Podcast Center
Video Center
Webcasts
Resource Center
Events
June 30, 2002 at 08:00 PM
IRS Ruling Seen Kick-Starting Move To Patient-Directed Health Care
By
Washington
A ruling last week by the Internal Revenue Service is being viewed by some as a major step towards altering the focus of the nations health care system.
“The ruling will kick-start the move towards patient-directed health care,” adds Greg Scandlen, a senior fellow with the National Center for Policy Analysis.
The issue, according to Scandlen, involves Health Reimbursement Arrangements (HRAs), which are tax-free health care reimbursement accounts established and funded by employers.
In Revenue Ruling 2002-41, the IRS determined that any unused money in these accounts can carry over from year-to-year. In other words, the use-it-or-lose-it rule, which applies to Flexible Spending Accounts funded by employees, does not apply.
Moreover, former employees, including retirees, can continue to draw on the accounts. In addition to paying for out-of-pocket health care expenses, employees can use the funds to purchase individual health insurance.
“These new rules will promote personal ownership and health care savings in a way that will fundamentally change health care in America,” says Rep. Jim DeMint, R-S.C., a major advocate for individually-directed health care.
“By giving people the ability to control their own health care decisions, Americans will begin to enjoy the benefits of a consumer-driven health care system,” DeMint says.
A major employers group agrees.
“The Treasury Department and the Internal Revenue Service took a solid step in the right direction for many employers that may be considering offering new consumer-oriented health plans to their employees,” says Paul Dennett, vice president for health policy with the American Benefits Council.
DeMint says the ability to accumulate money in the arrangements will encourage people to become better health care consumers.
“Rather than being controlled by an HMO or by federal bureaucrats, families will soon gain access to the quality care they need at a price they can afford,” DeMint says.
Scandlen says the main roadblock preventing many employers from establishing this type of health account was the uncertainty of the IRSs position on how they would be treated.
“Now that the IRS has ruled in favor of patient power, there should be a flood of new enrollments in 2003,” Scandlen says.
Dennett says employers are keenly interested in health plans that may help make their employees better consumers and become more actively engaged in keeping their health benefits as affordable as possible.
