Health Insurance and HSA

[BuckyBadger]

A little background. Until about a year and a half ago, my husband and I were on my University's health insurance plan because I was a grad student. It was spectacular. I paid about $35 a month and we both were covered for EVERYTHING. We never paid a dime for anything other than prescriptions.

Then I graduated and got a job and we went on my husband's plan. (Blue Cross Blue Shield I think.) Now they are informing us that they have a new option that will include a HSA.

Now, I know that health savings accounts are usually tied to high deductible plans, but here is my issue.

I don't really understand what the health insurance plan terms mean. I mean, I'm a smart enough person with most things, but I have NO IDEA what I'm talking about when it comes to that stuff. I understand the copay, but I don't really get the "out of pocket maximum" or how that works...

Is there a good resource? Like a "Health Insurance for Dummies" book? (I'll go google that next...) Or can someone take the time to explain it to me?

And then the question of if we should switch to the HSA plan. We are young and make a lot of money and we pay a lot of taxes. 31 and 32 and we make a combined gross of $230,000. We have no major health issues. We both get checkups. My husband gets some moles checked at the dermatologist every so often. Our only prescription is my birth control. He wears glasses and I wear contacts.

Would someone mind explaining to me what a high deductible HSA plan is exactly, and if we should take advantage of it? I've heard that it's a way to sock away more pretax money, which would be great for us obviously, but I don't know any of the details...

[riverwed070707]

I'm sure there is a lot of good information on the web, but in short, I find HSAs to be a good option for people who don't get sick a lot. The reason I say this is because there is substantial savings to be had in that the premiums are typically lower since you do pay the higher deductibe.

Speaking generally, most HSAs have a low or no copay, preventitive care is covered 100%, and employers often make a contribution to your savings account. The way the the deductible works is that every time you receive medical care that is not covered at 100%, you pay the full amount charged (not just 10-20% or whatever your coverage is). After the deductible is reached, then your coverage kicks in.

Out of pocket max is the most you will have to pay in a year. If you reach your deductible, incur even more and reach that number, insurance begins paying 100% instead of the 80-90% coverage.

We have an HSA and only once in 4 years have we ever reached our deductible. When we switched, I was saving $200/mo on our premiums so I started contributing that amount to our savings account instead and now when something comes up it doesn't feel like such a burden on the budget. I like that I'm paying for care when I need it and not just in case it happens -- when you pay higher premiums for a traditional account, the insurance company keeps that money whether you're sick or not! Contributions to your account are also tax-free (thus lowering your taxable income) and they roll over from year to year so you never lose what you contribute.

When I find HSAs to be more troubling are when famillies have several small kids at home (kids are always sick!) and when you don't have an adequate cash flow to contribute to the account or pay the deductible when it is needed. In those situations, receiving a $100+ bill for each doctors visit can be burdensome.

HTH!

[MonkeyMama]

And then the question of if we should switch to the HSA plan. We are young and make a lot of money and we pay a lot of taxes. 31 and 32 and we make a combined gross of $230,000. We have no major health issues. We both get checkups. My husband gets some moles checked at the dermatologist every so often. Our only prescription is my birth control. He wears glasses and I wear contacts.

You are the type demographic that HSAs are beneficial for.

BUT, there is the catch 22 that if you can afford lower deductible insurance, it may be better for the long run. & you have to run the costs to see if you even save money with the HSA.

For us personally, we switched to a high-deductible plan because we could no longer afford otherwise. BUT, we don't partake in the HSA because it is expensive, has a lot of tax issues in the state we live in, and our income tax bracket is too low to get much benefit, anyway. (We also are able to itemize medical deductionsm regardless). Oh, and I am not convinced that deductibles won't get larger over time. I think if I could afford a better health plan, I'd just buy the low deductible.

That said - I have always felt HSAs were much better for higher-incomes. IT's basically another "IRA" that you can utilize. Fees tend to be higher and investment choices are way more limited compared to retirement IRAs. BUT, for some, it is worth the current tax deduction (& is used as a retirement vehicle).

The only other advice I can give is read all the paperwork and ask questions. I can totally relate to a lot of this being greek and "learn as you go." But I remember making sure there was no lifetime maximum on benefits, and just general things like that. It's been a few years, so I don't remember everything.

We have maxed out our deductible every single year, and will probably continue to. Could not have been healthier when we signed up. My spouse had a battery of tests late 2009, surgery January 2010, I had tests late 2010 and surgery January 2011. Max, Max, Max. HEck, we keep maxing out in January. My dh has annual MRIs for eternity, and that pretty much blows our deductible. We couldn't have been more healthy when we signed up for HDHP - we both had benign tumors - needed to be removed surgically. That said, what I learned on our plan is that it is hard to get to out-of-pocket max. Because after paying $2000 for an MRI for dh in 2009, mine only cost $50 after our deductible was hit. Biopsy was maybe $10. Ultrasound was $10. Looking at our plan, prolonged hospital stay, and maybe a second surgery in same year, is all I Could figure would cost any significant amount of money after our deductible was hit. Since I had surgery this year, dh's MRIs were only $50 in 2011. BUT, every plan is different. SO I Can't speak for every insurance plan, of course.

All of the above said, not sure we can switch back to low deductible plan if we wanted to. Pre-existing conditions may leave us stuck with HDHP at this point. I did my due diligence and plan is still cheaper than anything else we can find. BUT, I am pretty sure they will jack up deductibles and out-of-pockets with time. Well, they already have.

[cypher1]

I'm pretty healthy overall (30, single, no kids) had to go to ER for a nasty bug several months back. After chest xrays, IV, more tests, it left a bill of almost $2600 for HDHP w/HSA. After all deductions, I still ended up owing roughly 1200 which I used my HSA fundings to pay off, instead of cash out of pocket. While that was a rare/extreme exception, having the HSA kind of a like another side EF. And very convenient, not just for lowering tax rate. Just something to consider

[Redraidernurse]

Because my husband and I are young, don't take medications, and rarely see a doctor the HSA works perfectly for us. Our deductible is high ($2500), but I would rather see $$ being taken out of my paycheck to be put in a HSA for ME to use (and I can control how much is taken out) than $$ be taken out to pay a health insurance coverage premium that we never use.