America’s Roadmap to Prosperity provides a new way of funding public and private benefits to increase entrepreneurship, labor market efficiency and government effectiveness and efficiency by returning ownership and control of these benefits to the individual. All existing federal benefits would be replaced with this new system.
First, it would provide monthly means tested income support and healthcare insurance. It would then provide the deductible for the healthcare insurance on a monthly basis. These public benefits would be delivered through one’s bank account and Flexible Savings Account (FSA). The FSA can be thought of as a combination healthcare insurance plan, health savings account and 401k plan with additional features. Additionally, accomplishing education benchmarks by the time a student turns 19 years of age would result in a one-time deposit into the student’s FSA as an incentive to achieve education goals early in life. Finally, the individual’s FSA would provide the foundation for entrepreneur and worker ownership and control of work benefits including vacation pay, sick leave, family leave, retirement savings and more.
Flexible Savings Account
The foundation of this new benefit system would be the Flexible Savings Account. An individual’s healthcare insurance and other benefits would be provided through this account. It would be funded through means tested deposits from the federal government for the Income Support Refund and healthcare insurance plan plus Standard Refund deposits and individual contributions from work, disability, retirement and other income. The minimum individual contributions would be 15% of income up to 10 times the poverty threshold for a single working individual. The individual would have the option of increasing contributions up to 45% of their income to fund benefits or save.
Half of the first 15% of income contributed each month by an individual would be used to pay the individual’s portion of healthcare insurance. If the individual doesn’t have income that month, the federal government would fund 100% of the cost of the healthcare insurance plan by depositing into the individual’s FSA. If the individual’s 7.5% contributions from income exceed the cost of the healthcare insurance plan, the surplus is saved and invested in the FSA for future use.
In addition to funding healthcare insurance, the FSA would fund other benefits by increasing the percent of income contributed each month or using excess funds left over after the individual’s healthcare insurance plan is paid. Healthcare insurance deductibles and co-payments could also be made. Short and long-term disability insurance could be purchased. Life insurance could be purchased. Vacation pay, sick leave, personal time off, family leave, unemployment pay, education and retirement could all be funded through this account.
Income Support Refund
The Income Support Refund would be monthly means tested deposits into one’s bank account (85%) and FSA (15%) with the option of increasing the deposits into one’s FSA up to 45% in parallel with deposits from other income sources. All citizens and legal residents would be eligible. The percent of the Income Support Refund and income to be contributed to one’s FSA would be set with the FSA provider and the government and income sources, including employers, would get the contribution rate from this source. There would be no restrictions on how the funds deposited into an individual’s bank account are used.
The Income Support Refund would be set at 100% of the national poverty threshold for a single working age individual. In 2021, the poverty threshold for a single individual under the age of 65 was $14,097 per year which would make the Income Support Refund $1,174.75 per month in 2022. Of the $1,174.75 per month Income Support Refund, $998.54 would be deposited into the individual’s bank account and $176.21 would be deposited into the individual’s FSA going towards their insurance premium. Maintaining the synchronization between government provided Income Support Refund’s and other income sources’ contribution rates creates a seamless transition on and off Income Support as needed.
Sources of income participating in the FSA and Income Support system would include wage, disability, vacation, sick leave, personal time off, family leave, unemployment, education, retirement and other sources of income. Social Security and pension income would be included as forms of retirement income.
Social Security for current retirees would be continued at the current benefit levels. Those eligible for Social Security early retirement would begin receiving those benefits. Those not currently receiving Social Security or eligible for early retirement would receive the inflation adjusted value of their and their employer’s contributions deposited into their FSA in the form of government bonds that mature fractionally each month from the month they turn 69 years of age until the age of life expectancy for 99.97% of the population for their date of birth.
The Income Support Refund would be means tested. It would be reduced $.50 for every $1.00 in wage, disability, vacation, sick leave, personal time off, family leave, unemployment, education, retirement and other sources of income. Since the rate of FSA contributions would be synchronized for the Income Support Refund and other sources of income, there would be smooth transitions on and off the Income Support Refund. This would also prevent welfare cliffs from federal income support that currently exist.
For those under the age of 19, their entire Income Support Refund would be deposited into their FSA. The only contribution rate available for those under 19 years of age would be 15%. The 15% contribution from the Income Support Refund would continue to go towards the individual’s healthcare insurance plan. The remaining Income Support Refund funds would be available to pay for childcare/education or be saved. Eligible childcare and education institutions would be required to include basic breakfasts, lunches and take home meals similar to what the school lunch program currently provides in their pricing. The entire cost of childcare and education will then be reported as income for the child with 15% of the cost being contributed to the child’s FSA.
Healthcare Insurance
The healthcare insurance plan would be funded by the government through deposits to an individual’s FSA. It would be means tested as half of the first 15% of contributions by an individual into their FSA would go towards paying their share of the healthcare insurance plan’s cost. The government would pay the remaining portion of the healthcare insurance plan’s cost. As an individual’s income goes up, the less the government provides means tested support.
This plan would cover hospital care, prescription drugs, emergency care, doctors’ visits and other services, mental health and substance abound treatment, wellness services, dental care, vision care, care through pregnancy, basic laboratory services, pediatric care, rehabilitative and habilitative services such as physical therapy, birth control and long-term care. All approved medical products and services are covered up to the average cost of that product or service or the average cost of the lowest price effective treatment. The prices that medical product and service providers charge will be made transparent. These prices will then be averaged each month on a per product/service basis and weighted average basis. The lowest of the two averages will then be used as the healthcare insurance plan’s average in coverage calculations. The cost of all claims would be shared among all healthcare insurance companies through a healthcare re-insurance cooperative.
The healthcare insurance plan’s deductible will be set at 20% of the national poverty threshold for a single working age individual for a rolling 12 month period. Deductibles are paid through an individual’s FSA.
All costs above the average cost of a medical product or service whether covered by healthcare insurance or by the deductible are considered co-pays. Co-pays are also paid through an individual’s FSA.
Standard Refund
The Standard Refund would be monthly deposits into one’s FSA (100%). All citizens and legal residents would be eligible.
The Standard Refund would be set at 20% of the national poverty threshold for a single working age individual to match the required healthcare insurance deductible for a year. In 2021, the poverty threshold for a single individual under the age of 65 was $14,097 per year which would make the Standard Refund $2,819.40 or $234.95 per month in 2022. The entire $234.95 would be deposited into the individual’s FSA to be used to pay for healthcare insurance deductibles or saved for future use.
To fund the transition to this new system, one year’s Standard Refund would be deposited into every individual’s FSA to start. This would allow individuals to pay for healthcare insurance deductibles before their savings becomes sufficient to pay for them. One year’s worth of Standard Refund deposits will be held in reserve in every FSA so that at all times healthcare insurance deductibles can be paid. Standard Refund FSA savings above the healthcare insurance deductible reserve threshold could be used for other authorized purposes.