HSA's (Health Saving's Account)

[Piston]

Anyone have one?  My company is switching health plans in 2012 and we are going to an HSA.  From what I am understanding, it doesn't look too advantageous to me, the employee.  However, it sure seems to be lowering the cost for the company!

Can anyone shed some light on how the HSA works?  Or if your happy/unhappy with yours?  We've had United Health Care and I've never really been happy with them. 

[jdonovan]

HSA's are an account you put money into to pay for expenses that aren't covered by the health plan. Unlike a FSA (flex spending account) the HSA account rolls forward year to year. FSA money is lost at end of year.

Usually HSA's are paired with a high deductible health plan. It seems we all switched from 80/20 plans in the 1970/1980 to HMO's. Theory being a few low cost visits were less overall cost than a few really expensive trips to the doctor. Now it seems we are 'over using' the HMO's so ins. co. are trying to discourage over use of health care by making the initial costs come out of the individuals pockets first.

If you are an infrequent user of medial services and/or don't have chronic health problems then you can fair under such a plan fairly well. If you see a doctor once a month, and have a lot of daily meds... well then you'll probably see your personal costs increase.

From what I am understanding, it doesn't look too advantageous to me, the employee.  However, it sure seems to be lowering the cost for the company!

Nope, this is all about shifting more of the cost burden onto the employee.

[doctorb]

My understanding of HSA's are what was posted by jdonovan.  FSA's are also popular, but they have changed the rules significantly as to what applies as an out-of-pocket healthcare expense this past year.  They used to cover non-prescription meds, such as aspirin or motrin.  Now they don't.

I don't want to stray from the HSA topic too far, but it is my opinion that FSA's are very good for your employer and maybe not so good for you.  You need to spend that money, all of it, during that calendar year or you lose it.  Do you know who gets it?  Yep, your employer.  Many people just forget to submit these claims.  Many companies hire third parties to administrate these systems, some of which make it fairly time intensive to get your own money back.  If your using a FSA, it is wise to underestimate the amount you will spend on out-of-pocket healthcare costs for the following year so that you are assured of getting your money back.  It's nice that these pre-tax dollars are spent on health care, don't get me wrong.  But it only takes a few hundred bucks of unclaimed deductions to erase any tax benefit you have garnered.  Last year, for instance, I purchased a pair of prescription sunglasses just to use up the rest of my FSA account.  I would not have bought them otherwise.

Because HSA's permit rollover from one year to the next, I think they are more employee friendly than FSA accounts.

[jdonovan]

Because HSA's permit rollover from one year to the next, I think they are more employee friendly than FSA accounts.

In a stand alone discussion, yes HSA beats FSA every day. BUT most companies introduce the HSA because they've changed the health plan and the employee out of pocket is going up... SUBSTANTIALLY.

So they bone you on increased costs, and then say look here is a program where you can spend pre-tax dollars so the screwing is a bit more comfortable.

But in any case its better than no health care plan...

In most companies, the company pays a significant portion of the health care plan costs. The average employee has no idea what a healthcare plan really costs.

[ronwood]

My employer took at high deductible insurance coverage out for the employees and contributed to our HSA instead of paying for a low deductible plan. Did not cost me any more, the same coverage, and save the company money.

[trapper]

When I had flexable spending at work my wife and I would get our eye exams and glasses in either Dec or Jan depending on amount of money we had left over.  Some times exam in Dec glasses in jan.  Used all of it using that system.

[SwampDonkey]

How much is an eye exam? It's $60 or $70 here and a pair of glasses is about $250-$350.

[jdonovan]

When I had flexable spending at work my wife and I would get our eye exams and glasses in either Dec or Jan depending on amount of money we had left over.  Some times exam in Dec glasses in jan.  Used all of it using that system.

A waste with a HSA. HSA money doesn't expire, there is no need to spend it unless you have to.

[Mooseherder]

How much is an eye exam? It's $60 or $70 here and a pair of glasses is about $250-$350.

Bill, Is this your cost in addition to what your coverage pays?

[Piston]

Doctor,
I agree with the FSA, I put in 5k a couple years ago for lasik eye surgery, and it worked out to my benefit, but it was a pain in the butt to get that money back.  I had to pay the 5k upfront, then submit a claim, wait for them to review and approve it, and finally get the money back.  If I hadn't had the money to pay upfront then I would not have been able to get the procedure done.  It really aggravated me that they made me pay first, and then get reimbursed.

The more I read about the HSA the more I am starting to understand it.  I agree with the theory behind it from the big perspective, that if does force people to be more careful with the medical care they are seeking, and hopefully will keep medical care costs competitive and reasonable (or should I say bring them down to reasonable.) However, I don't agree that I am responsible for 100% of the costs until I reach my deductible.  I can see maybe an increased cost, say 50/50 or so, but at 100%, that will persuade many people to avoid the cost of medical care that they otherwise would have taken. 
I can see lower income families not going to the doctor because it may cost too much, and then all of a sudden since they didn't' go to the doctor soon enough, the issue escalates and now they may have a major illness on they're hands.


I tried finding what is covered by the HSA?  Or what qualifies for that money?  I found the list of covered procedures/items on the IRS website, pub 502 I believe it was.  Is the coverage for an HSA mandated by the government?  Or are individual companies allowed to choose what they do and do not cover?

[jdonovan]

Examples of qualified expenses may be found in IRS pub. 502.
http://www.irs.gov/pub/irs-pdf/p502.pdf

In general, medical services and prescription drugs are covered. OTC drugs are not, and things to maintain health, vitamins, health club memberships are not.

[WDH]

If I understand it right, the money that you put in a HSA is pre-tax money.  However, when you use it, you are taxed on the money.  I had to fill out a Federal HSA Tax form this year, and I ended up paying tax on what I used. 

[Piston]

From what I've been reading, it looks like all the money you put in is tax free, similar to 401k.  Also, when you use the money, you are not taxed on it as long as it is a qualified expenditure.  If it is not qualified (or you can't prove what you spent the money on was a qualified purchase) then you will be taxed on it. 

[SwampDonkey]

Bill, Is this your cost in addition to what your coverage pays?

Full cost at an optometrist.

Insurance of optometry and dental is way more than out of pocket, so I don't have those coverages. I can't figure that out. :

If I had to see a specialist for an eye exam, that would be free. ;D

In school, eye and hearing exams were free for all the children.

Around here, if you have a claim on your insurance for a prescription it has to be a government approved drug for the treatment or it's coming out of your pocket. My only experience with this is out of country for meds for an ear infection. The doc back home told me that the drug was ineffective and costs a lot more than ones he prescribed to clear it up. $80 vs $40. ;) Paid a total of $250 for the out of country 5 minute visit and pills.

[Mooseherder]

And here I thought you guys were covered for all that.

[SwampDonkey]

Seniors on "supplement" pension, natives and the poor get a bit more benefits than the working stiff. ;) Dental and eye care, unless a hospital visit are out of your pocket. I also think catarak removal is out of pocket to. Coverage varies by province, it's not a federal program other than some of the financing.

[AvT]

When I had a job I had the option to put money into an HSA and I decided one year to put in $100/ month because I had planned to get a couple of crowns done that were only covered 50% by the company health plan.  I kept putting off getting the crowns done and kinda forgot about it untill it was too late.  In our plan if you didn't use the money they just took it.  You couldnt carry it forward to use it the next year.  So I was pretty mad when I realized I had $800.00 unused money in there that was about to vaporize on me.  Yep they just took it due to what it said in the fine print and there wasn't a thing I could do about it. 

[jdonovan]

In our plan if you didn't use the money they just took it.  You couldnt carry it forward to use it the next year. 

That is specifically NOT a HSA, that is a FSA, they are very different.

[Dodgy Loner]

In our plan if you didn't use the money they just took it.  You couldnt carry it forward to use it the next year. 

That is specifically NOT a HSA, that is a FSA, they are very different.

Right, the benefit of an FSA is that the entirety of the money that you will withdraw over the course of a year is immediately available to you on Jan. 1. The downside, as you found out, is that if you do not use all of that money within a year, it disappears into your employer's pocket.

With an HSA, you get to keep any money that you haven't used within the year, but you must let that money build up over time. For example, if you chose to put $100 per month in an FSA, and you had a big medical expense in January, you would be able to apply the entire $1200 that you would be contributing for the entire year towards that expense. However, if you were putting $100 a month into and HSA, then in January, you would have only $100 in your account to apply towards that expense.

For me, a high-deductible plan with an HSA is a no-brainer. Rather than paying outrageous premiums each month, and seeing it all disappear if I have no major medical expenses over the course of a year, I simply pay a pittance each month ($11) to the insurance company, and the rest of my money goes into an HSA. If I don't have any major expenses for a year, I get to keep all of that money. In the event that I do have a major medical expense (like this year - having a baby), it just turns out to be a wash compared to a more traditional low-deductible plan. My HSA money goes towards my deductible, and the insurance company 85% of the rest once I have met it.

[AvT]

Ok well these guys called it an HCSA and here are the terms and yes it sounds like an FSA

http://www.kwantlen.ca/__shared/assets/admin_hcsa7618.pdf

After that happened to me I never put another penny into the plan!

[jdonovan]

Ok well these guys called it an HCSA and here are the terms and yes it sounds like an FSA

http://www.kwantlen.ca/__shared/assets/admin_hcsa7618.pdf

After that happened to me I never put another penny into the plan!

Hmmm Canadian web site... I'll venture to guess the laws and terms are going to be different between the US and Canada.  ;)