HSA's?

[swanson719]

I was reading the health insurance thread, and noticed no one seemed to have an HSA as opposed to generic private insurance. Is there a reason for this? I understand an HSA carries a high deductible, but it is also an investment vehicle if not always used, which to me would make it appear advantageous, especially for those on this site. Can someone explain why private insurance is more popular that HSA's?

[elessar78]

I have an HSA (or is a FSA)... I don't know if the two terms are interchangeable or what.

But I've never heard of it as an investment vehicle, but as a rule of thumb it's better to keep insurance and investment separate. I don't know why an HSA would have a high deductible—from what I know it's pretax money that is set aside from one's paychecks that can be used to pay for qualified medical expenses such as; dr. visits, prescriptions, tests, etc

Also, where do I find the health insurance thread??

[disneysteve]

I wish I could have an HSA but I live in the wonderful insurance hell of New Jersey where a high deductible plan with an HSA actually costs MORE than traditional coverage which totally defeats the purpose.

[Caoineag]

I have an HSA and know people who use it like an IRA. I personally use mine for medical expenses of all kinds (like my and my husband's very expensive eye glasses). The reason I don't use it as an investment is because I have cheaper places to store my cash that don't come with such high expenses or low returns.

[elessar78]

(like my and my husband's very expensive eye glasses).

Have you tried Zenni Optical? It's an online eyeglass retailer and I just got a pair from them for $12.95 (includes shipping)! But I do have a pretty standard prescription for astigmatism and myopia. Maybe it can save you some dough.

It does take awhile to get your glasses (it took 2 weeks for mine), but if you're not in a rush then it's a great deal, IMO. I think they fill the prescription in China or Hong Kong then ship it to California.

[zetta]

I have an HSA (or is a FSA)... I don't know if the two terms are interchangeable or what.

But I've never heard of it as an investment vehicle, but as a rule of thumb it's better to keep insurance and investment separate. I don't know why an HSA would have a high deductible—from what I know it's pretax money that is set aside from one's paychecks that can be used to pay for qualified medical expenses such as; dr. visits, prescriptions, tests, etc

Also, where do I find the health insurance thread??

I'm not sure of the acryonym (FSA sounds right), but that is a different program that the OP is asking about. The one you describe comes through your employer, so you probably have insurance from them as well.

You can only have an HSA with a particular type of high-deductible insurance. The intent is to help you save up for the deductible amd the things the insurance doesn't cover.

[jIM_Ohio]

I have an HDHP with an HSA
in 2009 we spent every dollar we put in the HSA
probably will in 2010 (I have 21 month old twins)

sooner or later I believe we will come out ahead.

[creditcardfree]

I have an HSA (or is a FSA)... I don't know if the two terms are interchangeable or what.

But I've never heard of it as an investment vehicle, but as a rule of thumb it's better to keep insurance and investment separate. I don't know why an HSA would have a high deductible—from what I know it's pretax money that is set aside from one's paychecks that can be used to pay for qualified medical expenses such as; dr. visits, prescriptions, tests, etc

Also, where do I find the health insurance thread??

They are similar, but there are differences. Here's the link to the irs website that explains the differences.

[scfr]

I have an HDHP with an HSA. I think there are several people on this forum who have the same, especially self-employed folks.

[Broken Arrow]

I qualified for both a FSA (from the insurer) as well as a HSA (from my credit union). In my case, the HSA was better because I don't have to spend it or lose it by the end of the year, and the HSA being with my CU meant that I could conceivably roll that balance from one HDHP to another. On top of that, my HSA paid interest, whereas the FSA did not.

[MonkeyMama]

The two (private insurance and HSAs) are not mutually exclusive.

I have a HDHP private health plan. Which makes me eligible to use a HSA. The thing is, a HSA is to save for medical expenses. Since I spend $15k-ish a year on medical expenses (including premiums) I don't feel like saving MORE for future medical expenses. That's about 20% of my income!!

HSAs are tax deductible. So are medical expenses over 7.5% of income, if you itemize. So, I get a bigger tax break by just itemizing my medical expenses.

If I ever had a year where I did not use any of my deductible, I would consider putting some money away in a HSA. However, they tend to be pretty inflexible, costly investments. I would rather fund 401ks and IRAs, etc., first.

The nail in the HSA coffin is that California does not recognize HSAs, which creates a tax nightmare in our case.

However, if my spouse returned to work, and it was harder to itemize (since 7.5% income would increase dramatically), and we would have more money to save, we'd probably fund our HSAs. (After IRAs were maxed).

HSAs make more sense for people in higher tax brackets. Or who don't have high medical bills (which excludes most people paying for private insurance). That's the simple way to put it! I could open a HSA tomorrow, but it wouldn't make much sense.

I believe self-employed people can deduct 100% of their medical premiums AND fund a tax-deductible HSA. For them - makes more sense. I am not self-employed. I Can't deduct a HSA and then deduct my medical expenses too.

[red92s]

I'm a young, single, healthy male so a HSA made sense for me. In the two years I was with my former employer and on the HSA plan, I never had a medical expense that wasn't covered 100% by my plan as it was all routine checkups and such. I racked up about $2,500 in my HSA account over that time.

I was recently laid off, and have been using the HSA to pay my COBRA deductibles instead of doing it out of pocket (which is a load off while unemployed). I think COBRA premiums are the only insurance premiums you are allowed to pay via HSA funds.

[swanson719]

So then I have a question. HSA's are good for people with both low medical bills and extremely high medical bills, correct? DW's medical bills are in the $100K a month range, so conceivably, could I use an HSA as private insurance, and pay the $10,000 the first month, and then not have to worry about paying it the rest of the year? And in MonkeyMama's post, you mentioned medical bills past 7.5% of your income being tax deductible. Is this federal or state, and is it for self employed only? Because even with an HSA, $10,000 would be well past 7.5% of our income.

[MonkeyMama]

So then I have a question. HSA's are good for people with both low medical bills and extremely high medical bills, correct? DW's medical bills are in the $100K a month range, so conceivably, could I use an HSA as private insurance, and pay the $10,000 the first month, and then not have to worry about paying it the rest of the year? And in MonkeyMama's post, you mentioned medical bills past 7.5% of your income being tax deductible. Is this federal or state, and is it for self employed only? Because even with an HSA, $10,000 would be well past 7.5% of our income.

I don't understand your first question about $10k. If you get a HDHP plan, in general, you are on the hook for more medical expenses. You need to have a HDHP (High Deductible Plan) to be able to be eligible to open a HSA. & no, HDHPs/HSAs are not recommended for people with high medical expenses. Then - you would probably be better off paying for better health coverage.

In general - the idea with the HDHP/HSA is that you don't have medical problems and don't expect to have many medical expenses. So you pick a lower cost plan where you pay more out-of-pocket/deductibles if you do need medical care. You don't expect to use the care - so you put $ away in a HSA, for future medical bills. You probably have little in medical expenses, so the HSA is a good tax deduction.

7.5% of income thing is a Federal tax law. I am not sure on the state you are in. (Though most states probably conform). That is for anyone who itemizes their deductions.

Most of our medical expenses come from the insurance premiums. But we are able to keep those down considerably by having a high deductible plan. Which in general we don't use because we are healthy. But I still find it hard to save MORE for health expenses after paying the large premiums. I work for a small employer and so am not offered insurance for my family. But beyond that, even when I worked at a large firm, the health insurance from my employer was CRAP. So we have always had private insurance. May be costly, but at least it is good. Thank goodness since my dh faces major surgery this year. Worth every dime.

[maat55]

I had an HDHP before We got insurance through DW's employer. I never established my HSA due to debt reduction at the time.

An HDHP with an HSA would be my first option other than what we have.