HSA's- tell me the good and bad..

[4HOLIDAYS]

We are looking at a having a health ins plan with a HSA acct. I have only ever had traditional ins. This is in an attemp to try and find a solution to the crazy premiums we see for the coming year. We are a small employer, under 10, and trying to find a way to keep ins for us and our employees.

Please let me know the good and bad, any tips, anything to watch out for...

Thanks!

 

[havaneselover]

I have had an HSA for three years and highly recommend them. They are triple tax advantaged so I view mine as both a way to pay for current medical expenses and a retirement savings vehicle. I max mine out annually (have to pay for half of two sets of braces soon). For big expenses I pay with a credit card to earn points and reimburse myself with my HSA. For small purchases I just use my HSA debit card. Honestly I wish more people understood HSAs. They are great.

ETA: from an employer's perspective I think the two most helpful things would be to somehow educate people on how they work and set up accounts for employees with the company picking up the monthly fees and possibly depositing a certain amount every year in them. My company does neither and probably could save money if they did because some employees would switch from our platinum ppo.

 

[davper]

From someone who has had one for several years, they are bettor for someone who does not frequent a dr's office allowing you to save for future expenses.

If you have ongoing medical needs, all that expense has to be paid out of pocket until you meet the deductible.

 

[supersnoop]

Are you asking about an HSA or about a HDHP? Lots of people seem to confuse the two.

An HSA (Health Savings Account) is essentially an IRA account that can also be used to pay for medical expenses tax-free at any time. It's a great thing, and should be part of your retirement planning. I recommend funding it in full after funding your 401k up to your company match threshold.

A HDHP, or High Deductible Health Plan, is required in order to qualify for the tax-advantaged HSA account. It provides lower premiums by empowering you to take more control over your health care expenses. In other words, you'll pay less money up front, but you'll have to pay a larger portion of your expenses throughout the year. If you have fewer expenses, you come out ahead. If you have lots of expenses, you generally come out ahead, too. If your expenses are closer to your deductible, but not much over, the you tend to spend more on a HDHP. Generally speaking, HDHP's will save people money, but they're less predictable. It's kind of like the dining plan debates we have here on the DIS: traditional health insurance (and the dining plan) will typically cost you more money, but they provide assurance that most of your bills are paid. The HDHP (and paying out of pocket for meals) makes things less predictable, but generally saves you money.

 

[lanejudy]

My family has used an HSA with a HDHP (high deductible healthcare plan) for most of the past several years. We do have high medical needs and expenses so I disagree that it's only for "healthy" people who visit doctors infrequently. I'll be honest that the first year on the HSA was a challenge (mentally) to get used to the bills instead of copays, but I kept spreadsheets and tracked each expense to show that we actually saved a considerable amount of money over using a PPO. This past year (2016) we switched back to a more traditional PPO because I thought some legislation changes might have resulted in savings, but I was wrong and am actually happy to have recently signed us up for the HSA again for 2017. (Well, "happy" being relative because it's still a lot of money, but I know prefer that option and it does save us money.)

Since you are asking from an employer's perspective -- I agree with havaneselover, if you can cover the monthly account fees that will help your employees. And if you can go further by making even a small deposit to the HSA that's awesome. My employer still covers the fees, and used to make a deposit each January but no longer does. It's still a less expensive option for us than a traditional PPO. I do NOT recommend that you spin this to employees as a way to "shop around and control expenses" since I see very little of that in reality; maybe it depends where you live.

You probably won't make everyone happy. I'm sure there are some who will find the HSA more expensive for their particular needs, but others will find that it works out financially. Good luck -- it's a hard decision to make as an employer.

 

[wilkeliza]

I haven't gone that route but my company offers it. An HSA usually comes hand in hand with what is considered a HDHP even if the deductible isn't that high really. I went with the PPO but our company does offer HDHPs with HSA. The PPO deductible falls in the middle of the two HDHP at 2K for a individual and 4K for a family where the two HDHPs are 2.5K/5K and 1.5K/3K. Most people have been doing the 1.5K/3K HDHP with an HSA but the breaking point for me was that prescription coverage doesn't kick in until you meet the deductible where on the PPO prescription coverage is day 1. So because I have maintenance medications I went that way. If I wasn't that way I would have to make sure I was putting enough aside on my HSA every year to cover the deductible for the next year.

I don't envy anyone who has to make this decision for their employees and I'm glad I work somewhere that has the ability to offer us both. I do see that HDHP and HSAs are the way most insurance plans are going so don't feel bad. Like @lanejudy the HSAs do often save people money especially those who are healthy adults who only need a yearly phsycial and maybe only make one or two doctors visits a year. I think our break down is if you have 1 ER visit and 2 doctors visits a year the HSA always comes out ahead of course that is as long as you aren't on any maintenance medications and the other pseudo negative is the first year is usually a little more rough as you haven't built up the savings you need to cover the expenses out of pocket first.

 

[Alesia]

I love our HSA. I honestly can't think of a single downside.

 

[loves to dive]

I'm another one who has to make the employer side decision every year. We are a small company with only 3 employees on insurance, one of whom has kids and is divorced. I always have to sit down and take a look at the high deductible and keep in mind the mind set of the employees. By law we can offer two plans for our employee's to choose from and we match them differently, if you pick the plan that is better for the company you get a little better match. I've turned down HSAs every year because they end up costing just about as much as the PPO or HMO plans would and I know my employees and know they wouldn't have the forethought to actually put money in the savings, these are people who only do the amount of 401K that the company matches. It usually takes me 3 months to go through all the plans and pick out two that are going to benefit the company as well as the employees. The hardest part is taking myself out of the mix and not just pick one that would work for me. As the bookkeeper, my first priority has to be toward the company's bottom line.

 

[SC Minnie]

Our company has a regular PPO as well as an HSA. They started the HSA 3 or 4 years ago and I've been on it since. Our company funds it your first year-- it was more the first year-- to give the employee a kickstart. I actually like the HSA. On ours, all wellness checkups are still covered 100%. Other Drs visits are still paid at the negotiated rate with BCBS. To give you an example-- with our PPO copays for urgent care are $20. I went to urgent care in Nov and had to pay $16 with the HSA.

The way I do mine, I took the difference in the premium from the PPO and the HSA and put that into the HSA every paycheck. So it's not really 'saving' me money monthly but it's helping me build up. Also, DD22 is still on my plan but lives away. They sent me a separate card for her to use when she needs it.

 

[DreamIsaWish]

I like our high-deductible plan. But, the traditional plan has way higher premiums so that definitely plays into the mix. I think everything I save on premiums in a year would cover one deductible. So as long as I don't have the whole family get sick at once it works out better. But I don't know anything from an employer perspective. I have to assume that my employer is subsidizing our plans quite a bit since they add money to the HSA every year.

 

[mistysue]

We've had HSA's through two different employers and the only thing that I found frustrating is you lose the money if you don't spend it. So there is a lot of guessing there. If we are going to spend it I want the money to be tax deductible, but then it's a waste if we don't. Our regular bills jump up and down like crazy so it's always a stressful gamble for me.
I'm curious how this as seen as part of retirement planning - do you have an account where you keep it? Ours have always been spend it or it's gone.

 

[wilkeliza]

We've had HSA's through two different employers and the only thing that I found frustrating is you lose the money if you don't spend it. So there is a lot of guessing there. If we are going to spend it I want the money to be tax deductible, but then it's a waste if we don't. Our regular bills jump up and down like crazy so it's always a stressful gamble for me.
I'm curious how this as seen as part of retirement planning - do you have an account where you keep it? Ours have always been spend it or it's gone.

If you have an HSA that money is yours you should be keeping it. Do you have a flex spend account? A flex spend is different then an HSA and you do lose that at the end of the coverage year. HSA is a savings account that is yours to keep even if you become unemployed you just have to start paying the maintenance fees on it that your company may have been paying previously.

 

[lanejudy]

We've had HSA's through two different employers and the only thing that I found frustrating is you lose the money if you don't spend it. So there is a lot of guessing there. If we are going to spend it I want the money to be tax deductible, but then it's a waste if we don't. Our regular bills jump up and down like crazy so it's always a stressful gamble for me.
I'm curious how this as seen as part of retirement planning - do you have an account where you keep it? Ours have always been spend it or it's gone.

An "HSA" (Healthcare Savings Account) is only available if you have an HDHP (high deductible healthcare plan). Many employers offer a medical FSA -- a flexible spending account to be used for medical expenses. The spending account is a "use it or lose it" based on federal tax law (similar to a dependent care spending account to pay for childcare). An HSA savings account can be carried over year-after-year and has much higher limits; many people use it for additional protected (pre-tax) savings towards retirement healthcare needs if they are able to put that much extra aside.

 

[havaneselover]

Another thing I love about my HSA is I can use it on my kids even though my ex is the one carrying them on his insurance.

 

[4HOLIDAYS]

Havenslover, how are you able to use your HSA funds if your kids are not on the plan? My agent said that I can't.

She also said I am not allowed to pay for something on Jan1 personally and then reimburse myself once I have funds in the acct.

How about using my cc to pay so I get the points and then reimbursing myself, regardless of if the funds are in the acct? Again, she says no but I read online lots od people do this.

My reg agent is out until tomorrow, or so I am told, and I am not crazy about the one currently helping me.

Any advise on setting up accts for ourselves? Where? Fees? I have been playing phone tag with my acct today to try and ask these things.

 

[100AcreWood]

I was very hesitant to try it the first year we did because we have higher than average prescription costs but it's worked out well. When you see the medical bills at the beginning of the year before your deductible is met it's very intimidating.

This will be our third year with an HSA.

 

[havaneselover]

Havenslover, how are you able to use your HSA funds if your kids are not on the plan? My agent said that I can't.

She also said I am not allowed to pay for something on Jan1 personally and then reimburse myself once I have funds in the acct.

How about using my cc to pay so I get the points and then reimbursing myself, regardless of if the funds are in the acct? Again, she says no but I read online lots od people do this.

My reg agent is out until tomorrow, or so I am told, and I am not crazy about the one currently helping me.

Any advise on setting up accts for ourselves? Where? Fees? I have been playing phone tag with my acct today to try and ask these things.

You are getting bad advice I believe. If your kids are on your income tax return, then you can pay for their medical expenses with your HSA regardless of whether they are on your insurance plan.

You also are allowed to reimburse yourself.

I am using optum and they are fine. Wells Fargo sold their HSA business to them. I don't pay any monthly fees because I keep at least $5,000 in mine but I think the fees are about $5/month on less than that amount.

 

[wendow]

We have had an HSA the last three years combined with an HDHP. I have loved the tax advantage of having an HSA without quite so many rules as a FSA. We are at a point, however, with a chronically ill child that that a HDHP no longer makes sense. We will lose our HSA and are forced back into a FSA. I cannot think of anything or any reason not to go for the HSA. It was great for us!

 

[tinker&belle]

We love ours. My DH and I both had LASIK surgery that we paid for once we got a huge savings in our plan. We max out every year. We pay for our HDHP premium and HSA deposit monthly just a little more than what we paid for our old PPO and rather than paying the premium and then it is going we can use it on any applicable expense including dental costs.

 

[laceltris3]

If you are able to take advantage of the HSA, while still paying your expenses out of pocket, it is pretty awesome. I have had an HSA for maybe 8 years. I used a bit of the HSA $ to pay for the birth of the kids, but for the most part we try to leave the HSA money alone. I keep a full years deductible in cash, and invest the rest. It is pre tax money, growing tax free, and is tax free on withdrawal for future medical expenses so we use it as an IRA. We have saved up around 25K. It is a rare tax advantage.