How does a HSA work?

[Goldy1]

WE may be looking into buying our own heath insurance. WE are in 30's and heathy so far and can afford a high deductable ie even 5K, and just want to protect against a big bill.

I know how a flex plan works, but what about the HSA? How does the money get in there and what if I don't use it? I figure another pro of health insurance I have had is getting "contracted" rates instead of super high "cash rates"

[KGeary]

Why I Switched from Standard Health Insurance to an HSA

That will give you the basics and tell you why I thought it was a good idea to make the switch.

[Alex_Adviser]

Health Savings Accounts (HSAs) are tax-exempt trusts or custodial accounts, similar to an IRA.

The money deposited into an HSA account is 100% tax-free and can be used to pay for qualified medical expenses. Any money that isn't used remains in your account and keeps growing on a tax-favored basis to cover future medical expenses or to supplement retirement.

How does my HSA work?

1. You can choose to use your HSA funds to pay for qualified medical expenses such as office visits, lab work and prescription drugs while you are meeting your annual deductible. Expenses you incur for services covered under your health plan will count toward your annual deductible.

2. You may also choose to use your HSA funds for qualified services not covered by the health plan, such as dental care, weight loss programs and eyeglasses. However, expenses that are not covered by your health plan will not count toward your annual deductible.

3. If you prefer, you can choose to save any or all of you HSA funds, and pay for your medical expenses out of pocket throughout the year, until you meet your annual deductible.

4. Once you've met your deductible, additional health care expenses are covered under the terms of your medical plan, and you can choose to use your HSA funds to pay for fixed expenses such as copayments.

5. If you don't use all of your HSA dollars, the remaining amount will carry over into the next year. Please check the Official Plan brochure for more information about your HSA.

I hope the information will be useful to you.

Regards

[jIM_Ohio]

Health Savings Accounts (HSAs) are tax-exempt trusts or custodial accounts, similar to an IRA.

The money deposited into an HSA account is 100% tax-free and can be used to pay for qualified medical expenses. Any money that isn't used remains in your account and keeps growing on a tax-favored basis to cover future medical expenses or to supplement retirement.

How does my HSA work?



2. You may also choose to use your HSA funds for qualified services not covered by the health plan, such as dental care, weight loss programs and eyeglasses. However, expenses that are not covered by your health plan will not count toward your annual deductible.

Anyone taking this advice should get a second opinion. I would not use my HSA this way because the IRS may have an issue with some of this.

Weight loss food is never deductable under any circumstance
Weight loss programs are fully deductable if perscribed by a doctor.

[scfr]

We self-insure, and decided to go with a HDHP and HSA.

As far as "how the money gets in there," you will have to open up an HSA with a bank. Before you can open one, you will need to have a HDHP. When choosing where to open your HSA, really investigate the fees. Some places charge pretty steep ones.

The money not used gets carried over to the following year. When you get older, the money gets treated essentially the same as an IRA.

You may want to check out the following resources:

U.S. Treasury - Health Savings Accounts (HSAs)

http://finance.yahoo.com/expert/article/millionaire/50127

If you want to really get in to the nitty gritty details, go to the IRS web site (Internal Revenue Service) and check out Pubs 969 & 502.

[Goldy1]

thanks. What is hdhp though?

[scfr]

Sorry - HDHP = High Deductible Health Plan (insurance policy with a high deductible). In order to open an HSA, you have to have an HDHP. They go hand in hand.

You get the HDHP from an insurance company, and then you open an HSA with a bank. We found that the insurance companies make it very clear which are the HDHP / HSA-eligible plans.

[mnpqrd]

As far as "how the money gets in there," you will have to open up an HSA with a bank. Before you can open one, you will need to have a HDHP. When choosing where to open your HSA, really investigate the fees. Some places charge pretty steep ones.

I want to find better bank for HSA but haven't found one. Currently I'm with JPMorganChase Bank. There's no maintenance fee but the interest rate is low. It's only 1.04% per annum. They also offer some mutual funds with maintenance and transaction fees.

Is there any bank that offers a better rate and lower/no fees?

[scfr]

I want to find better bank for HSA but haven't found one. Currently I'm with JPMorganChase Bank. There's no maintenance fee but the interest rate is low. It's only 1.04% per annum. They also offer some mutual funds with maintenance and transaction fees.

Is there any bank that offers a better rate and lower/no fees?

We're with HSA Resources Bank (subsidiary of Falcoln National Bank). We pay an annual fee of $25. They offer brokerage trading, but we stick with a plain old bank account.

Interest paid is tiered - These are current APYs:
Greater than $25,000.00 2.75%
Greater than $10,000.00 and less than $24,999 2.25%
Greater than $5,000 and less than $9,999.99 1.75%
Greater than $500 and less than $4,999.99 1.00%
Below $500.00 0.50%

There are probably banks out there with higher rates or lower fees, but I will say that so far the service we have received from them has been excellent.

Would love to hear what others are paying and earning on their HSAs.

[maat55]

I want to find better bank for HSA but haven't found one. Currently I'm with JPMorganChase Bank. There's no maintenance fee but the interest rate is low. It's only 1.04% per annum. They also offer some mutual funds with maintenance and transaction fees.

Is there any bank that offers a better rate and lower/no fees?

Try provident direct. They offer HSA's, but I do not know what they pay in interest. I get 3.75% in my savings.

[MonkeyMama]

Try provident direct. They offer HSA's, but I do not know what they pay in interest. I get 3.75% in my savings.

Most HSAs pay very low interest rates. No correlation to regular accounts, that I could see.

State Farm bank is one I have considered. THey have decent interest rates, and low fees. Last I looked (a year ago?) there wasn't much choice out there. Most financial institutions do not offer HSAs.

[Johansen8]

Unlike most flex spending or health care reimbursement accounts, an HSA is not a use it or lose it proposition. It's your money, and if your employer helps in the contribution, it's free money, free money that can accumulate handsomely for the increased medical expenses likely to occur in the golden years.

[Goldy1]

Wish I was in Canada and didn't have to deal with this $#@&^. lol

[noppenbd]

This page has a bunch of options:

Compare HSA options

[mnpqrd]

Try provident direct. They offer HSA's, but I do not know what they pay in interest. I get 3.75% in my savings.

I contacted provident direct and was told that "The current interest rate is 1.20%".

Also, their website says:
For groups under 10, there will be a $25 per account set-up fee.
$2.50 monthly maintenance fee