HSA Questions

[LivingAlmostLarge]

If you have an HSA through work how does it work? I know you need it with an HDHP and you have say a $3000 deductible annually. But does your insurance cover most stuff and you are responsible for 20%? Does your company kick in annually the deductible?

So many people talk on here and ER about this HSA but I don't have one and never have. We've had FSA but HSA have never been offered. I wouldn't mind being able to have and save it say with the 22% coupon from tax free. But it's not available for some. Is it unusual to have a regular insurance plan?

[kork13]

I know the whole ACA health insurance marketplace centers largely around HDHP+HSA plans... So if you want one, I'd point you there first. Many employers also offer them, and typically with better terms like lower premiums, lower out-of-pocket costs, contributions/matching for the HSA, etc.

Unfortunately, I'm also inexperienced with them, and never had one myself. So I can't speak very authoritatively on it.

[disneysteve]

I know the whole ACA health insurance marketplace centers largely around HDHP+HSA plans

There are ACA plans that include an HSA, but I wouldn't say that's the focus of them. There are many choices with or without an HSA.

I had an HSA for a while at my old job and I loved it. I fully funded it so that I could then use that tax-free money to pay for medical costs. Unfortunately, I only had it for a few years and my current job doesn't offer an HSA plan.

One great thing about the HSA plans is that you could use the funds for medical expenses not covered by your insurance including copays, eyeglasses, and a bunch of other stuff so you got to buy all of those things with pre-tax dollars.

[rennigade]

If you never go to the doctor you don't need an HSA.

[LivingAlmostLarge]

I don't get why and hsa isn't available to everyone.

[kork13]

I don't get why and hsa isn't available to everyone.

Seriously... Regardless of your health insurance, having an avenue for tax-free medical spending would be awesome. No health insurance covers everything, and it'd be really nice for those expenses to at least remain tax free.

[disneysteve]

I don't get why and hsa isn't available to everyone.

That's a good question. I don't know what goes into the decision behind which plans an employer offers to the employees. Maybe there are different costs involved to the employer. Does anyone have any insight into that?

[ua_guy]

That's a good question. I don't know what goes into the decision behind which plans an employer offers to the employees. Maybe there are different costs involved to the employer. Does anyone have any insight into that?

There are different costs. PPO's tend to be more expensive for the employer to offer because they cover more. Many employers still offer them to either meet or beat the market to attract employees, or keep them around. In employment markets where employers need to be both generous and flexible, you'll typically have a couple different options for employees; HDHP with HSA and annual wellness incentive, PPO, HMO.

Being able to open an HSA is a benefit of having a HDHP and taking a higher risk with regards to coverage and out-of-pocket expenses. If an HSA was available to everyone, it would make taking a HDHP a lot less attractive--the point of an HDHP is to reduce healthcare costs and encourage health consumerism, so it has special tax advantages associated with it. The last figure I heard was that an employee on an HDHP costs a company on average almost 40% less than the same employee on a PPO plan. Not all employers offer HSA's along with their HDHP's, but because you are in an HDHP, you are eligible to open an HSA. You just have to go do it at a bank/institution of your choice versus through your employer.

Outside of an HDHP, like if you take a PPO plan, you may be eligible for an FSA/flexible spending account, which offers some similar benefits to an HSA (but not all), or a HRA/health reimbursement arrangement-account, but I believe the stipulation with HRA's is that they are employer-funded only.

[ua_guy]

If you have an HSA through work how does it work? I know you need it with an HDHP and you have say a $3000 deductible annually. But does your insurance cover most stuff and you are responsible for 20%? Does your company kick in annually the deductible?

So many people talk on here and ER about this HSA but I don't have one and never have. We've had FSA but HSA have never been offered. I wouldn't mind being able to have and save it say with the 22% coupon from tax free. But it's not available for some. Is it unusual to have a regular insurance plan?

I've had HDHP plans with an HSA for about 15 years. An HSA is a savings account which you are only eligible for if you are enrolled in an HDHP. Other types of plans can't have HSA's.

They come with higher deductibles, higher out of pocket maximums, generally comparable co-insurance, but cost less to you as an employee, generally. And they generally cost less to offer for the employer.

Additionally, the companies I've worked for have provided annual health incentive contributions to my HSA. For example, if I take a health questionnaire and complete 3 healthy activities through the plan's administrator (typically a website you go to to answer the questions and keep track of activities) then the employer would give me as much as $1,000 annually to contribute to my HSA. If my annual deductible is $1500 for me on an HSA, and my employer gives me $1,000, then my deductible effectively becomes $500. HDHP's also have specific coverages compared to PPO's, for example, an HDHP covers an annual wellness exam for free. Preventive medications are (were?) also covered by HDHP's.

If you have a lot of health needs, you will still probably find lower cost to you/ your family on a PPO. HDHP's are designed more for healthy people who don't need a lot of care. If you need serious care, it works the same as regular insurance, but if you OOP max is $3500 for a family on a PPO and $10,000 on an HSA, it could be a very expensive year for you if someone in your family gets sick. This is where the HSA comes in to help you build funds tax-free, health savings for a bad day, also an incentive for not only being healthier, but for paying more attention to your own healthcare costs since YOU are spending the money. Risk/reward.

HSA's take tax-free contributions from your paycheck, up to an annual max, as well as employer contributions (like the $1k incentive I mentioned above).
You may spend the money on IRS-approved healthcare expenses. If it's not IRS-approved, and you are audited, you pay fines (similar to withdrawing a 401k early-- it's NOT cost effective).
Once over a certain threshold ($3k ish?), you can invest your HSA money.
If you leave your HDHP, your HSA is still yours and can still be spent on IRS-approved healthcare expenses. You can no longer contribute to it, however.
An HSA typically has an associated Debit Card... When you pay for healthcare expenses you just swipe the card and it is deducted from your account. Save your receipts in case you are audited.
HSA's come with an annual tax form that you have to print off and file with your taxes.

[disneysteve]

The last figure I heard was that an employee on an HDHP costs a company on average almost 40% less than the same employee on a PPO plan.

That being the case, I wonder why all employers don't offer them. It's a benefit to the employer and to the employee.

[ua_guy]

That being the case, I wonder why all employers don't offer them. It's a benefit to the employer and to the employee.

I think it's possible some people actually have HDHP's and may not be fully aware, or it may be the only choice offered. The IRS defines it as any plan with a deductible of $1400 or more for an individual, $2800 for a family. Out of pocket maxes are capped at $7000 per individual, $14000 per family.

This site says 51% of the US workforce is enrolled in an HDHP, so it may be more uncommon that an employer doesn't offer one. The only other thing I can think of is administrative burden or contract purchase rates.

https://www.valuepenguin.com/enrollment-changes-to-high-definition-health-insurance-plans

[Atretes1]

If you never go to the doctor you don't need an HSA.

I never go to the DR and I have an HSA. I go once a year for my free physical. I am using the HSA for an alternative retirement plan or for medical expenses in retirement. Just using it now to earn market earnings.

[disneysteve]

I never go to the DR and I have an HSA.

I never go to the doctor, but I loved having an HSA. I was able to use pre-tax dollars to buy my glasses, for example. And all 3 of us wear glasses so it was a substantial savings just from that alone. Plus it was another, albeit small, tax-free place to stash some money. Even though we haven't had the HSA plan for about 5 years, I still have a few thousand dollars in there.

[Atretes1]

I never go to the doctor, but I loved having an HSA. I was able to use pre-tax dollars to buy my glasses, for example. And all 3 of us wear glasses so it was a substantial savings just from that alone. Plus it was another, albeit small, tax-free place to stash some money. Even though we haven't had the HSA plan for about 5 years, I still have a few thousand dollars in there.

I cash flow any medical expenses and save my receipts for withdrawal later.

[LivingAlmostLarge]

I think it's possible some people actually have HDHP's and may not be fully aware, or it may be the only choice offered. The IRS defines it as any plan with a deductible of $1400 or more for an individual, $2800 for a family. Out of pocket maxes are capped at $7000 per individual, $14000 per family.

This site says 51% of the US workforce is enrolled in an HDHP, so it may be more uncommon that an employer doesn't offer one. The only other thing I can think of is administrative burden or contract purchase rates.
https://www.valuepenguin.com/enrollm...nsurance-plans

Not really. I bet a lot of people have FSA which we've always had but are not HSA. HSA need to be more tied to HDHP and most people don't have that.