registered health savings accounts

Time for an RHSP? Share your thoughts!

registered health savings accountsIs it time for an RHSP?  What do you think?  Please share your thoughts with us using the comment button at the bottom of this post.  If you do not know what an RHSP is, here is some information from the Financial Post:

by Richard C. Owens: Registered health savings plans would help give patients better control of their medical costs

The delivery of medical care is becoming too expensive for provincial budgets, even while insufficient investment is being made in innovation and improvement in patient care. In the result, still more costs are being downloaded to patients as treatments, procedures and drugs are delisted, or never listed, to help contain costs. The solution is a Registered Health Savings Plan (RHSP).

An RHSP would resemble a Registered Retirement Savings Plan (RRSP), Tax Free Savings Account, (TFSA) or a Registered Education Savings Plan (RESP). Individuals would deposit funds in a registered account that could be withdrawn tax-free for healthcare expenses approved and listed as deductions in the Income Tax Act.

The deductible expenses would be those not covered by provincial insurance -among them dental care, prescription drugs, physiotherapy, prostate tests and dozens of routine procedures, let alone the controversial care required for rare disorders that our Medicare systems do not insure or fully insure.

An RHSP would permit monies to be saved and invested on a limited, tax-free basis for the health-care needs of families. RHSPs would help to rectify the imbalance in health-care benefits between employees of large organizations, who typically have private health insurance, and employees of smaller ones, who typically do not and who therefore use more of their paycheques on uninsured services and medical emergencies. An RHSP would also act as a supplement to the Canada Pension Plan or other pensions, since so much of retirees’ savings is needed to meet health-related expenses as they age.

At first blush, RHSPs might seem to be a cost to governments, because they shelter income, lowering the tax revenue of governments. But RHSPs could be used to absorb some new or increased costs, generate efficiencies in health care and give rise to the economic benefits of improved health.

Governments could even use RHSPs to curb their Medicare costs by delisting existing Medicare services, using some of the revenues saved to top up the RHSPs of the poor, much as the federal government now provides grants to RESP accounts.

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