Health Savings Accounts? (1 Viewer)

[Adam Lenhardt]

I'm losing my current health insurance at the end of the month and am being shifted to a HDHP, with a $1200 annual deductible. This will reduce my premiums by a couple hundred dollars a month, with the caveat that I'll have to have much more money accessible up front to pay for doctors' bills etcetera. I've been advised to set up a Health Savings Account (HSA) and have the payroll department at my employer deposit a certain percentage of each paycheck into it so I don't have to pay taxes on it.
A local bank in my area, Adirondack Trust, was recommended, but last fall they instituted a $4 monthly fee. I find the idea of having to pay a fee to access money in any savings account repugnant, so I'm wondering if any one knows of any HSAs with no fees that I can look into. I don't really care about the interest rate, but I don't want to be paying a fee either.

 

[Jay H]

FYI, I think a lot of the new HSAs are using a debit card, so you pay money into your account and you use your debit card to pay for approved medical expenses. At least mine is...
make sure you go over the approved expenses as you might be surprised at what they do cover and what they don't and you should know beforehand before you go into one.
We have one here that is employer provided that is free, but I don't know if it is free before my employer is paying all fees or free because it is free. I can tell you which one though but my card is at home...
Jay

 

[Citizen87645]

I would check with a local credit union if they offer an HSA.

I suppose it would be ideal if your employer helped facilitate the creation of the HSA by contracting with a provider, seeing that they are switching you to an HDHP, but it sounds like they decided not to go that route.

 

[Adam Gregorich]

http://search.hsafinder.com/ Just leave all the fields blank and hit search. It will give you a long list places you can set up an account and show you the monthly fees. I would also recommend that if you can afford it that you put in more than the $1200. Its like a 401k, so its a good opportunity to put some money aside tax free for health care expenses you may have anytime in the future.

 

[Jay H]

It looks like my healh care provider also provides the HSA so I think my situation isn't going to help you...
Jay

 

[Adam Lenhardt]

I would check with a local credit union if they offer an HSA.

Thanks for the tip. There's a credit union down the street that lets anybody join so I'll see what they offer first.

http://search.hsafinder.com/  Just leave all the fields blank and hit search.  It will give you a long list places you can set up an account and show you the monthly fees.  I would also recommend that if you can afford it that you put in more than the $1200.  Its like a 401k, so its a good opportunity to put some money aside tax free for health care expenses you may have anytime in the future. 

I'm switching to an HDHP because it's the only affordable option for me right now, but part of the appeal of the HSAs is that I can "bank" unspent funds during my healthy years and have that as a resource later on. Since graduating college, I've always managed to stay insured but it's been a real patchwork of things as my employment status has changed and my income level changed. The idea of having a reserve fund that travels with me is nice--but not if it costs me money to make use of it.
That site you linked me to is now in my bookmarks. It's nice to know that there are no-fee options out there.

 

[Jason_V]

I have two different HSA's: one with a former employer and one with my current. Both have fees-I don't think about them very much, to be honest. If i get a certain balance, the monthly fee is removed. It came in handy last year when I fractured my elbow. Insurance took care of most of the surgery, etc. expense and I had more than enough money banked for the remainder. Every paycheck, my current employer contributes to the HSA and I put some money into the other one. (The current one does not allow non-paycheck contributions.)

We also have the option of a flexible spending account, but you're put in the position of either spending the money by the end of the year or losing it. I really *really* dislike being stuck like that.

The debit cards (both are Visa, I think) work anywhere-doctor's offices, pharmacy, hospital, ER-and there's no submitting receipts to prove expenses (at least for these two).

Like Adam, I bank money all year, every year so I don't have to pay for the incidentals.

 

[BrianW]

but part of the appeal of the HSAs is that I can "bank" unspent funds during my healthy years and have that as a resource later on.

If you're not aware, another terrific feature of having an HSA is paying for medical expenses with pre-tax money. This is a significant savings even for people in the lowest tax brackets.
Even if your employer won't deduct pre-tax from your paycheck, you can make deposits to your HSA and claim them on your taxes at the end of the year. Be sure you don't deposit more than the maximum allowed.

 

[Adam Gregorich]

Originally Posted by BrianW /t/320931/health-savings-accounts#post_3931205
Even if your employer won't deduct pre-tax from your paycheck, you can make deposits to your HSA and claim them on your taxes at the end of the year. Be sure you don't deposit more than the maximum allowed.

My wife works for Microsoft and they have the best benefits. I think she pays under $20 a check and gets, gym membership, life insurance on everyone in the family, and 0 deductible, 0 co-pay coverage for all of us including for prescriptions. We have even had doctors they contract with make house calls before. My company uses HSA and high deductibles so whenever I use medical services, my benefits kick it back for being under the deductible and my wife's benefits cover it. How is this relevant? Because of that we found out that I am no longer eligible to make contributions to my HSA, so I had to get the extra I had contributes back from them and pay taxes on it. A real PITA.

 

[Adam Lenhardt]

If you're not aware, another terrific feature of having an HSA is paying for medical expenses with pre-tax money. This is a significant savings even for people in the lowest tax brackets.
Even if your employer won't deduct pre-tax from your paycheck, you can make deposits to your HSA and claim them on your taxes at the end of the year. Be sure you don't deposit more than the maximum allowed.

Thanks for sharing, both points are very relevant to my situation. I work for a mom and pop business, and they farm out payroll to Paychex. I was not looking forward to dealing with them for setting up the HSA withdrawls. If I'm reading you correctly, I can make deposits into an HSA with my post-tax net pay, and then get the taxes I paid on that income back toward my deduction on my 1040 the following spring? That would save me some headaches.

My wife works for Microsoft and they have the best benefits. I think she pays under $20 a check and gets, gym membership, life insurance on everyone in the family, and 0 deductible, 0 co-pay coverage for all of us including for prescriptions.  We have even had doctors they contract with make house calls before.  My company uses HSA and high deductibles so whenever I use medical services, my benefits kick it back for being under the deductible and my wife's benefits cover it.  How is this relevant?  Because of that we found out that I am no longer eligible to make contributions to my HSA, so I had to get the extra I had contributes back from them and pay taxes on it.  A real PITA. 

You're no longer eligible to make contributions to your HSA because of your coverage as a spousal dependent through your wife's superior health insurance, but the money you'd contributed before can still sit tight in the HSA, and you could still spend it on medical expenses tax-free if you so desired, correct?
Basically, what I'm getting at is: if I acquire traditional, no deductible health insurance in the future, I'll no longer be qualified to contribute to the HSA. But I could still spend money from it on copays and prescriptions without a tax penalty, correct? Or, more desirably, I could sit on that HSA for decades and have it to rely on as a tax-free cushion when old age brings higher medical expenses or if any unforeseen medical expenses come my way, right? You can only contribute to an HSA when you're enrolled in a qualified high deductible plan, but if you don't use that money after switching to another, non-qualifying health insurance scheme it's still there to access for medical expenses.

 

[BrianW]

If I'm reading you correctly, I can make deposits into an HSA with my post-tax net pay, and then get the taxes I paid on that income back toward my deduction on my 1040 the following spring?

Correct. But as Adam Gregorich discovered, you must have a "High-Deductible, HSA-Compliant" policy in order to make deposits to your HSA account.

You're no longer eligible to make contributions to your HSA because of your coverage as a spousal dependent through your wife's superior health insurance, but the money you'd contributed before can still sit tight in the HSA, and you could still spend it on medical expenses tax-free if you so desired, correct?

Correct. Even when you're not covered by an HSA-Compliant policy, you can still use your HSA account to pay medical bills.

Basically, what I'm getting at is: if I acquire traditional, no deductible health insurance in the future, I'll no longer be qualified to contribute to the HSA. But I could still spend money from it on copays and prescriptions without a tax penalty, correct?

Correct.

Or, more desirably, I could sit on that HSA for decades and have it to rely on as a tax-free cushion when old age brings higher medical expenses or if any unforeseen medical expenses come my way, right?

Correct. Not only that, but depending on who holds your account, when you reach retirement age, you can use your HSA monies for any purpose you desire, just like a tax-deferred retirement account.

You can only contribute to an HSA when you're enrolled in a qualified high deductible plan, but if you don't use that money after switching to another, non-qualifying health insurance scheme it's still there to access for medical expenses.

Correct.

 

[Adam Gregorich]

You're no longer eligible to make contributions to your HSA because of your coverage as a spousal dependent through your wife's superior health insurance, but the money you'd contributed before can still sit tight in the HSA, and you could still spend it on medical expenses tax-free if you so desired, correct?

Yes. It is just sitting in an accout tax free. Even through I can't currently add anything to it I can still use it. In fact I used it a few weeks ago to pay the balance on a set of perscription sunglasses.

 

[Adam Lenhardt]

Thanks for all of the info guys. It's really helping me to figure all of this out. My current, no-deductible $20 copay insurance expires Friday, so I'm sure I'll be sick and need to visit the doctor on my dime come next week.

 

[DaveF]

I signed up for the HDHP at my new job. That was a mistake. It's more expensive and harder to deal with than the PPO I'm used to. Its not awful, and if it's your only option I'm not helping, but I'm not a fan.
Now, if you never use insurance, rarely see the doctor and have no Rx save some generics, it would be fine and cheaper than a PPO. But otherwise...I'll avoid it in the future.

 

[Adam Gregorich]

Originally Posted by DaveF /t/320931/health-savings-accounts#post_3932425
I signed up for the HDHP at my new job. That was a mistake. It's more expensive and harder to deal with than the PPO I'm used to. Its not awful, and if it's your only option I'm not helping, but I'm not a fan.
Now, if you never use insurance, rarely see the doctor and have no Rx save some generics, it would be fine and cheaper than a PPO. But otherwise...I'll avoid it in the future.

I like the concept of the HDHP and like it or not more companies are going to be moving to them. It is supposed to put each of us in charge of our health care spending to make us wiser consumers. The only problem is the system isn't designed for that. If you called up your Doctors office and asked what the cash price was for a procedure or office visit I bet they couldn't tell you. If no one can tell you what things cost, how can you make a smart decision? I was having some blood work done last month and asked my Dr. to add in blood typing. When I went to the lab they looked over what they were going to do and told me that insurance probably wouldn't cover it. When I asked how much it would cost, no one could tell me.

 

[BrianW]

For my part, when I got my insurance through my employer, the HDHP policy was $200 per month less than the PPO with its $30 copay. Each year, my family spends less than $800 on wellness visits, which was more than offset by the $2400 in premium savings. Plus, there's the savings of paying medical bills with pre-tax money. Even with the PPO's 70/30 kicking in for a major injury or illness, the PPO's worst-case would still cost me more than the HDHP worst case. For intermediate case scenarios, the PPO was only marginally better. Selecting the HDHP policy was the way to go.
Now that I'm buying insurance on my own, I find that the HDHP policies are still better than the PPO policies, though the difference is not as great.
I do agree, however, that nobody knows how much procedures actually cost. All they know is what they agreed to charge the insurance companies when they signed up, and it's different for every company. This is something that needs to be fixed, but it won't happen any time soon. Medical facilities are reluctant to put an actual price on their services, because that would give the insurance companies the upper hand in negotiating terms.

 

[Adam Lenhardt]

I signed up for the HDHP at my new job. That was a mistake. It's more expensive and harder to deal with than the PPO I'm used to. Its not awful, and if it's your only option I'm not helping, but I'm not a fan.
Now, if you never use insurance, rarely see the doctor and have no Rx save some generics, it would be fine and cheaper than a PPO. But otherwise...I'll avoid it in the future.

I sort of got dragged kicking and screaming into the HDHP as it is my only option. But I did the math and it's not more expensive for me, since the difference in premiums over the course of a year is more than the annual deductible, even I'm hospitalized several times and have to pay the full $1200 one year, my total health care spending will still be less than it'd have been with the PPO with equivalent coverage.
The downside, as you say, is that it's harder to deal with. The thing I'm most dreading is having to deal with the billing depts. at the various doctor's offices directly. I've worked really hard to maintain a stellar credit history, and I don't like that any issue I have over the bill with any doctor's office could compromise that. The guy at the insurance company told me to keep receipts and document everything, because billing mistakes from the doctor's offices are not uncommon.

I like the concept of the HDHP and like it or not more companies are going to be moving to them.  It is supposed to put each of us in charge of our health care spending to make us wiser consumers.  The only problem is the system isn't designed for that.  If you called up your Doctors office and asked what the cash price was for a procedure or office visit I bet they couldn't tell you.  If no one can tell you what things cost, how can you make a smart decision?  I was having some blood work done last month and asked my Dr. to add in blood typing.  When I went to the lab they looked over what they were going to do and told me that insurance probably wouldn't cover it.  When I asked how much it would cost, no one could tell me.

The good side of HDHPs is that it gets more and more health care consumers asking those questions; the US spends way more on health care per capita than any other nation and a big part of that is that nobody really knows what they're spending.
The other argument, which I'm less sold on, is that health care spending with traditional plans is driven up by frivolous doctor's appointments and unnecessary procedures. While I'm sure there's some of that, most people I know don't go to the doctor's unless there's something wrong. I'd guess that the difference in health care spending between traditional copay plans and HDHPs is also driven by sick people avoiding necessary treatment because they don't have enough money stashed away to cover medical expenses until they hit the deductible. Those people in turn will probably cost the health care system more money over the long term, because the treatment they'll eventually need when the problem can't be ignored any more is likely to be much more expansive (and expensive) than the preventative treatment would have been.

I do agree, however, that nobody knows how much procedures actually cost. All they know is what they agreed to charge the insurance companies when they signed up, and it's different for every company. This is something that needs to be fixed, but it won't happen any time soon. Medical facilities are reluctant to put an actual price on their services, because that would give the insurance companies the upper hand in negotiating terms.

I don't know if this is how all HDHP plans work, but with my plan, doctors, etc. must submit the charges to the HMO, who will approve them at the negotiated rate, and then the doctors send me a bill for the approved amount. So I'm paying the same amount the HMO would have paid with a traditional plan, and presumably somebody on an HDHP plan with a different HMO would be paying a different negotiated rate for the same service. Someone with no insurance coverage whatsoever would be paying a significantly higher rate than both myself and the person on the other hypothetical HDHP plan, because the "list" price for services is always much higher than what is negotiated with the HMOs.

 

[Adam Lenhardt]

After doing research, today I signed up with Alliant Credit Union for my HSA. In order to be a member, you have to either live in certain Chicago area communities or be an employee/member of a Qualifying Organization. If you're a member of a PTA organization, that qualifies, but I'm not so I made a $10 donation to Foster Care to Success which was enough to get me listed as a member and qualify for credit union membership. The APY is only 1.25%, but for the amount I'm going to have in there in the next couple years, avoiding fees was more important to me than having a high return yield.
The person at Paychex my employer deals with was out of the office today, so I'll find out if I can setup pre-tax direct deposit contributions or whether I have to go with post-tax ACH payments from my checking account on Monday.
Thanks for all of the information, guys.

 

[Adam Gregorich]

Originally Posted by Adam Lenhardt /t/320931/health-savings-accounts#post_3936180
After doing research, today I signed up with Alliant Credit Union for my HSA. In order to be a member, you have to either live in certain Chicago area communities or be an employee/member of a Qualifying Organization. If you're a member of a PTA organization, that qualifies, but I'm not so I made a $10 donation to Foster Care to Success which was enough to get me listed as a member and qualify for credit union membership. The APY is only 1.25%, but for the amount I'm going to have in there in the next couple years, avoiding fees was more important to me than having a high return yield.
The person at Paychex my employer deals with was out of the office today, so I'll find out if I can setup pre-tax direct deposit contributions or whether I have to go with post-tax ACH payments from my checking account on Monday.
Thanks for all of the information, guys.

Good use of $10 to avoid fees. Smart thinking!

 

[Adam Gregorich]

Originally Posted by Adam Gregorich /t/320931/health-savings-accounts#post_3932443
I like the concept of the HDHP and like it or not more companies are going to be moving to them. It is supposed to put each of us in charge of our health care spending to make us wiser consumers. The only problem is the system isn't designed for that. If you called up your Doctors office and asked what the cash price was for a procedure or office visit I bet they couldn't tell you. If no one can tell you what things cost, how can you make a smart decision? I was having some blood work done last month and asked my Dr. to add in blood typing. When I went to the lab they looked over what they were going to do and told me that insurance probably wouldn't cover it. When I asked how much it would cost, no one could tell me.

I enjoy watching Stossel tonight and he mentioned this website that lists doctors who have set discounted pricing for services where the patient pays in full. A good fit for HSA plans:

http://simplecare.com/index2.asp