Generally, distributions from an HRA must be paid to reimburse you for qualified medical expenses you have incurred. The expense must have been incurred on or after the date you are enrolled in the HRA. Reimbursements under an HRA can be made to the following persons:

1. Current and former employees.

2. Spouses and dependents of those employees.

3. Any person you could have claimed as a dependent on your return except that:

a. The person filed a joint return,

b. The person had gross income of $3,400 or more, or

c. You, or your spouse if filing jointly, could be claimed as a dependent on someone else’s 2007 return.

4. Spouses and de;endents of deceased employees.

Qualified medical expenses.

Qualifed Medical expenses are those specified in the plan that would generally qualify for the medical and dental expenses deduction. These are explained in Publication 502, Medical and Ental Expenses. However, even though non-prescription medicines (other than insulin) do not qualify for the medical and dental expenses deduction, they do qualify as expenses for HRA purposes. Qualified medical expenses from your HRA include the following:

Amounts paid for health insurance premiums and Amounts paid for long-term care coverage and Amounts that are not covered under another health plan.

The main reason consumers think about going to individual health insurance through a private health insurance company versus their employer group policy is because of the increasing cost of group premiums. Many times your employer pays a portion or your entire premium, but pays nothing for your dependents.

Individual health insurance premiums are typically more affordable then group premiums. This rule is not true for everyone however. Carriers set rates according to factors such as age, location and medical conditions. So if you or your dependent is 55 and has a few medical conditions you may get the best rates through the group policy.

This brings us to pre existing medical conditions. If you opt for the group policy they must accept you no matter your medical conditions. With an individual policy you go through an underwriting process which could ultimately end up with a decision to decline you if you have a declinable health condition. They also look at your weight as a means of accepting.

Would you like to choose a plan that meets your needs exact? Group restricts you to accept what they offer. Individual insurance allows you the freedom to secure what meets your needs. That way you only pay for what you need or desire.

When you go with a group you are locked in. You are obligated to use the plan they offer with no freedom to choose the benefit package. They also have an enrollment period. If you miss it you have to wait a year to sign back up or make changes. Your employer can change the carrier and/or plan every year if they want, which means rates and benefits are subject to change. And it may leave you searching for a new physician every year.

Employer group policies usually just cover medical. Vision and dental may be offered from your employer, but usually as a separate cost, separate plan and different carrier. With individual health insurance many of the carriers offer bundling. Which means you can have medical, dental and vision in one plan and one rate.

As you can see there are many factors you should ponder before deciding which option is best for you and your family. You should take some time to think about your budget, medical conditions and what is important to you.

But with rising health care costs and a changing economy, some employers have had to drop insurance coverage, leaving employees to look for new or additional protection.

If you do end up looking for health insurance, the task can seem daunting. The phone book and Internet are flooded with insurance agents and companies that offer various types of policies–unless you know where to look and what to look for.

STEP ONE:

Evaluate Your Needs

The same principle applies when shopping for health coverage as when shopping for groceries–purchase the items you really need and save money by eliminating the ones you don’t. Compare plans based on your age, current health conditions and family medical history to help ensure you get the benefits you need without spending a lot.

Do you need coverage for hospital stays or doctor’s office visits? Today, many surgeries are done on an outpatient basis, so it may be wise to consider a plan that covers both outpatient and inpatient procedures.

It’s also important to think about your coverage for catastrophic events. Can you afford to pay the higher expenses a catastrophic illness or injury may bring or are you more worried about the day-to-day medical services?

STEP TWO:

Know the Total Cost of Coverage

Check to see if you can get discounts on your premiums, perhaps by paying them once a year, paying online or having the premiums deducted straight from your bank account.

Co-pays and deductibles can also be part of a health insurance plan, so make sure to figure those expenses into the total cost of your insurance. Or, find a plan that has no co-pays or deductibles (like a limited-benefit plan).

STEP THREE:

Research the Company

Consider the company itself. Are there local representatives or ones available by phone who can help if you have questions? Having a person in your area who can provide answers is always a bonus.

Additionally, research insurance companies based on financial strength and claim payment history. Independent rating agencies and your state’s insurance department can be good resources.

Good health insurance is a must-have in today’s world of high-priced medical procedures, so take the time to fina plan that can be tailored to meet YOUR needs.

Now that the presidential race has narrowed to two candidates, it’s a good time to review where each of them stands on the issue of health care reform and what they intend to do about it. While Senator Barack Obama and Senator John McCain agree on many of the problems with the current health care system, they offer very different solutions.

One issue that McCain and Obama agree on is controlling health care costs. This reflects a growing consensus among health care experts that something must be done to bring the growth of health care spending under control.¹

Most Americans share this concern. According to an October 2007 Kaiser Family Foundation poll, more Americans were “very worried” about being unable to afford health insurance than about losing their job or house, or even experiencing a terrorist attack.²

McCain and Obama do differ on the issue of universal coverage. McCain wants to give everyone access to health insurance, but is against any mandates requiring that everyone have coverage. Obama intends to mandate that all children are covered, but stops short of requiring every American to purchase health insurance.

Historically, the primary difference between the Republican and Democratic approaches to health care reform involves the role of government and this is very evident in their two plans.

Barack Obama’s plan

“My plan begins by covering every American. If you already have health insurance, the only thing that will change for you under this plan is the amount of money you will spend on premiums. That will be less. If you are one of the 45 million Americans who don’t have health insurance, you will have it after this plan becomes law. No one will be turned away because of a preexisting condition or illness.”

Barack Obama —Iowa City, May 29, 2007³

According to his website, Obama’s plan promises:

• Quality, affordable and portable coverage for all – he will make a new national health plan available to all Americans, including the self-employed and small businesses, offering affordable health coverage similar to the plan available to members of Congress, including:
• Guaranteed eligibility.
  -­ Comprehensive benefits.
  -­ Affordable premiums, copays and deductibles.
  -­  Subsidies.
  -­  Portability and choice.
• Lower costs by modernizing the U.S. health care system – his plan would reimburse employer health plans for a portion of the catastrophic costs they incur above a threshold if they guarantee to use those savings to reduce the cost of workers’ premiums. He also supports:
  -­ Helping patients with disease management programs, coordination and
     integration of care, and requiring full transparency about quality and costs.
  -­  Ensuring health care professionals deliver quality care. 
  -­  Lowering costs through investment in electronic health information technology
     systems and increasing competition in the insurance and drug markets. 
  -­  Lowering prescription drug costs by allowing Americans to buy their medicines
      from other developed countries increasing the use of generic drugs.
• Fight for new initiatives, such as:
  -­  Advancing the biomedical research field.
  -­  Fighting AIDS worldwide. 
  -­  Supporting Americans with disabilities. 
  -­  Improving mental health care.

Obama doesn’t support a mandated plan because he says that people don’t have health care because it’s too expensive, not because they don’t want it. He would create a national health insurance program for those without employer-provided health care and who don’t qualify for existing federal programs. Although it doesn’t mandate individual coverage for all Americans, it does require coverage for all children.⁴

According to Obama, his plan will save the typical family up to $2,500 every year through:

• Investing in health information technology.
• Improving prevention and management of chronic conditions.
• Reducing insurance overhead by increasing insurance industry competition and reducing underwriting costs and profits.
• Reducing insurance premiums by providing reinsurance for catastrophic coverage.
• Making health insurance universal, reducing spending on uncompensated care.⁵

Obama’s central proposition is that the government can intervene to improve the quality of health care provided in the U.S.⁶ He estimates that his plan would cost $50 billion to $65 billion a year, which he would pay for in part by rolling back tax cuts for those who make more than $250,000 enacted by President Bush.⁷

John McCain’s plan

“The biggest problem with the American health care system is that it costs too much… Businesses and families pay more and more every year to get what they often consider to be inadequate attention or poor care.”

John McCain — Des Moines, Oct. 11, 2007 ⁸

According to John McCain’s website,⁹ McCain believes the key to health care reform is to reduce costs and restore control to the patients themselves by:

• Reforming health care to make it easier for individuals and families to obtain insurance – his plan will use competition to improve the quality and variety of health insurance to meet individual’s needs, lower prices and encourage portability by allowing the purchase of health insurance nationwide, across state lines.
• Reforming the tax code to offer more choices beyond employer-based health insurance coverage by offering the option to receive a direct refundable tax credit of $2,500 for individuals and $5,000 for families to offset the cost of insurance.
• Increasing the benefits of health savings accounts (HSAs) for families.
• Working with states to establish a guaranteed access plan to take care of the traditionally uninsurable.
• Promoting disease and individual case management, as well as health and wellness programs.
• Proposing initiatives that can lower health care costs, such as:
  -­ Lowering drug prices with through safe reimportation of drugs and faster
     introduction of generic drugs. 
  -­  Providing quality, cheaper care for chronic disease. 
  -­  Promoting coordinated care. 
  -­  Expanding access to health care through walk-in clinics in retail outlets.
  -­  Greater use of information technology. 
  -­  Reforming the Medicaid and Medicare payment systems. 
  -­  Bringing transparency to health care costs.

McCain contends soaring health care costs are the result of treatment for chronic diseases, such as cancer, diabetes, lung problems and heart disease. He wants to improve preventive care and develop a national medical records network to enhance the care of people with chronic diseases.¹⁰

McCain’s staff said his proposal would cost about $10 billion a year in reduced federal tax revenues and subsidized coverage for the poor.¹¹

Analyzing the candidates’ health care reform plans

Obama’s plan encourages the sharing of risk between the healthy and the sick, while McCain’s plan maximizes individual choice in obtaining coverage, at the cost of reducing risk-sharing.¹²

One analyst feels that McCain may be pushing for greater changes than Obama. Today, employers can write off the cost of health insurance premiums as a business expense, just like salaries. But employees don’t pay taxes on the value of that benefit, making employer-provided coverage tax-free for the 60 percent of workers who receive health benefits through their employers. In addition to being administratively efficient, this system promotes the pooling of risk.¹²

According to a Kaiser Family Foundation survey released last year, the average annual premium of an employer-based insurance policy is $12,000, of which employees pay about one-third.¹¹ By ending the employer tax exemption, employees would pay taxes on those benefits.

McCain’s plan would steer millions of additional Americans toward individual insurance, but many experts feel that the individual market can’t handle the load. Higher administrative costs for individual policies mean that a worker switching from a group policy to an individual one receives less coverage for the same price. And the cost of individual policies varies greatly, depending on the individual’s health.¹³

Plus, almost all analysts think that some employers would drop coverage if the tax exclusion is eliminated. Another concern is that younger workers would take the tax credit and buy inexpensive policies outside work, leaving employers to cover only the oldest and sickest. Obama says he would avoid this by reinforcing group coverage by maintaining the employer tax exclusion and adding new subsidies for companies to insure their workers.¹²

McCain would address these concerns by deregulating the insurance industry, allowing families to purchase health insurance across state lines, creating a bigger pool and better balancing risk. Currently, insurers need to follow the laws of the states where they sell their plans. He would also establish government-subsidized “high-risk” pools for those who still can’t buy private insurance due to pre-existing health issues.¹³

Obama’s plan would restructure the health insurance industry by imposing new national standards. He would also establish government-organized purchasing exchanges for individuals and small businesses, requiring insurers that participate in them to sell the policies to everyone at comparable prices, regardless of their health.¹³

Both McCain and Obama agree that a stronger role for primary care physicians and much bigger emphasis on preventive medicine would cut costs and improve care. They both also want to expand health information technology.¹⁴ This is a good idea, but these efforts are already underway in the U.S. health care system and is harder to accomplish than it first sounds.¹⁵

What does the insurance industry say? According to one article, America’s Health Insurance Plans (AHIP), the industry’s trade association, has endorsed a tax credit for the uninsured similar to the one McCain proposes, but opposes eliminating the tax break for employer-based coverage. AHIP has also not endorsed nationwide insurance sales.¹³

Aetna has long recognized the need for health care reform and has been involved in several efforts to make it happen. We were one of the first health benefits companies to embrace the concept of consumerism – giving members greater control over their health care decisions and spending. We also place a strong emphasis on all aspects of wellness – from encouraging a healthy lifestyle to providing benefits for preventive care and disease management. Aetna is also the first to endorse an individual mandate to obtain coverage. Ron Williams testified to this before the U.S. Senate Finance Committee on June 11.

Click here to read Aetna’s Proposal for Health Care System Transformation.

Click here to read about Ron Williams interview in FORTUNE magazine

Click here for the news release on Ron Williams’ testimony before the U.S. Senate Finance Committee.

Additional links

Comparison of Barack Obama’s and John McCain’s health care reform plans

Barack Obama’s website

John McCain’s website

NY Times Election Guide to the Issues: Health Care

Uninsured adults are more likely to be diagnosed with a disease, such as cancer, at an advanced stage, which greatly reduces their chance of survival. The Institute of Medicine found that uninsured adults are 25 percent more likely to die prematurely than adults with private health insurance.