independent review for personal relevance should be undertaken. Reliance on this material should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. All articles are copyrighted to their publishers. This publication is intended for general information only and not as legal advice. You should discuss specific details with your advisor.

 

 

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