With huge deficits, the health fund is on the brink of becoming an unfunded liability.
So how can we fix the health fund?
Introduce a health savings account plan.
Here’s how it works:
Give every working writer a health care voucher, depending on their age.
So younger writers (18–35) would get, a voucher worth $5,000 annually.
Older writers (35+) would get more (let’s say $7,500).
Regardless of your age, writers have TWO OPTIONS:
Option #1: They can use the voucher to buy health insurance.
Now here’s where things get interesting…
Option #2: If they are healthy, they can receive their annual voucher, save it, and carry over any unused amount up to a limit.
For example: let’s say a writer is healthy. He receives his voucher of $5,000 for the year and decides he doesn’t need health insurance. Instead, he puts the money into a health savings account (HSA) which he/she can draw from in case of an emergency.
The HSA can be maxed out at $20,000. And if this happens, the writer must opt out of the health plan and will receive no more vouchers.
But of course, not everyone is going to be perfectly healthy. Say if you broke your leg or had to visit the emergency room?
With a maxed out account, you can simply draw from it to pay for any incidentals like ER visits, prescriptions, eye glasses etc.
So using the example above, let’s say the writer needs to get a wisdom tooth removed and it costs $1,000. He can simply go to the dentist, and pay for it using his HSA.
Now he has $19,000.
Only when writers get down to $10,000 will they begin receiving vouchers again, enabling them to max out their HSA once more.
OK, but what if something catastrophic happens?
Create a high deductible of $10,000.
So using the example above, the writer has $19,000 in his HSA. He would then pay the deductible and be left with $9,000.
Starting next year, he will receive a voucher as normal for $5,000 replenishing the HSA to $14,000.
The next year he can receive another voucher. And the year after that, he will only receive a voucher for $1,000 to max out his HSA at $20,000.
Here are the advantages of this plan:
- It rewards healthy writers while still providing for older ones
- It gives maximum flexibility to writers and allows them to choose the health plan that suits their lifestyle
- It will result in huge savings, if the healthiest writers max out their HSA’s and opt out. This could make the health fund solvent again
- Writers can actually INVEST their HSAs. THIS IS HUGE. Why? Let’s say if a writer has a maxed out HSA; they can invest that $20,000 in a mutual fund with an annual return of 8% ($1,600). Over time, this could snowball into a significant ROI. And this has major ramifications because if enough writers max out and invest their HSA dollars, it could result in accounts with surpluses. And that means no more need for vouchers!
