Health Savings Account-Health Savings Account Info

jdub310:

It’s good to have a HSA in addition to health insurance. Then you can pay your insurance deductible with tax free dollars from your HSA.

Chely V:

Here’s the way mine works:

With traditional insurance: I was paying $90 each paycheck (every 2 weeks) which comes out to $2340 a year, plus there is a $15-$30 deductible every time you see a doctor and like $300 for a hospital visit.

With an HSA, I take $80 out each paycheck, pre-tax and it gets put into a bank account. I can then use that bank account to pay for my doctors visits, and once I have spent all $2300, everything is paid in full. And if I don’t spend all of it, it carries over into the next year.

Then if I leave my job I can keep it and use it at my new job (if they offer the Consumer Driven Health Plan) or I can use it like a 401K. However, you get HEAVILY taxed for taking any money out of it since it was all pre-tax!

Hope this helps!

Insurance Pickle.com:

I’m amazed of how many people don’t understand HSAs (or qualfied high deductible plans). First to be clear the health plan itself is a QHDP (Qualified High Deductible Plan) which by having one allows you to open an HSA (Health Savings Account). We all call the plan the HSA which is technically not correct, but that’s ok. It’s important to know that you can’t have an HSA without a QHDP, but you can have a QHDP without the HSA.

I have a blog on my site titled “What’s the Total Monthly Cost of Your Health Plan” which goes into this (below) a little bit.

Of course for my example that follows state to state and company to company it’ll be different. But let’s assume that as a family you could get (for easy math) a $3600 deductible QHDP and after the $3600 everything (drugs, hospital, doctors, etc…) was covered 100%. And let’s assume that this plan cost $250/month. So, if you paid for the qualified health plan at $250/month and then turned around and put $300/month into your HSA (or stuck $3600 in up front) your total monthly cost is $550. If you think about it even if you could get an HMO which has no dedeductibles for the same $550 per month it wouldn’t make any sense to do so. With the HMO if you go to the doctor you’re going to have to come out of pocket OVER AND ABOVE the $550 for the copays, etc… BUT with the HSA you won’t come out of pocket in addition to the $550. When you go to the doctor you’ll pull it from the savings account.

So if you go to the doctor a bunch you could eat through the account and hit the insurance and if you don’t use it much at all your money in the savings account stays there.

So, these notions of it’s not good if you use it a lot or it’s not good if you hardly ever go to the doctor make absolutely no sense. What make sense is doing the math to figure out which plan makes more sense if over the course of a year you A) don’t get sick at all, B) rack up moderate to low bills of $1,000, C) $10,000 of bills and D) $250,000 in bills. In my state for scenarios A, B, C, AND D it makes sense to do the HSA every time because your MEDICAL expenses will be lower. It’s also the case in my state that the HSA plans actually have richer benefits than the non-HSA plans. For example the same PPO plan from Blue Cross covers up to $3,000,000 in prescriptions, but the regular non-hsa PPO only covers $1,500 per year. That’s a huge benefit and the total cost when analyzing both plans is lower for the HSA.

So do the math and figure it out. Because I will say that around 1999/2000 when HSAs were still MSAs they made no sense here because the cost of a $5000 deductible MSA was the same price as a $500 deductible plan.

For the most part, unless you’re choosing a stripped down HSA plan, the ONLY downside to the HSA is if you get the plan this week and fall down the stairs next week and haven’t put a single dime into the plan yet. SO, yes that is a risk getting out of the gate, but I’ll also say that I had surgery 3 (THREE) months ago and I haven’t written a single check yet. I haven’t even seen the anesthesiologist’s bill yet. I like to wait until I get all my bills before I write checks to make sure they’re right and match the EOBs (explanation of benefits). The point being is that risk is no big deal, because even now if I was faced with large bills I could pay them in payments or put it on a credit card. The HSA tax savings would more than make up for any interest if I used a credit card.

Anyway, just do the math and see what makes sense to you. I think HSAs are phenomenal ways to pay for health care and I wish HR departments would get on the ball and make them more readily available to their employees.

Good luck and I hope that helped,

Jeff