Anyone here use an HSA ( health savings account )

[TnAndy]

My wife wants to retire next year, and our health insurance has always been thru her employer ( I'm self employed ). I'm interested in how HSAs work, and what you think of them if you have one.

Thanks !

[Alice In TX/MO]

When I worked at a school district we had that option. I like it. They take X number of PRE-TAX dollars from your check each month. When you have doctor bills, you pay them, then send the bill (or a copy) to the health insurance company. They send you a check from your HSA. So, your health care bills are paid with your own pre-tax dollars. Very cool.

We got to set how much was taken out each month. The only draw back was that you had to be careful how much they took out because if you didn't use it all, it was forfeited to the school district!! We never had that happen, because hubby is on lots of meds due to the kidney transplant, and that was always a predictable amount. I could figure out how much to have deposited in the HSA.

Doc visits, meds, dental, eye care, etc.....all payable by the HSA.

[LisaInN.Idaho]

Originally Posted by Rose

When I worked at a school district we had that option. I like it. They take X number of PRE-TAX dollars from your check each month. When you have doctor bills, you pay them, then send the bill (or a copy) to the health insurance company. They send you a check from your HSA. So, your health care bills are paid with your own pre-tax dollars. Very cool.

We got to set how much was taken out each month. The only draw back was that you had to be careful how much they took out because if you didn't use it all, it was forfeited to the school district!! We never had that happen, because hubby is on lots of meds due to the kidney transplant, and that was always a predictable amount. I could figure out how much to have deposited in the HSA.

Doc visits, meds, dental, eye care, etc.....all payable by the HSA.

That almost sounds more like a Section125 Flexible Spending Account, than a Health Savings Account. In a qualified HSA you don't forfeit your unused money..it rolls over to the next year.

[Rick]

I used one for 6 months when I had a Management job- I went back in the union and lost the account, as we union grunts are not entitle to save taxes on our health spending.

If you get one, estimate what your average out of pocket expenses have been in the last five years. Also investigate (call them and ask for literature or a web-site) what items are re-imbursable. I was told (but do not know for sure) that all over the counter costs such as band-aids cough meds, motrin etc., toothpaste, even mouthwash were covered. You can increase your amount based on those types of expenditures. Better to pay tax on 100 dollars underestimated than lose 100 dollars over estimated. There should be an annual open enrollment period to adjust your dollar amount.

One fact I can tell you: I had a doctor bill that was not covered by my HMO. It was reimbursed by the pre-tax plan, but I had to submit it to the HMO so they could deny it, and then I sent the denial to the pe-tax plan.

Your deductibles, and co-pays are available in statement form from your Health Plan for submission for reimbursement from the pre-tax plan.

Hope this helps.

[travlnusa]

I have had one for a few years now, and love it.

Because it is through an insurance company, we get the discounted rates. Because we pay the first $3500/person or $7000/family, we are very good shoppers/consumers of health care.

We have built up about $8000 in our account over time and in time will lower the pre-tax dollars we add each month.

Our old policy cost $100s more per month and never covered anything. This way we know what we pay and when they take over.

Recommed it to all.

[TnAndy]

Thanks ya'll !

[shelljo]

We just signed up for one this year. Our HSA will also roll over, and our insurance premiums are a LOT lower. Wish we could have gotten one years ago. DS has pneumonia this fall--he's 14. The last time he was at the DR's before this was 10 years ago. We'd have had a lot saved up in that time. (He gets physicals through the school.) I think it sounds great. We would only lose the money if DH leaves the company.

[lgslgs]

We have one and I really like it. We combine it with a high deductable Blue Corss/Blue shield policy ($129.33 per month for two healthy adults in their mid-40's.) We went with the really high deductable policy - $10,000 per year - but we have 100% coverage from 10,000 to 5,000,000. With our family health histories and with a good savings plan so that you can pay that $10,000 a few years in a row if disaster strikes, it works great. Not the best plan, though, if you have a family history of a lot of health problems or if you aren't a good saver.

Do your research, and make sure that you go with an HSA account custodian that doesn't eat you alive with service fees. We use American Chartered Bank (an Illinois bank that we found online) and they have no fees at all and no charge for debit cards. But they also only offer plain savings accounts and no higher yield investments. Our plan is to use this account to save every month, and when the money builds up over the next few years we expect to see better high yield offerings from major investment firms. We can do a custodial transfer at no charge from this bank at any time.

We used to have a medical flexible spending account through work, and those are nice as well as long as you spend out your money every year. HSA is so much better, though, because you can build up your savings year after year if you stay healthy, and buy your Nyquil with pre-tax dollars if you need it.

Lynda

[amelia]

I began using an HSA earlier this year and am very pleased. The way it works is this: You take out a qualifying high-deductible insurance policy (the deductible options available to me were $1,500 and $2,500), and then establish a health savings account through one of several banks nationwide that deal in HSAs. You contribute as much or as little as you want to the health savings account throughout the year, and those contributions are fully tax deductible up to the amount of your deductible. When a medical expense comes along, you simply draw on your health savings account (by use of a debit card or check) up until the time your annual deductible is met. At that point, your insurance policy takes over and begins paying according to its terms (in my case 80 percent, with an annual out-of-pocket maximum of $4,000).

There are a number of really nice features to HSAs, including the following:

(1) Any unused funds contributed to the HSA roll over and accumulate from year to year.

(2) The funds in the account are truly "yours." They can be pulled out at any time, for any reason--provided, however, that if they are not used for qualifying health purposes, there is a penalty, just like in the case of an IRA.

(3) The array of qualifying expenses is quite broad--much broader than what a traditional insurance policy would cover. For example, herbs recommended by a naturopath, or cough medicines purchased over the counter, appear to be qualifying expenses. So is mileage to and from medical appointments, and parking while you're there. I understand (although I have not verified this) that even the medical costs of an uninsured dependent can be paid for out of a parent's HSA.

(4) The monthly premium for a high-deductible policy is considerably lower than the premium for traditional, low-deductible plans. My premium is about $150 per month for an $2,500 deductible, 80/20 policy with an out-of-pocket maximum of $4,000. A traditional 80/20 policy with a $500 or $1,000 deductible but otherwise comparable terms would be costing me more than twice that.

(5) The scope of coverage of a HSA-qualified high-deductible insurance policy does not appear to be any different than you would get with a traditional, low-deductible policy. In my case, I went with the same major insurer (Blue Cross) that previously was providing me with traditional coverage. The plans were basically the same except for the amount of the deductible.

(6) The high-deductible insurance plan generally has a designated "stop loss" amount or annual "out-of-pocket maximum." Therefore, even in the worst case scenario, the amount that you would be out of pocket is limited to that amount.

(7) The high-deductible insurance plan entitles you to all of the negotiated rates that you would otherwise have as a result of being part of an insurance group. Therefore, even before you have met your deductible, you have your medical provider send the bill to the insurer, which in turn will calculate the reduced amount to which the provider is entitled to bill you.

In assessing whether an HSA would be a good option for me, I made up three imaginary scenarios--a representative "good year" in which I had very few medical expenses, a "medium year" in which I had some significant illness, and a "tragic year," in which I got run over by a truck or some similar thing. I made a chart that compared what I would end up paying out-of-pocket under each of the scenarios (factoring in monthly insurance premiums), with what I would pay out-of-pocket if I had a traditional (non-HSA) insurance plan. What came out of that exercise was quite interesting: In a good year, I would save a significant amount by going with an HSA. In either of the other two scenarios, the amount I would pay out-of-pocket with or without an HSA would come out roughly the same.

IMHO, the biggest downside to HSAs is that they require the discipline to make consistent contributions to the HSA, since you are, quite literally, acting as your own insurer (at least up until a certain point). There is no one forcing you to make contributions, so there can be a real temptation, when things get tight, to defer funding the HSA. I think the best way of approaching it is to figure out what the monthly premium for a traditional policy would be, and then religiously pay the difference between that and the reduced amount of your actual premium, into the HSA.

Good luck with your decisionmaking!