15. The Medigap Trap

08/29/2009

Listen up. My Common Scents have just uncovered a new stink. This pertains to you 65 and over who have a Health Savings Account (HSA). Probably you already realize that there are huge gaps in what Medicare pays (your physician surely does) and what is reasonable. So, if you are like many seniors, you have also acquired a Medigap insurance policy to pick up the difference – you know, the deductible and the 20% Medicare doesn’t pay for and your previous private insurer might have. Wouldn’t it be nice if you could pay your premiums for a Medigap policy out of the HSA using tax-free dollars that you contributed to so dutifully just so you have your own medical reserve? Since you, at 65, have become a senior (title only since your status is being lowered under O-Care) you have also joined the “mature” health care pool responsible for most of the overall Health Care costs (that makes you particularly vulnerable under O-Plan care). I’m here to inform you that you can NOT use your HSA tax-free dollars for Medigap insurance. You can use it for Medicare A, B, C, D, but NOT Medigap. However, you can still include the insurance premium as an itemized Schedule A tax deduction. Doesn’t that make you feel good. Oops! What’s that? All those deductibles you now use you HSA tax-free dollars on are no longer deductible in Income tax for Schedule A! Well, geez – pay me now or pay me later! Just when you thought you were getting something for free the Uncle Sam barracuda swings around and bites you again. Now would this take $1 Trillion to change? Would it be beneficial to all you “mature” folks to allow tax-free HSA dollars to be used to plug the HOLES in the MEDICARE system? My Common Scents tell me it would. Maybe if sOmebody (you know who the “O” is by this time) would define the deficiencies in the present system, he’d be able to quickly provide solutions at a very affordable cost. What would this take? Hmmm, our useless Congress to debate forever – that’s always expensive? Or, simply change the tax publication, forms and laws pertaining to Health Savings Accounts? Come on O, use some Common Sense!