Eight Tips For Launching Your Real Estate Investing Career

Eight Tips for Getting Started in Real Estate Investing


This article is just the basics for getting started in real estate investing. This is not a how to article but an article that gives you some information about things to do to get started. Everything in this article is tools that can be applied to helping anyone get started in real estate investing. I am going to give you my eight keys to getting started. Nothing is right or wrong but reflects the point of view of the author. Laws and legal practices vary from state to state, and laws can change over time. The author does not vouch for the legality of his opinions, nor is there any intent to supply legal advice. The author strongly encourages the reader to consult with professionals and an attorney prior to entering in any real estate transaction or contract. The author is not a writer but he is a real estate investor. There will be grammar mistakes and errors, so don’t be too critical of the grammar but focus your energy on what is being said. With that said prepare yourself to think a little differently and expand your mind. Let’s get started on an amazing adventure.

The Eight Tips are as follows

1. Desire
2. Goal Setting
3. Learning What To Do
4. Attending a Real Estate Investing Seminar
5. The Billings Montana Market
6. Finding a Mentor
7. Your Real Estate Team
8. Just Do IT

1. Desire

Before we get in to the bolts and nails of real estate investing in I want to talk to you about desire. If you are going to be successful at anything in life including real estate investing you have to have the desire to do it. Desire is defined as longing or craving, as for something that brings satisfaction or enjoyment. Desire stresses the strength of feeling and often implies strong intention or aim. In real estate investing if you don’t have a desire to learn and grow as a human being and really get satisfaction out of it, then real estate investing is going to be hard to do. When I go out and look at a property it brings me a lot of enjoyment. Every aspect brings me joy from talking to home owners, figuring out how I can make a deal work, to buying the house and to finding a good homeowner or tenant for the house. Real estate investing may not be for everyone but real estate investing can offer anyone the financial freedom we all crave for. If you do not have the desire for real estate investing that is ok, it can still help you to live your dreams and help you to get where you want to go in the future.

Why is real estate investing an amazing avenue for anyone to live out all of their dreams? Let me ask you a few questions. Do you have enough money to do anything you want? Do you have everything you want? No debt? A nice house? Great Marriage? The freedom to do anything regardless of how much it costs and the time it takes? If you have all of these things then you are one of the few people in America who does. Most people may be working fifty hours a week and making just enough to pay their bills. In today’s day and age most people are living pay check to pay check never really knowing if they will make enough to pay the bills that just keep piling up. If you cannot keep up with your monthly bills how are you going to plan for retirement or send your kids to college or have time to enjoy life. The answer to all of these questions is becoming financially free. Now it’s not going to be easy everyone will have to get off the couch and out of their comfort zone. Real estate is proven to be one of the fastest ways to get your out of the rat race of the nine to five and begin living the life you deserve to live. Everyone wants something different out of their life. Some dream of traveling the world, spending more time with family, volunteering, golfing, laying on a beach, giving back to the community, or anything that will make them happy. There are thousands of things that make people happy.

Making it in real estate takes a person who has a strong desire to change their lives for the better and think big. Anyone can become a great real estate investor. It is going to take a lot of work and can be a struggle at times but in the end it will be the most amazing feeling ever. The people that make it in real estate investing all have a few things in common. First they run their real estate investing business like any other business out there. Second they get out there and network with anyone and everyone. Some people might be like me and have a hard time talking to other people. If you are that is ok, anyone can learn how to become a people person, it just takes hard daily work. You have to push yourself past your comfort zone. The third thing is that you cannot be afraid to fail. Everyone has failed at something but the most successful people out their learn from their failures. The fourth thing is that you have to put a good team together. I will go into putting a team together in a later chapter. The concept of putting a team together is so that when you don’t know something you have team members that know what to do and can help you with questions. The can also make sure that you are not working yourself to death. You do not want to be the person doing everything in your business. Doing everything is a receipt for failure. You have to put together good people who you can trust and rely on. The fifth thing is that you need a mentor. Sixth and final is the desire to do it. No one can become successful at something if they don’t want to do it and don’t get satisfaction out of what they are doing.

2. Setting Goals

Having goals is one of the most important aspects of achieving what you want in life. You don’t want to just have your goals up in your head you want to write them down and past what you have wrote on the wall somewhere or in the bathroom mirror. You want to review your goals daily and read them out loud to yourself. This way you remind yourself everyday why you are building your business.

How should you start to write down you goals? First off you should think big, and by big I mean HUGE. If your goals are too small you will easily achieve them and have nothing else to look forward too. You should start off by asking yourself the question if I had all the money and time in the world what would I do, what would I buy, how would I spend my time, and how would I spend my energy. Are you starting to write these down? Well you should be. Think about what you want, spending time with family, traveling the world, the best cars, a castle, owning a small country, running for president, having the biggest real estate investing business in your area or in the country. Whatever your dreams and what you want out of your life, write it down. Some of my goals are becoming free, traveling the world, having a Ferrari, having 10 vacation homes all over the world. Right now I am just trying to get you out of your comfort zone of thinking and let your imagination run.

There are several ways to set goals. I have learned a lot of ways you can set you goals and there is no right or wrong way. The best ways that I have found to set your goals is to break them up into two categories. First your short term goals. This should be goals from a month out to around a year. The second is your long term goals these goals are you think big goals and what you see for your future.

For year one I like to first make a list of what I want to achieve this year and I will give you an example of how to do that. For year one you want to be very specific first you want to list what you want your income to be at the end of the year, next how much cash in the bank you want (this is money in your checking account, not assets). Next you want to list how much you are going to give. Giving is a very important, this can be giving to charity, giving of gifts to friends and family, giving to your school or anything you can dream of. As long as what you give brings joy to others who need it more than you. Next list what bad habits you have that you want to eliminate. Weather is be quitting smoking, spending too much on junk, drinking too much, working too much, not spending enough time with family, too much TV, not exercising and many more. We all have bad habits that need to be changed in order for use to grow as human beings. Under each of these bad habits list out some steps that you can take in order to quit them. If you bad habit is being lazy and not exercising enough what can you do to change that. Well you can get a gym membership or a home work out program. Commit yourself you following through with a plan to work out 3-5 days a week. For you to change these bad habits you have to be totally committed and follow through with a detailed plan you set for yourself. After you have your plans in place you should start listing several things you want to achieve or do in the next year. This can be start a successful business, spend time with family, travel to 2-5 places and so on. Now under each of these you should also write a detailed plan on what you need and what you need to do in order to achieve these goals. Finally you should take all of this information you have a write on page on what you see your life being over the next year. Doing this is a great exercise to really see what you want out of life.

Goals Year One

This is what I am going To Do This Year
Income: $500,000
Cash: $100,000
Give: $20,000

Bad Habits that will be changes:

Over Sleeping 1. Go to bed at 11 p.m. 2. Use a timer and set it for 8 hours 3. Set the timer on the other side of the room

Buying things that you don’t need: 1. Going out shopping less 2. If you have the urge to buy something think to yourself is thing item going to help me to achieve my goals of becoming financially free? 3. Tell friends what you are doing, so they can help to stop you.

What I want to Achieve:

Start a successful Real Estate Investing Business: (you should write a detailed step by step plan of everything you need in order to achieve your goal)

Travel: Where do I want to visit? 1. Gators football game (what I need to do it, money, etc)

And last your own page about what you want to achieve using words like I will and only positive words.

For long term goals you don’t need to be as specific right now, but you should list them and under them list a few steps or smaller goals that need to be achieved before you are able to achieve them. With the long term goals always think big. Another good exercise for long term goals is to make a collage of you goals. Put pictures of the house you want on it, places you want to travel, a picture of your family, a number of what income you want in or anything you can think of.

3. Learn

Knowledge builds confidence and destroys fear. If you are starting any kind of business you need to learn the ins and outs of that business. The best way I have found to learn about real estate investing is to read all about it. But once you know it you have to apply what you have learned. Learning and reading is just one step to take. There are thousands of books on the market about real estate investing and everyone has something you can learn from. You don’t just want to read real estate investing books though. You also want to fill yourself with motivational and leadership books. Every successful person that I know if a reader and they all spend at least thirty minutes a day reading something that will teach them about improving their business or helping themselves to become a better person. Some of the best books that I would recommend reading are listed below.

1. Rich Dad Poor Dad by Robert Kiyosaki (read this first and also ready everything in the rick dad poor dad series, great books to start with and will expand you mind)
2. Be a Real Estate Millionaire by Dean Graziosi
3. Flip your way to financial freedom by Preston Ely (this is an E-Book)
4. Four hour work week by Timothy Ferriss
5. The Attractor Factor
6. Short Sale Pre-foreclosure Investing by Dwan Bent-twyford and Sharon Sestrepo
7. Keys to success, by Napoleon Hill
8. Think and Grow Rich by Napoleon Hill
9. How to win friends and influence people
10. Any Book by John C. Maxwell (he has tons of amazing leadership books)
11. Getting Started in Real Estate Day Trading by Larry Goins
12. The E Myth by Michael Gerber
13. How to be a quick turn real estate millionaire by Ron Legrand
14. The Power of Full Engagement
15. The It Factor
16. Anything by Anthony Robins

There are tons more you can read but these will give you a great start. You should also read books on negotiating, sales, motivation, and biographies on American business people.

I hope this list gives you the knowledge it has given me. If you learn and apply what you have learned from these books there is no reason that you should not become very successful.

4. Attend a Real Estate Investing Seminar

Attending a Real Estate Investing Seminar can be one of the best places to learn about real estate investing from some very well known experts. There are several seminars going on all over the country every weekend. If you live in a big city it will be very easy to find one. If you live in a town like Billings Montana you might need to travel a little ways to find one. Now most of the best meeting cost money to attend them. Some range from five hundred dollars for three days and some can be up to $20,000. There are a few that I would recommend. Than Merrill is a great speaker to go hear. I have learned a ton from him. You can find his company online by Google searching him. Also rich dad poor dad has seminars all over the country. I attended one of their seminars in Billings Montana for only $500 dollars and learned a ton from it. There is also Preston Ely, Larry Goins, and hundreds of speakers out there. If you find a great book that you really enjoyed, then just simple search for that person online and see if they are speaking somewhere or offer a seminar close to you.

Another reason I recommend going to a seminar is because they get you pumped up and motivated. I have not yet found anything else that just gets you feeling like you can do anything. When you get back from one of these seminars you will have tons of energy and knowledge. Every time I get back from one all I want to do is going out and do a deal or ten.

These seminars will also provide you with several opportunities to purchase amazing real estate investing tools, software or learning material at a fraction of the cost. Believe me when I tell you all of the low priced seminars try to sell you something. But a lot of times what they are trying to sell is some really good stuff.

Another reason to attend a seminar is to network with other investors and build relationships with them. You can meet other investors who you can partner with on a deal, sell a deal too, people who will provide you with deals and so on. You should have hundreds of business cards made up and try to give them all out. You never know how much one business card you hand out can make you.

5. Learn About the real estate market in your area

Most real estate investors start their career off my investing around where they live. This is why I do my real estate investing in Billings Montana. You can venture out when you have more experience. The reason behind this is because we feel more comfortable with the areas and know the areas better. It is also easier to get local real estate information that we need. Investing in your local market is also cheaper to start out, there is less travel costs, you can see what you are buying and it may give you a feeling a comfort.

First you have to decide which part of town is the best place to invest in. This can be determined by what kind of real estate investing you choose to do. I have not gone over the types of real estate investing but some include rehabbing (fixing up and selling), wholesaling (finding deals and selling them to other investors), buying to rent, and there are a few others. These are the real estate strategies that I use for the most part. When looking at the market you need to see where other investors are buying their houses. Most of the best deals will be found in low to middle class neighbors hoods. By low I don’t mean drug infested war zones, what I mean is blue collar safe neighbor hoods that might have somewhat older houses and houses that are not on the higher end price side. Now you can find deals in the higher priced neighbor hoods but most will be in the low to middle income neighborhoods. When looking where others are buying ask local realtors, other investors or appraisers.

When talking with investors ask them several questions such as what neighborhoods they prefer, what type of houses they buy (3 bed 2 bath), and what they do (rehab, rent, wholesale). You should not look at other investors as competition but try and work with them.

There are different types of markets such as appreciating markets, flat markets, and deprecating markets. Appreciating markets are markets that there is no enough houses or a very high demand for houses which causes the price of houses to go up. The reason there is a high demand for housing can be because of job growth, a very appealing area, or several reason. Flat markets are markets that have no or very little growth. This means that there is not a lot of demand; buy just enough to fill every ones needs. Depreciating markets are where there is a lot more houses than people to fill those house. This causes house prices to start going down. This can be because of a large employer leaving the area, a natural disaster or just over building. There is an old saying buy in a bust and sell in a boom. In depreciating markets you can pick up several deals, while in appreciating the house prices are going to be much higher and harder to find great deals. The deal will still be out there you just have to know where to find them.

Learning your market is another key to becoming successful. Real estate Brokers and experts in your area can be the best source of information for you. Learn to use them to find out what kind of market you are in. If you are in Billings Montana we are in a pretty stable market. Billings Montana has not seen the ups and downs that other markets have experienced. I will have to say that I have been noticing a little bit of a downward trend but not much. Once the first time home buyer credit is over with we might see a little more decline. Every market can vary by neighborhood, so make sure you know you market well. I have seen the same houses just one mile apart selling for totally different prices.

6. Find a Mentor

Having a mentor to help you can be your biggest learning experience. Mentors can help you with any questions you may have, walk you step by step through the investing process, give you moral support, you learn from their proven system, and also network you with others in the business. Every successful real estate investor that I know says they owe a lot of their success to the mentors they have and had in their lives. I have had one of the best mentors around, my father. He is teaching me something new every day and pushing me to become successful.

When trying to find a mentor I would suggest network with the investors at your local real estate investors club meeting. There is a real estate investing club in Billings Montana that meets once a month. You can find information about real estate investing clubs in your area by searching for REA or real estate investors club then your area in Google. When you go to the meetings ask around who the biggest investors are. Then ask if you could get together with them sometime and discuss real estate investing. Ask them if they would consider working with you to get their career going. Offer your services as a bird dog. Bird dogs are people who go out find deals or leads about deals and give them to other investors. A bird dog gets from $500 to $3000 dollars depending on the deal. Make sure that you have a bird dog contract signed with the investors saying that if you find them and deal and they buy it that you get paid a certain amount of money. Being a bird dog helps you to build credibility with the investor and they are more likely to mentor you if you have something to offer them. If you would like to contact me with a question go to my web site Big Sky Property Solutions LLC.

7. Your Real Estate Team

Building an effective team can make your life as a real estate investor a lot easier. You are only one person and cannot do everything or be an expert in every aspect of real estate investing. Going at a project alone can become one of the most frustrating experiences you will ever encounter. Many people have become frustrated and quite real estate investing because they try and juggle too many things. Make sure that when putting a team together you provide everyone with win-win opportunities. When someone knows that working with you is going to make them money they will put you as a higher priority on their list. But you have to prove it to them that you are the real deal.
People to have on your real estate investing team include

o Real Estate Agents ( find the top agent for volume of sales in your area and other agents who work with real estate investors)
o Real Estate appraisers (find an appraiser that has done a few hundred jobs or more and make sure they carry errors and omissions insurance)
o Real estate contractors (good rehab crews that can get the job done in a timely manner, have 3-5 crews and on every deal get 3 estimates done. Ask for referrals from them and make sure they are licensed)
o Real estate attorneys (every investor needs an attorney, they can help to protect your assets, make sure you find one that works with investors)
o A property management company (can manage your properties and will give you leads on property they are managing that might come up for sale)
o Title companies (take care of the legal process and make sure there are no liens against the property you are buying, choose one that does hundreds of closings a year)
o Home inspectors(charge about $400 but will give you a great inspection and could save you thousands in the long run)
o And your Mentor

All of these people can help you in various aspects of real estate investing. You might find that there are a couple others that are keys to your business but this is just a list of a few.

8. Just Do it

There is no better phrase out there then JUST DO IT! Once you have learned all you can networked with investors in Billings and learned real estate investing strategies there is nothing left to do but get your feet wet. There is no better learning tool out there then doing a deal. Once you have completed that first deal you will know what to expect and find out that it is not as hard as you thought it would be. You will have learned what you did right and what was frustrating. Take that experience and ask yourself what would have made it run smoother. Apply that to your next deal. Then the next deal will be easier and it keeps getting easier as you go. I will say that every deal is different from the last but that what makes this business fun. You have to be creative and always keep on learning and growing with your business.

The average person never uses what they learn. Don’t be average apply your knowledge. When going out and doing your first deal act like you have done 1000’s of deals. The fastest way to change a habit is to act like it is true.

Five keys for success
1. Specialized Knowledge
2. Tools of a professional
3. Have the mindset of a winner
4. Mentors
5. Money and the knowledge of leveraging it (you don’t have to have millions to invest in real estate, there are many strategies out there to use other people’s money, or no money at all)

This is going to conclude this article about getting started in real estate investing. I hope this gave you some ideas about how you can get started. I didn’t give you any strategies at this point but look for some in upcoming articles. These are simple steps you can use to get started. If you read this article thank you for listening.

If you would like to contact me and discuss anything you can find me at Big Sky Property Solution LLC by just clicking the link below.

This article was wrote by Christopher Seder of Billings Montana

I am a real estate investor in Billings Montana.

Home Improvement Tips: Ways to Increase the Value of Your Home

Reasons for A Redo

Home improvement projects often begin with someone saying, “Wouldn’t it be nice if… ?” usually followed by a wish for a remodelled kitchen or a room addition for space to accommodate every family member’s needs. More often than not, reality and dreams don’t coincide, due to limited funds for realizing the dream, or limits on the available space. The trick: turning your dreams into reality. Begin with a realistic evaluation of your needs. Homeowners usually consider home improvements for one of the following reasons.

You may feel the need to update something that is out-of-date. If your kitchen colour scheme was perfect a few decades ago but no longer works, now may a good time to update it.

Some home improvement projects grow out of an immediate need to replace broken or inefficient fixtures. If a sink, tub, or toilet needs to be replaced, consider taking advantage of the opportunity to do a makeover on the entire bathroom.

If you’re preparing to sell your home, you’ll want to be sure to get top dollar from the sale. That’s great motivation for some home improvement projects.

You have decided that staying put and improving your home is a better option than moving.

Your family has grown and you need more space.

Improving to Move? or Improving to Stay?

Evaluate your plans carefully if you’re improving your home to list it for sale. Cutting corners may hurt your prospects rather than helping them. But don’t go overboard either. Potential buyers may prefer not to pay for some of the extras, such as a hot tub or pool. You’re better off keeping the changes simple.

And remember that buyers who view your home may not share your tastes and may not appreciate the care you took to find just the right shade of green paint for the walls.

You’ll find that improving to sell is easier if you can think about it from the prospective buyer’s point of view: What is important to the home buyer? Here are a few remodelling projects buyers are likely to find valuable:

Adding or remodelling a bath

Improving the kitchen

Adding a new room


Adding a bedroom

Adding or enclosing a garage.

If you’re remodelling because you want to stay in your home, you should still avoid over-improving it. You’ll probably want to sell it someday, and even if your house is the best on the block, it may be difficult to convince potential buyers to pay for the things you considered important. And when you consider making improvements, keep in mind the value of other homes in the area. Your home’s value should not be more than 20% above the average, which means that a $10,000 kitchen improvement project well could be a better investment than a $10,000 hot tub, especially if yours will be the only home in the area with a hot tub.

Home Maintenance versus Home Improvements

It’s unfortunate that some home improvement projects are undertaken because something has broken. Replacing a leaky bathtub may be the first step to a major bath remodeling: since the tub has to be replaced anyway, why not do the whole room?

While that might be a legitimate reason to remodel, avoid basing your home improvement projects on immediate needs. You’ll be better off if you minimize problems with proper maintenance. Examine every part of your home at least once a year. Check the roof, the plumbing, electrical wiring, etc. As soon as become aware of a problem, fix it. Making repairs when you’re first aware of them will help you avoid larger expenses later on. Keep in mind that maintenance does not add to the value of your home. Usually repairs are not improvements; they are necessities.

Hiring Professionals May Save You Time and Money

It should go without saying that home projects can be expensive, so you may be tempted to tackle them yourself as a way to save money. That may be a smart move for small projects. You won’t have to wait for someone to fit your house into their busy schedule, and you can boast about having done the work yourself.

But unless you’re very versatile, major home improvements are better left to professionals. If you decide to remodel the kitchen and plan to do the work yourself, will you be able to handle the plumbing, electrical, and carpentry work on your own?. And don’t forget that you’ll need to finish it quickly, because you won’t have a kitchen as long as it’s a “work in process” and eating three meals a day in restaurants could get expensive. Keep in mind, do-it-yourself jobs generally take more time. And you’ll be responsible for getting all the necessary permits and inspections.

Hiring people who have the required experience can save you money and time, too. For example, these professionals can help you get a custom look using stock products, and that can be a significant savings. Getting something done right the first time will give you value that lasts for years.

To find qualified and dependable home improvement specialists, check with friends, business associates, and neighbours for recommendations. Always get at least three references, and check them out thoroughly. Also check with the local chapter of the Better Business Bureau or Chamber of Commerce. Their numbers can be found in the community services section of your telephone book.

Once you’ve located the necessary home improvement specialists, make sure everyone is in agreement about the design, the schedule, and the budget, and get the details down in writing in a signed contract.

It’s also wise to check on professional certifications and licenses, where required, and be certain that the contractors you hire are fully insured and bonded. Your town or city Building Department can provide that information. And it’s very important that you make sure contractors carry workers’ compensation insurance: if workers are injured on the job, you won’t be liable if the contractor is covered. Request copies of their insurance certificates. And make sure that either you or your contractor have gotten any necessary permits before the work begins. Contact your local Planning and Zoning Commission for information.

Here’s a quick overview of some of the professionals you may need to work with when you remodel your home:

Architect: Architects design homes or additions from the foundation to the roof. If your project will require structural changes such as adding or removing walls, or if the design is complex, you will probably need an architect. Since architects may charge an hourly or a flat fee, make sure you get an estimate of the total cost: drawing up the plans for a major remodeling project can take 80 hours or more.

Contractor: The contractor oversees the home improvement project, including hiring and supervising workers, getting the necessary permits, making sure inspections are done as needed, and providing insurance for work crews. It’s always a good idea to get proposals from one or more reputable contractors, based on the specific details of your project.

Be sure each contractor bids on exactly the same plan so that you can compare their bids more easily. When you’ve chosen a contractor, make sure the contract specifies that you will pay in stages. You’ll usually pay one third when the contract is signed so that the contractor can buy supplies. The number and timing for making the remaining payments will depend on the size of the project. Do not make the final payment until all the work is successfully completed, inspected, and approved.

Interior Designers: Interior designers are specialists who will provide advice on furnishings, wall coverings, colors, styles, and more. They help save you time by narrowing your selection, and save money because they usually receive professional discounts from their suppliers. When meeting with an interior designer, be sure to tell them about your personal style and preferences. Expect to pay anywhere from $50 to $150 per hour, or you may be able to negotiate a flat fee of approximately 25% of the total project cost.

A Brief History of Special Education

Perhaps the largest and most pervasive issue in special education, as well as my own journey in education, is special education’s relationship to general education. History has shown that this has never been an easy clear cut relationship between the two. There has been a lot of giving and taking or maybe I should say pulling and pushing when it comes to educational policy, and the educational practices and services of education and special education by the human educators who deliver those services on both sides of the isle, like me.

Over the last 20+ years I have been on both sides of education. I have seen and felt what it was like to be a regular main stream educator dealing with special education policy, special education students and their specialized teachers. I have also been on the special education side trying to get regular education teachers to work more effectively with my special education students through modifying their instruction and materials and having a little more patience and empathy.

Furthermore, I have been a mainstream regular education teacher who taught regular education inclusion classes trying to figure out how to best work with some new special education teacher in my class and his or her special education students as well. And, in contrast, I have been a special education inclusion teacher intruding on the territory of some regular education teachers with my special education students and the modifications I thought these teachers should implement. I can tell you first-hand that none of this give and take between special education and regular education has been easy. Nor do I see this pushing and pulling becoming easy anytime soon.

So, what is special education? And what makes it so special and yet so complex and controversial sometimes? Well, special education, as its name suggests, is a specialized branch of education. It claims its lineage to such people as Jean-Marc-Gaspard Itard (1775-1838), the physician who “tamed” the “wild boy of Aveyron,” and Anne Sullivan Macy (1866-1936), the teacher who “worked miracles” with Helen Keller.

Special educators teach students who have physical, cognitive, language, learning, sensory, and/or emotional abilities that deviate from those of the general population. Special educators provide instruction specifically tailored to meet individualized needs. These teachers basically make education more available and accessible to students who otherwise would have limited access to education due to whatever disability they are struggling with.

It’s not just the teachers though who play a role in the history of special education in this country. Physicians and clergy, including Itard- mentioned above, Edouard O. Seguin (1812-1880), Samuel Gridley Howe (1801-1876), and Thomas Hopkins Gallaudet (1787-1851), wanted to ameliorate the neglectful, often abusive treatment of individuals with disabilities. Sadly, education in this country was, more often than not, very neglectful and abusive when dealing with students that are different somehow.

There is even a rich literature in our nation that describes the treatment provided to individuals with disabilities in the 1800s and early 1900s. Sadly, in these stories, as well as in the real world, the segment of our population with disabilities were often confined in jails and almshouses without decent food, clothing, personal hygiene, and exercise.

For an example of this different treatment in our literature one needs to look no further than Tiny Tim in Charles Dickens’ A Christmas Carol (1843). In addition, many times people with disabilities were often portrayed as villains, such as in the book Captain Hook in J.M. Barrie’s “Peter Pan” in 1911.

The prevailing view of the authors of this time period was that one should submit to misfortunes, both as a form of obedience to God’s will, and because these seeming misfortunes are ultimately intended for one’s own good. Progress for our people with disabilities was hard to come by at this time with this way of thinking permeating our society, literature and thinking.

So, what was society to do about these people of misfortune? Well, during much of the nineteenth century, and early in the twentieth, professionals believed individuals with disabilities were best treated in residential facilities in rural environments. An out of sight out of mind kind of thing, if you will…

However, by the end of the nineteenth century the size of these institutions had increased so dramatically that the goal of rehabilitation for people with disabilities just wasn’t working. Institutions became instruments for permanent segregation.

I have some experience with these segregation policies of education. Some of it is good and some of it is not so good. You see, I have been a self-contained teacher on and off throughout the years in multiple environments in self-contained classrooms in public high schools, middle schools and elementary schools. I have also taught in multiple special education behavioral self-contained schools that totally separated these troubled students with disabilities in managing their behavior from their mainstream peers by putting them in completely different buildings that were sometimes even in different towns from their homes, friends and peers.

Over the years many special education professionals became critics of these institutions mentioned above that separated and segregated our children with disabilities from their peers. Irvine Howe was one of the first to advocate taking our youth out of these huge institutions and to place out residents into families. Unfortunately this practice became a logistical and pragmatic problem and it took a long time before it could become a viable alternative to institutionalization for our students with disabilities.

Now on the positive side, you might be interested in knowing however that in 1817 the first special education school in the United States, the American Asylum for the Education and Instruction of the Deaf and Dumb (now called the American School for the Deaf), was established in Hartford, Connecticut, by Gallaudet. That school is still there today and is one of the top schools in the country for students with auditory disabilities. A true success story!

However, as you can already imagine, the lasting success of the American School for the Deaf was the exception and not the rule during this time period. And to add to this, in the late nineteenth century, social Darwinism replaced environmentalism as the primary causal explanation for those individuals with disabilities who deviated from those of the general population.

Sadly, Darwinism opened the door to the eugenics movement of the early twentieth century. This then led to even further segregation and even sterilization of individuals with disabilities such as mental retardation. Sounds like something Hitler was doing in Germany also being done right here in our own country, to our own people, by our own people. Kind of scary and inhumane, wouldn’t you agree?

Today, this kind of treatment is obviously unacceptable. And in the early part of the 20th Century it was also unacceptable to some of the adults, especially the parents of these disabled children. Thus, concerned and angry parents formed advocacy groups to help bring the educational needs of children with disabilities into the public eye. The public had to see firsthand how wrong this this eugenics and sterilization movement was for our students that were different if it was ever going to be stopped.

Slowly, grassroots organizations made progress that even led to some states creating laws to protect their citizens with disabilities. For example, in 1930, in Peoria, Illinois, the first white cane ordinance gave individuals with blindness the right-of-way when crossing the street. This was a start, and other states did eventually follow suit. In time, this local grassroots’ movement and states’ movement led to enough pressure on our elected officials for something to be done on the national level for our people with disabilities.

In 1961, President John F. Kennedy created the President’s Panel on Mental Retardation. And in 1965, Lyndon B. Johnson signed the Elementary and Secondary Education Act, which provided funding for primary education, and is seen by advocacy groups as expanding access to public education for children with disabilities.

When one thinks about Kennedy’s and Johnson’s record on civil rights, then it probably isn’t such a surprise finding out that these two presidents also spearheaded this national movement for our people with disabilities.

This federal movement led to section 504 of the 1973 Rehabilitation Act. This guarantees civil rights for the disabled in the context of federally funded institutions or any program or activity receiving Federal financial assistance. All these years later as an educator, I personally deal with 504 cases every single day.

In 1975 Congress enacted Public Law 94-142, the Education for All Handicapped Children Act (EHA), which establishes a right to public education for all children regardless of disability. This was another good thing because prior to federal legislation, parents had to mostly educate their children at home or pay for expensive private education.

The movement kept growing. In the 1982 the case of the Board of Education of the Hendrick Hudson Central School District v. Rowley, the U.S. Supreme Court clarified the level of services to be afforded students with special needs. The Court ruled that special education services need only provide some “educational benefit” to students. Public schools were not required to maximize the educational progress of students with disabilities.

Today, this ruling may not seem like a victory, and as a matter of fact, this same question is once again circulating through our courts today in 2017. However, given the time period it was made in, it was a victory because it said special education students could not pass through our school system without learning anything. They had to learn something. If one knows and understands how the laws work in this country, then one knows the laws always progress through tiny little increments that add up to progress over time. This ruling was a victory for special education students because it added one more rung onto the crusade.

In the 1980s the Regular Education Initiative (REI) came into being. This was an attempt to return responsibility for the education of students with disabilities to neighborhood schools and regular classroom teachers. I am very familiar with Regular Education Initiative because I spent four years as an REI teacher in the late 1990s and early 2000s. At this time I was certified as both a special education teacher and a regular education teacher and was working in both capacities in a duel role as an REI teacher; because that’s what was required of the position.

The 1990s saw a big boost for our special education students. 1990 birthed the Individuals with Disabilities Education Act (IDEA). This was, and is, the cornerstone of the concept of a free and appropriate public education (FAPE) for all of our students. To ensure FAPE, the law mandated that each student receiving special education services must also receive an Individualized Education Program (IEP).

The Americans with Disabilities Act of 1990 reached beyond just the public schools. And Title 3 of IDEA prohibited disability-based discrimination in any place of public accommodation. Full and equal enjoyment of the goods, services, facilities, or accommodations in public places were expected. And of course public accommodations also included most places of education.

Also, in the 1990s the full inclusion movement gained a lot of momentum. This called for educating all students with disabilities in the regular classroom. I am also very familiar with this aspect of education as well, as I have also been an inclusion teacher from time to time over my career as an educator on both sides of the isle as a regular education teacher and a special education teacher.

Now on to President Bush and his educational reform with his No Child Left Behind law that replaced President Johnson’s Elementary and Secondary Education Act (ESEA). The NCLB Act of 2001 stated that special education should continue to focus on producing results and along with this came a sharp increase in accountability for educators.

Now, this NCLB Act was good and bad. Of course we all want to see results for all of our students, and it’s just common sense that accountability helps this sort of thing happen. Where this kind of went crazy was that the NCLB demanded a host of new things, but did not provide the funds or support to achieve these new objectives.

Furthermore, teachers began feeling squeezed and threatened more and more by the new movement of big business and corporate education moving in and taking over education. People with no educational background now found themselves influencing education policy and gaining access to a lot of the educational funds.

This accountability craze stemmed by excessive standardized testing ran rapid and of course ran downstream from a host of well-connected elite Trump-like figures saying to their lower echelon educational counterparts, “You’re fired!” This environment of trying to stay off of the radar in order to keep one’s job, and beating our kids over the head with testing strategies, wasn’t good for our educators. It wasn’t good for our students. And it certainly wasn’t good for our more vulnerable special education students.

Some good did come from this era though. For example, the updated Individuals with Disabilities with Education Act of 2004 (IDEA) happened. This further required schools to provide individualized or special education for children with qualifying disabilities. Under the IDEA, states who accept public funds for education must provide special education to qualifying children with disabilities. Like I said earlier, the law is a long slow process of tiny little steps adding up to progress made over time.

Finally, in 2015 President Obama’s Every Student Succeeds Act (ESSA) replaced President Bush’s NCLB, which had replaced President Johnson’s ESEA. Under Obama’s new ESSA schools were now allowed to back off on some of the testing. Hopefully, the standardized testing craze has been put in check. However, only time will tell. ESSA also returned to more local control. You know, the kind of control our forefathers intended.

You see the U.S. Constitution grants no authority over education to the federal government. Education is not mentioned in the Constitution of the United States, and for good reason. The Founders wanted most aspects of life managed by those who were closest to them, either by state or local government or by families, businesses, and other elements of civil society. Basically, they saw no role for the federal government in education.

You see, the Founders feared the concentration of power. They believed that the best way to protect individual freedom and civil society was to limit and divide power. However, this works both ways, because the states often find themselves asking the feds for more educational money. And the feds will only give the states additional money if the states do what the feds want… Hmm… Checks and balances, as well as compromise can be a really tricky thing, huh?

So on goes the battle in education and all the back and forth pushing and pulling between the federal government and the states and local government, as well as special education and regular education. And to add to this struggle, recently Judge Moukawsher, a state judge from Connecticut, in a lawsuit filed against the state by the Connecticut Coalition for Justice in Education Funding, rocked the educational boat some more when in his ruling he included a message to lawmakers to reassess what level of services students with significant disabilities are entitled to.

His ruling and statements appear to say that he thinks we’re spending too much money on our special education students. And that for some of them, it just isn’t worth it because their disabilities are too severe. You can imagine how controversial this was and how much it angered some people.

The 2016 United States Presidential election resulted in something that few people saw coming. Real Estate mogul and reality star Donald Trump won the presidency and then appointed anti-public educator Betsy Devos to head up this country’s Department of Education. Her charge, given to her by Trump, is to drastically slash the Department of Education, and to push forward private charter schools over what they call a failing public educational system.

How this is going to affect our students, and especially our more vulnerable special education students, nobody knows for sure at this time. But, I can also tell you that there aren’t many people out there that feel comfortable with it right now. Only time will tell where this is all going to go and how it will affect our special education students…

So, as I said earlier, perhaps the largest, most pervasive issue in special education is its relationship to general education. Both my own travels and our nation’s journey through the vast realm of education over all of these years has been an interesting one and a tricky one plagued with controversy to say the least.

I can still remember when I first became a special education teacher back in the mid-1990s. A friend’s father, who was a school principal at the time, told me to get out of special education because it wasn’t going to last. Well, I’ve been in and out of special education for more than two decades now, and sometimes I don’t know if I’m a regular education teacher or a special education teacher, or both. And sometimes I think our country’s educational system might be feeling the same internal struggle that I am. But, regardless, all these years later, special education is still here.

In closing, although Itard failed to normalize Victor, the wild boy of Averyon, he did produce dramatic changes in Victor’s behavior through education. Today, modern special education practices can be traced to Itard. His work marks the beginning of widespread attempts to instruct students with disabilities. Fast forwarding to 2017, for what happens next in the future of education and special education in our country… Well, I guess that depends on all of us…

Fashion Jobs and Fashion Career Advice

Picking one out of many fashion jobs generally is an overwhelming challenge. There are several different opportunities in the fashion industry that you might not be sure which one is best for you. With the high demand for fashion jobs, you need to be sure of what it is that you want to do so you can get started on pursuing your dream in this competitive industry. Below you will find descriptions for several fashion jobs and, subsequently, be one step closer to establishing your career in the fashion industry.

1. Fashion Designer

Thanks to shows like Project Runway, there are many people whose curiosity has been rose towards the fashion industry, exclusively, fashion design. A career as a fashion designer seems extravagant and rewarding but it takes a whole lot of work. A fashion designer must be well-informed of the latest trends (and sometimes even be ahead of them) and have the creativity to conceptualize new designs. A fashion designer creates sketches, whether by hand or with computer-aided design (CAD) software, of their designs and must be familiar with fabrics and materials in order to create samples that show what the final product would look like. As a fashion designer you can specialize in clothing design, footwear or accessories. Fashion jobs like that of a fashion designer are prolonged with grueling hours of intensive work and lots of traveling if you want to promote your designs. Fashion designers work under pressure to meet deadlines and make an impression on fashion buyers and other potential clients. As a fashion designer you would need not only talent and creativity but also thick skin and dedication.

2. Fashion Merchandising

Fashion jobs in merchandising can be very challenging. A fashion merchandiser must know what consumers really want, how to present it to them, what they want to pay for it and how to lure them to purchase. A fashion merchandiser is not just an expert in fashion but must also have strong business, financial and advertising skills. As a fashion designer you might find yourself creating budgets, tracking profits and losses, tracking inventory, developing marketing strategies and even putting together creative visual displays to draw in consumers. It’s a career that entails many different roles but also has many opportunities to grow and advance in.

3. Fashion Buyer

Fashion buyers are among the most crucial people for brands and companies. They must have good communication skills, be aggressive, organized and driven. As a fashion buyer you work hand in hand with designers, merchandisers and other key people to select what pieces to present to consumers and ensure that best-sellers are continually available. Buyers must be mindful of both current and future trends so they can make the right choices of clothing, shoes, accessories, etc. to ensure high profits. Working with suppliers to negotiate prices suggests that a fashion buyer must have good interpersonal skills, be educated in market costs and also in consumer demands. Fashion buyers must be ready to work under pressure, travel and research and analyze in order to make practical decisions on what products to offer their target customer base.

4. Fashion Director

Fashion directors, also known as creative directors or fashion coordinators, are in charge of the image and look of a store, magazine or a fashion house. They are accountable for that first impression given when people look at ad campaigns, shoots and even fashion films. A fashion director must make sure that the models, photographers, location and concepts characterize the store, brand, or magazine in the best and most genuine way. One of the most well known creative directors in the industry is Grace Coddington who, alongside Anna Wintour and other industry professionals, are a part of American Vogue. In the documentary “The September Issue” we are able to see Coddington showing us her best work and the steps she takes to produce the magnificent spreads in Vogue. Now, don’t think it will be a snap landing one of these fashion jobs. Be prepared for long hours of work, creative stumps, frequent traveling, crazy deadlines, and being willing to go back to the drawing board time and time again. Remember, as a fashion director you are responsible for the image of a brand; you produce something that the whole world will see. People will base their opinions on what you present to them. As one of the top fashion jobs in the industry, the pressure is on!

Fashion Jobs – The List Goes On

5. Fashion Forecaster

Probably one of the highest ranking careers in the fashion industry, fashion forecasters do just that, forecast the future trends and styles. This is much more sophisticated than forecasting the weather. Not only does a fashion forecaster need to have in depth knowledge of fashion but he or she must also be creative and surely have the skills necessary to research and analyze potential trends, colors, fabrics and patterns. Fashion forecasters seek inspiration in everything from movies, music, even science and technology. Getting a position as a fashion forecaster is one of the most prestigious of all fashion jobs you could aspire to.

6. Fashion Stylist

A fashion stylist has the easy (or is it?) task of making someone look good. A stylist must be familiar with what colors, fabrics and styles work best to flatter someone’s shape while also knowing ways to accessorize and finish the perfect outfit. Fashion stylists are responsible for picking the best pieces for photoshoots, events, etc. and putting them together for the final product. A stylist’s reputation lies on how good the client looks and, in the case of ad campaigns, whether or not the stylist can communicate the image and vision of a product. Don’t be surprised if, as a fashion stylist, you find yourself traveling for motivation or shopping for clothing, or even spending a day (or a few) revamping a client’s closet. Finding fashion jobs for stylists can be as uncomplicated as working as a personal shopper or styling photo shoots for websites or local magazines or newspapers.

7. Fashion Photographer

It’s not just about knowing just how to take a good picture. Fashion photographers basically have two fields to be good at: fashion and photography. The photography part consists of knowing what angles, lighting, etc. As far as the fashion, photographers really need to be experts in that as well. A fashion photographer should always know what the best trends are, top designers, top fashion events and any other heavy hitter aspects of the industry. Fashion jobs in this field can consist of taking pictures for model portfolios, ad campaigns, and fashion shows. Fashion photographers are responsible for producing a shot that requires excellent technical skills and extensive fashion knowledge. For example, when a fashion photographer goes to shoot at a fashion show he or she must know exactly when to snap the shot of that model wearing the flowing dress. The picture must showcase how the fabric moves and flows instead of displaying a dress that falls limp and drags on the floor. A fashion photographer works hand in hand with stylists, makeup artists and models to ensure that the final product is efficient in sending a visual message.

8. Fashion Editor

Fashion editors supervise the direction of a fashion publication, website and other media. They are in charge for editing a fashion writer’s work, making suggestions, and researching the possibilities of future stories. Fashion writers must be aware of trends and classics to assure that coverage is provided for the target audience. A fashion editor works under the pressure of meeting deadlines, supervising writers, discovering features and fresh ideas all while staying current on the industry and scanning the levels of competition. Some of the qualities necessary for one of these fashion jobs are being organized, punctual, able to communicate verbally and have impeccable writing and journalistic skills. Being one of the most competitive fashion jobs in the industry, a fashion editor should be ready to put some hard work in and spend long nights brewing up excellent, creative content.

9. Fashion Writer

Being a fashion writer is not as easy as picking up a pen and paper (or laptop, tablet, etc.) but includes extensive amounts of research. Fashion writers must be current on their knowledge of fashion and creative when drumming up writing ideas. Of course, outstanding writing skills are a must and meeting deadlines are also fundamental in this career. Fashion writers can execute interviews, cover fashion events and supply reviews of products. You have a choice of working as a freelance writer, with television shows, websites, blogs, smaller publications like local magazines and newspapers or with major publications such as Vogue or Elle, among others. This is one of those fashion jobs where you can find many opportunities and can be fairly simple to get started.

10. Fashion PR (Fashion Public Relations)

Creating a good consumer opinion is of the utmost importance for this fashion job. Where advertising and marketing can create a consumer desire to purchase a certain fashion item, public relations handles the image in its relation to the public eye. Public opinion can gauge the success and longevity of a company. Out of all the fashion jobs mentioned, fashion pr is the piece that ties it all together.

Fashion Jobs that Require WORK!

Whatever one of these fashion jobs you determine to make your career, remember that in such a reasonably competitive industry it’s important to put in a lot of hard work and to be determined. All employers look for something that make their next hire special and capable of making their publication, line, show, or website shine amongst the rest. What is it that you have to offer that others don’t have? How motivated are you? Tell us, which one of these fashion jobs appeal to you the most?

Health Savings Accounts – An American Innovation in Health Insurance

INTRODUCTON – The term “health insurance” is commonly used in the United States to describe any program that helps pay for medical expenses, whether through privately purchased insurance, social insurance or a non-insurance social welfare program funded by the government. Synonyms for this usage include “health coverage,” “health care coverage” and “health benefits” and “medical insurance.” In a more technical sense, the term is used to describe any form of insurance that provides protection against injury or illness.

In America, the health insurance industry has changed rapidly during the last few decades. In the 1970’s most people who had health insurance had indemnity insurance. Indemnity insurance is often called fee-forservice. It is the traditional health insurance in which the medical provider (usually a doctor or hospital) is paid a fee for each service provided to the patient covered under the policy. An important category associated with the indemnity plans is that of consumer driven health care (CDHC). Consumer-directed health plans allow individuals and families to have greater control over their health care, including when and how they access care, what types of care they receive and how much they spend on health care services.

These plans are however associated with higher deductibles that the insured have to pay from their pocket before they can claim insurance money. Consumer driven health care plans include Health Reimbursement Plans (HRAs), Flexible Spending Accounts (FSAs), high deductible health plans (HDHps), Archer Medical Savings Accounts (MSAs) and Health Savings Accounts (HSAs). Of these, the Health Savings Accounts are the most recent and they have witnessed rapid growth during the last decade.


A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States. The funds contributed to the account are not subject to federal income tax at the time of deposit. These may be used to pay for qualified medical expenses at any time without federal tax liability.

Another feature is that the funds contributed to Health Savings Account roll over and accumulate year over year if not spent. These can be withdrawn by the employees at the time of retirement without any tax liabilities. Withdrawals for qualified expenses and interest earned are also not subject to federal income taxes. According to the U.S. Treasury Office, ‘A Health Savings Account is an alternative to traditional health insurance; it is a savings product that offers a different way for consumers to pay for their health care.

HSA’s enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.’ Thus the Health Savings Account is an effort to increase the efficiency of the American health care system and to encourage people to be more responsible and prudent towards their health care needs. It falls in the category of consumer driven health care plans.

Origin of Health Savings Account

The Health Savings Account was established under the Medicare Prescription Drug, Improvement, and Modernization Act passed by the U.S. Congress in June 2003, by the Senate in July 2003 and signed by President Bush on December 8, 2003.

Eligibility –

The following individuals are eligible to open a Health Savings Account –

– Those who are covered by a High Deductible Health Plan (HDHP).
– Those not covered by other health insurance plans.
– Those not enrolled in Medicare4.

Also there are no income limits on who may contribute to an HAS and there is no requirement of having earned income to contribute to an HAS. However HAS’s can’t be set up by those who are dependent on someone else’s tax return. Also HSA’s cannot be set up independently by children.

What is a High Deductible Health plan (HDHP)?

Enrollment in a High Deductible Health Plan (HDHP) is a necessary qualification for anyone wishing to open a Health Savings Account. In fact the HDHPs got a boost by the Medicare Modernization Act which introduced the HSAs. A High Deductible Health Plan is a health insurance plan which has a certain deductible threshold. This limit must be crossed before the insured person can claim insurance money. It does not cover first dollar medical expenses. So an individual has to himself pay the initial expenses that are called out-of-pocket costs.

In a number of HDHPs costs of immunization and preventive health care are excluded from the deductible which means that the individual is reimbursed for them. HDHPs can be taken both by individuals (self employed as well as employed) and employers. In 2008, HDHPs are being offered by insurance companies in America with deductibles ranging from a minimum of $1,100 for Self and $2,200 for Self and Family coverage. The maximum amount out-of-pocket limits for HDHPs is $5,600 for self and $11,200 for Self and Family enrollment. These deductible limits are called IRS limits as they are set by the Internal Revenue Service (IRS). In HDHPs the relation between the deductibles and the premium paid by the insured is inversely propotional i.e. higher the deductible, lower the premium and vice versa. The major purported advantages of HDHPs are that they will a) lower health care costs by causing patients to be more cost-conscious, and b) make insurance premiums more affordable for the uninsured. The logic is that when the patients are fully covered (i.e. have health plans with low deductibles), they tend to be less health conscious and also less cost conscious when going for treatment.

Opening a Health Savings Account

An individual can sign up for HSAs with banks, credit unions, insurance companies and other approved companies. However not all insurance companies offer HSAqualified health insurance plans so it is important to use an insurance company that offers this type of qualified insurance plan. The employer may also set up a plan for the employees. However, the account is always owned by the individual. Direct online enrollment in HSA-qualified health insurance is available in all states except Hawaii, Massachusetts, Minnesota, New Jersey, New York, Rhode Island, Vermont and Washington.

Contributions to the Health Savings Account

Contributions to HSAs can be made by an individual who owns the account, by an employer or by any other person. When made by the employer, the contribution is not included in the income of the employee. When made by an employee, it is treated as exempted from federal tax. For 2008, the maximum amount that can be contributed (and deducted) to an HSA from all sources is:
$2,900 (self-only coverage)
$5,800 (family coverage)

These limits are set by the U.S. Congress through statutes and they are indexed annually for inflation. For individuals above 55 years of age, there is a special catch up provision that allows them to deposit additional $800 for 2008 and $900 for 2009. The actual maximum amount an individual can contribute also depends on the number of months he is covered by an HDHP (pro-rated basis) as of the first day of a month. For eg If you have family HDHP coverage from January 1,2008 until June 30, 2008, then cease having HDHP coverage, you are allowed an HSA contribution of 6/12 of $5,800, or $2,900 for 2008. If you have family HDHP coverage from January 1,2008 until June 30, 2008, and have self-only HDHP coverage from July 1, 2008 to December 31, 2008, you are allowed an HSA contribution of 6/12 x $5,800 plus 6/12 of $2,900, or $4,350 for 2008. If an individual opens an HDHP on the first day of a month, then he can contribute to HSA on the first day itself. However, if he/she opens an account on any other day than the first, then he can contribute to the HSA from the next month onwards. Contributions can be made as late as April 15 of the following year. Contributions to the HSA in excess of the contribution limits must be withdrawn by the individual or be subject to an excise tax. The individual must pay income tax on the excess withdrawn amount.

Contributions by the Employer

The employer can make contributions to the employee’s HAS account under a salary reduction plan known as Section 125 plan. It is also called a cafeteria plan. The contributions made under the cafeteria plan are made on a pre-tax basis i.e. they are excluded from the employee’s income. The employer must make the contribution on a comparable basis. Comparable contributions are contributions to all HSAs of an employer which are 1) the same amount or 2) the same percentage of the annual deductible. However, part time employees who work for less than 30 hours a week can be treated separately. The employer can also categorize employees into those who opt for self coverage only and those who opt for a family coverage. The employer can automatically make contributions to the HSAs on the behalf of the employee unless the employee specifically chooses not to have such contributions by the employer.

Withdrawals from the HSAs

The HSA is owned by the employee and he/she can make qualified expenses from it whenever required. He/She also decides how much to contribute to it, how much to withdraw for qualified expenses, which company will hold the account and what type of investments will be made to grow the account. Another feature is that the funds remain in the account and role over from year to year. There are no use it or lose it rules. The HSA participants do not have to obtain advance approval from their HSA trustee or their medical insurer to withdraw funds, and the funds are not subject to income taxation if made for ‘qualified medical expenses’. Qualified medical expenses include costs for services and items covered by the health plan but subject to cost sharing such as a deductible and coinsurance, or co-payments, as well as many other expenses not covered under medical plans, such as dental, vision and chiropractic care; durable medical equipment such as eyeglasses and hearing aids; and transportation expenses related to medical care. Nonprescription, over-the-counter medications are also eligible. However, qualified medical expense must be incurred on or after the HSA was established.

Tax free distributions can be taken from the HSA for the qualified medical expenses of the person covered by the HDHP, the spouse (even if not covered) of the individual and any dependent (even if not covered) of the individual.12 The HSA account can also be used to pay previous year’s qualified expenses subject to the condition that those expenses were incurred after the HSA was set up. The individual must preserve the receipts for expenses met from the HSA as they may be needed to prove that the withdrawals from the HSA were made for qualified medical expenses and not otherwise used. Also the individual may have to produce the receipts before the insurance company to prove that the deductible limit was met. If a withdrawal is made for unqualified medical expenses, then the amount withdrawn is considered taxable (it is added to the individuals income) and is also subject to an additional 10 percent penalty. Normally the money also cannot be used for paying medical insurance premiums. However, in certain circumstances, exceptions are allowed.

These are –

1) to pay for any health plan coverage while receiving federal or state unemployment benefits.
2) COBRA continuation coverage after leaving employment with a company that offers health insurance coverage.
3) Qualified long-term care insurance.
4) Medicare premiums and out-of-pocket expenses, including deductibles, co-pays, and coinsurance for: Part A (hospital and inpatient services), Part B (physician and outpatient services), Part C (Medicare HMO and PPO plans) and Part D (prescription drugs).

However, if an individual dies, becomes disabled or reaches the age of 65, then withdrawals from the Health Savings Account are considered exempted from income tax and additional 10 percent penalty irrespective of the purpose for which those withdrawals are made. There are different methods through which funds can be withdrawn from the HSAs. Some HSAs provide account holders with debit cards, some with cheques and some have options for a reimbursement process similar to medical insurance.

Growth of HSAs

Ever since the Health Savings Accounts came into being in January 2004, there has been a phenomenal growth in their numbers. From around 1 million enrollees in March 2005, the number has grown to 6.1 million enrollees in January 2008.14 This represents an increase of 1.6 million since January 2007, 2.9 million since January 2006 and 5.1 million since March 2005. This growth has been visible across all segments. However, the growth in large groups and small groups has been much higher than in the individual category. According to the projections made by the U.S. Treasury Department, the number of HSA policy holders will increase to 14 million by 2010. These 14 million policies will provide cover to 25 to 30 million U.S. citizens.

In the Individual Market, 1.5 million people were covered by HSA/HDHPs purchased as on January 2008. Based on the number of covered lives, 27 percent of newly purchased individual policies (defined as those purchased during the most recent full month or quarter) were enrolled in HSA/HDHP coverage. In the small group market, enrollment stood at 1.8 million as of January 2008. In this group 31 percent of all new enrollments were in the HSA/HDHP category. The large group category had the largest enrollment with 2.8 million enrollees as of January 2008. In this category, six percent of all new enrollments were in the HSA/HDHP category.

Benefits of HSAs

The proponents of HSAs envisage a number of benefits from them. First and foremost it is believed that as they have a high deductible threshold, the insured will be more health conscious. Also they will be more cost conscious. The high deductibles will encourage people to be more careful about their health and health care expenses and will make them shop for bargains and be more vigilant against excesses in the health care industry. This, it is believed, will reduce the growing cost of health care and increase the efficiency of the health care system in the United States. HSA-eligible plans typically provide enrollee decision support tools that include, to some extent, information on the cost of health care services and the quality of health care providers. Experts suggest that reliable information about the cost of particular health care services and the quality of specific health care providers would help enrollees become more actively engaged in making health care purchasing decisions. These tools may be provided by health insurance carriers to all health insurance plan enrollees, but are likely to be more important to enrollees of HSA-eligible plans who have a greater financial incentive to make informed decisions about the quality and costs of health care providers and services.

It is believed that lower premiums associated with HSAs/HDHPs will enable more people to enroll for medical insurance. This will mean that lower income groups who do not have access to medicare will be able to open HSAs. No doubt higher deductibles are associated with HSA eligible HDHPs, but it is estimated that tax savings under HSAs and lower premiums will make them less expensive than other insurance plans. The funds put in the HSA can be rolled over from year to year. There are no use it or lose it rules. This leads to a growth in savings of the account holder. The funds can be accumulated tax free for future medical expenses if the holder so desires. Also the savings in the HSA can be grown through investments.

The nature of such investments is decided by the insured. The earnings on savings in the HSA are also exempt from income tax. The holder can withdraw his savings in the HSA after turning 65 years old without paying any taxes or penalties. The account holder has complete control over his/her account. He/She is the owner of the account right from its inception. A person can withdraw money as and when required without any gatekeeper. Also the owner decides how much to put in his/her account, how much to spend and how much to save for the future. The HSAs are portable in nature. This means that if the holder changes his/her job, becomes unemployed or moves to another location, he/she can still retain the account.

Also if the account holder so desires he can transfer his Health Saving Account from one managing agency to another. Thus portability is an advantage of HSAs. Another advantage is that most HSA plans provide first-dollar coverage for preventive care. This is true of virtually all HSA plans offered by large employers and over 95% of the plans offered by small employers. It was also true of over half (59%) of the plans which were purchased by individuals.

All of the plans offering first-dollar preventive care benefits included annual physicals, immunizations, well-baby and wellchild care, mammograms and Pap tests; 90% included prostate cancer screenings and 80% included colon cancer screenings. Some analysts believe that HSAs are more beneficial for the young and healthy as they do not have to pay frequent out of pocket costs. On the other hand, they have to pay lower premiums for HDHPs which help them meet unforeseen contingencies.

Health Savings Accounts are also advantageous for the employers. The benefits of choosing a health Savings Account over a traditional health insurance plan can directly affect the bottom line of an employer’s benefit budget. For instance Health Savings Accounts are dependent on a high deductible insurance policy, which lowers the premiums of the employee’s plan. Also all contributions to the Health Savings Account are pre-tax, thus lowering the gross payroll and reducing the amount of taxes the employer must pay.

Criticism of HSAs

The opponents of Health Savings Accounts contend that they would do more harm than good to America’s health insurance system. Some consumer organizations, such as Consumers Union, and many medical organizations, such as the American Public Health Association, have rejected HSAs because, in their opinion, they benefit only healthy, younger people and make the health care system more expensive for everyone else. According to Stanford economist Victor Fuchs, “The main effect of putting more of it on the consumer is to reduce the social redistributive element of insurance.

Some others believe that HSAs remove healthy people from the insurance pool and it makes premiums rise for everyone left. HSAs encourage people to look out for themselves more and spread the risk around less. Another concern is that the money people save in HSAs will be inadequate. Some people believe that HSAs do not allow for enough savings to cover costs. Even the person who contributes the maximum and never takes any money out would not be able to cover health care costs in retirement if inflation continues in the health care industry.

Opponents of HSAs, also include distinguished figures like state Insurance Commissioner John Garamendi, who called them a “dangerous prescription” that will destabilize the health insurance marketplace and make things even worse for the uninsured. Another criticism is that they benefit the rich more than the poor. Those who earn more will be able to get bigger tax breaks than those who earn less. Critics point out that higher deductibles along with insurance premiums will take away a large share of the earnings of the low income groups. Also lower income groups will not benefit substantially from tax breaks as they are already paying little or no taxes. On the other hand tax breaks on savings in HSAs and on further income from those HSA savings will cost billions of dollars of tax money to the exchequer.

The Treasury Department has estimated HSAs would cost the government $156 billion over a decade. Critics say that this could rise substantially. Several surveys have been conducted regarding the efficacy of the HSAs and some have found that the account holders are not particularly satisfied with the HSA scheme and many are even ignorant about the working of the HSAs. One such survey conducted in 2007 of American employees by the human resources consulting firm Towers Perrin showed satisfaction with account based health plans (ABHPs) was low. People were not happy with them in general compared with people with more traditional health care. Respondants said they were not comfortable with the risk and did not understand how it works.

According to the Commonwealth Fund, early experience with HAS eligible high-deductible health plans reveals low satisfaction, high out of- pocket costs, and cost-related access problems. Another survey conducted with the Employee Benefits Research Institute found that people enrolled in HSA-eligible high-deductible health plans were much less satisfied with many aspects of their health care than adults in more comprehensive plans People in these plans allocate substantial amounts of income to their health care, especially those who have poorer health or lower incomes. The survey also found that adults in high-deductible health plans are far more likely to delay or avoid getting needed care, or to skip medications, because of the cost. Problems are particularly pronounced among those with poorer health or lower incomes.

Political leaders have also been vocal about their criticism of the HSAs. Congressman John Conyers, Jr. issued the following statement criticizing the HSAs “The President’s health care plan is not about covering the uninsured, making health insurance affordable, or even driving down the cost of health care. Its real purpose is to make it easier for businesses to dump their health insurance burden onto workers, give tax breaks to the wealthy, and boost the profits of banks and financial brokers. The health care policies concocted at the behest of special interests do nothing to help the average American. In many cases, they can make health care even more inaccessible.” In fact a report of the U.S. governments Accountability office, published on April 1, 2008 says that the rate of enrollment in the HSAs is greater for higher income individuals than for lower income ones.

A study titled “Health Savings Accounts and High Deductible Health Plans: Are They an Option for Low-Income Families? By Catherine Hoffman and Jennifer Tolbert which was sponsored by the Kaiser Family Foundation reported the following key findings regarding the HSAs:

a) Premiums for HSA-qualified health plans may be lower than for traditional insurance, but these plans shift more of the financial risk to individuals and families through higher deductibles.
b) Premiums and out-of-pocket costs for HSA-qualified health plans would consume a substantial portion of a low-income family’s budget.
c) Most low-income individuals and families do not face high enough tax liability to benefit in a significant way from tax deductions associated with HSAs.
d) People with chronic conditions, disabilities, and others with high cost medical needs may face even greater out-of-pocket costs under HSA-qualified health plans.
e) Cost-sharing reduces the use of health care, especially primary and preventive services, and low-income individuals and those who are sicker are particularly sensitive to cost-sharing increases.
f) Health savings accounts and high deductible plans are unlikely to substantially increase health insurance coverage among the uninsured.

Choosing a Health Plan

Despite the advantages offered by the HSA, it may not be suitable for everyone. While choosing an insurance plan, an individual must consider the following factors:

1. The premiums to be paid.
2. Coverage/benefits available under the scheme.
3. Various exclusions and limitations.
4. Portability.
5. Out-of-pocket costs like coinsurance, co-pays, and deductibles.
6. Access to doctors, hospitals, and other providers.
7. How much and sometimes how one pays for care.
8. Any existing health issue or physical disability.
9. Type of tax savings available.

The plan you choose should according to your requirements and financial ability.