Health Savings Account

[Sallyr70]

For the first time, my company is offering an HSA. The plan I'm currently on is $16.12 a week ($838/year.) There is no premium with the HSA. The company contributes $250 a year. So if my medical expenses are less than $1088, I will be on top! It feels risky to do this, but I'm in excellent health. The deductible is $1500 and max out of pocket is $3000.

I'm 'loading up' on doc appointments and lab work through the end of this year, since I've already met the lower deductible and i have full coverage.

Does anyone use their HSA as an investment vehicle? I already have a Roth IRA and 401K (which I don't max out due to my income).


Sally

[cypher1]

Not so much as an investment vehicle, but I do contribute 2000 throughout the year, and my employer adds 750 at the beginning of each year. So far I have 6500 banked.

While I'm healthy (for now), I figure at one point or another I'll have to use for surprise work/emergency and can't hurt to have a little extra stashed. I would actually consider it part of my EF overall.

[disneysteve]

For the first time, my company is offering an HSA. The plan I'm currently on is $16.12 a week ($838/year.) There is no premium with the HSA. The company contributes $250 a year. So if my medical expenses are less than $1088, I will be on top! It feels risky to do this, but I'm in excellent health. The deductible is $1500 and max out of pocket is $3000.

I'm a little confused. You say there is no premium for the insurance plan but you are paying $16.12/week. Isn't that the premium? Or are you saying that's the amount you are putting into the HSA? If so, how did you arrive at that amount seeing as it's a rather random number?

What about this feels risky to you? If all of the money is going into your HSA, what's the risk? It's your money? It's there whenever you need it to pay medical expenses? And if you actually are getting the insurance at no cost, that's fantastic. I'd jump at that deal assuming the coverage is decent. I'm a little surprised that you have an HSA with such a low deductible. I thought the whole idea was that an HSA had to be coupled with a HDHP (high deductible health plan).

[bennkar]

I'm a little confused. You say there is no premium for the insurance plan but you are paying $16.12/week. Isn't that the premium? Or are you saying that's the amount you are putting into the HSA? If so, how did you arrive at that amount seeing as it's a rather random number?

I think she means the HSA will be starting next year with no premium, but her current non-HSA plan has a premium.

What about this feels risky to you? If all of the money is going into your HSA, what's the risk? It's your money? It's there whenever you need it to pay medical expenses? And if you actually are getting the insurance at no cost, that's fantastic. I'd jump at that deal assuming the coverage is decent. I'm a little surprised that you have an HSA with such a low deductible. I thought the whole idea was that an HSA had to be coupled with a HDHP (high deductible health plan).

Deductibles for a single person can be lower than for a family. Mine is, I believe, $1,300.

[disneysteve]

Deductibles for a single person can be lower than for a family. Mine is, I believe, $1,300.

Yep. I looked that up. The minimum deductible for a HDHP is set by the IRS. For 2017, the individual minimum is $1,300 and $2,600 for families.

When we had our HDHP, our family deductible was $4,700, well above the minimum.

[Goldy]

I use my HSA as an investment vehicle by contributing the max and letting it grow until either I need it for medical expenses or I hit the age where it can be drawn on. So far there is about 15k in it mostly invested in a target date fund.

[Sallyr70]

I'm a little confused. You say there is no premium for the insurance plan but you are paying $16.12/week. Isn't that the premium? Or are you saying that's the amount you are putting into the HSA? If so, how did you arrive at that amount seeing as it's a rather random number?

What about this feels risky to you? If all of the money is going into your HSA, what's the risk? It's your money? It's there whenever you need it to pay medical expenses? And if you actually are getting the insurance at no cost, that's fantastic. I'd jump at that deal assuming the coverage is decent. I'm a little surprised that you have an HSA with such a low deductible. I thought the whole idea was that an HSA had to be coupled with a HDHP (high deductible health plan).

The plan for 2017 costs me $16.12/week in premiums. The HSA for 2018 has no premium. What feels risky is having to pay 100% of my medical costs up to the $1500 deductible.I'm not worried about the money I put into the HSA because there's no time limit to use it. I'm hoping that I stay healthy, and therefore keeping my expenditures low. I'm an individual so the deductible is $1500 (family would be $3000).

[LivingAlmostLarge]

What happens if you never are offered an HDHP? I just ask what happens to people who are always covered by normal HMO/PPO? Then you never get to take advantaged of the HSA.

[disneysteve]

What feels risky is having to pay 100% of my medical costs up to the $1500 deductible.

You're currently paying $838/year.
With the HSA, your employer will put in another $250/year.
So with the HSA, you're only putting at risk an additional $412/year.
Also, keep in mind that the money you put in the HSA is tax-free.

I think the HSA is a great deal. I jumped on it as soon as I had the chance. I don't have one any more but took full advantage of it when I did.

[scfr]

What happens if you never are offered an HDHP? I just ask what happens to people who are always covered by normal HMO/PPO? Then you never get to take advantaged of the HSA.

If it's an employer-provided HMO/PPO, what I'd say is that you just consider yourself da*n lucky.

[disneysteve]

What happens if you never are offered an HDHP? I just ask what happens to people who are always covered by normal HMO/PPO? Then you never get to take advantaged of the HSA.

If it isn't a high deductible plan, then no, it wouldn't be eligible for an HSA.

Ultimately, what really matters is how much you pay and how good the coverage is. When I did have an HDHP/HSA, it was actually not nearly as good as when I had an HMO.

[bennkar]

You're currently paying $838/year.
With the HSA, your employer will put in another $250/year.
So with the HSA, you're only putting at risk an additional $412/year.
Also, keep in mind that the money you put in the HSA is tax-free.

I think the HSA is a great deal. I jumped on it as soon as I had the chance. I don't have one any more but took full advantage of it when I did.

Right. If you are putting in the max (is it $3,500?) then you are saving whatever your marginal tax rate is for both state & federal (lets say 33%) on that $3,500 - $838 (= $2,662), you would be saving $887 in taxes. While this marginal rate (& savings) could be more or less for you, you can see the amount saved using an HSA can really add up. And then you can invest the money as well.

I was only able to start investing in my HSA in June, yet its value has increased $133 as of today. Yes it could go back down, but its impressive to see I could spend more already and be ahead of the game. We only had an HSA option as of the prior year - I wish I had signed up then.

[Nutria]

Right. If you are putting in the max (is it $3,500?) then you are saving whatever your marginal tax rate is for both state & federal (lets say 33%) on that $3,500 - $838 (= $2,662), you would be saving $887 in taxes.

Are you saving $887 in taxes, or $887 in taxable income (meaning that you'd really be saving 10%, 15%, 25%, 28%, 33%, 35% or 39.6% of $887)?

[bennkar]

Are you saving $887 in taxes, or $887 in taxable income (meaning that you'd really be saving 10%, 15%, 25%, 28%, 33%, 35% or 39.6% of $887)?

The $887 would be tax savings (@33% rate) of the $2662 difference put into the HSA. And I wasn't accounting for FICA taxes either!

[LivingAlmostLarge]

Yep we've never been offered a HDHP so I'd look if it's a better deal.