Health Savings Accounts

[jenm]

What kind of luck has anyone had with Health Savings Accounts? I understand it could save a tremendous amount of money. Any input on this or suggestions?

[texaslp]

I see it mentioned a lot in news articles, but haven't gotten into in great detail yet. I'm a little apprehensive about it from what I have seen, but it seems to be more popular every year so I'm sure I'll be looking at it soon.

[jtr8178]

My wife has one at her work. I'm not sure how it works, I just know they put money into it every month. They sent her checks and a debit card. They put in $122 per month into it.

[helpers1]

From what I understand, HSA's are geared to help employees with the pinch of high premium policies. They work very similar to cafeteria 125's (you have pretax money taken out of your paycheck, it's put into an account-administered by the company- and you can draw from it for medical purposes by turning in receipts, etc--the benefit being no taxes paid on that money.) But with cafeteria 125's you either use the money in the fiscal year, or you lose it. With HSA's, any leftover unused balance will rollover to the next year. I understand you can put up to $10k/year in this account, and at age 65, you can take the money out for any reason at all--a supplement to 401k? Anyways, a benefit to the company is having higher premium policies, which would be a great savings on employee benefits expense. Some businesses are also contributing to their employees' HSA to help fund the higher medical costs. I have downloaded from the "free stuff

[helpers1]

And now, after reading the documentation, HSA's seem very, VERY, involved. However, the savings may well be worth the trouble. I hear our insurance agents are the ones to contact regarding more detailed info. Maybe they can take some of the headache out of this program.

Is anyone currently administrating this type of plan?

[jtr8178]

I'm sure that I am not being very helpful, but my wife's company uses a company called HSA. The website is: https://secure.hsabank.com/ibanking3/login.aspx

Looks like they contribute $122 each month, but she is charged $2.25 per month for "monthly fee".

We're not even sure how it works (she just started a couple months ago). They gave us a debit card, so I guess she could theoretically purchase anything she wanted? We got no clue, I guess it will pile up until sometime in the future when we need it.

Good luck with it!

[texaslp]

I just ran across a little bit of info. According to what I have the max you can contribute per year is "the lesser of the deductible with a max of $2650 single/$5250 family.

jtr it looks like theoritically you're right you could use it for anything, but "account holder is responsible for reporting any non-qualified reimbursements on their federal tax form". So that makes it sound like they are subject to IRS audit.

As far as the employer saving a tremendous amount, it would depend on a few things. If you haven't been on a high deductible plan, you could save a good bit on premiums, then it depends on how many ee's you have on the plan.

Example: 100 employees all contribute $1000 per year. The company would save the ss/medicare taxes on that $100,000 or $7650(if no one is maxed on SS)

Worth looking into and crunching the numbers, just look carefully at how much admin is involved.

[Hawk]

This link:
http://www.treasury.gov/offices/public- ... sics.shtml

provides the easiest explanation of an HSA. One of the ideas is that you have a high-deductible insurance plan, which usually carries a lower premium, and put money away tax-free to use on deductible, co-pays, drugs and all allowable expenses.

Two things not mentioned here:
1. The High-Deductible Health Plan (HDHP) typically does NOT include a drug card or plan. Your drug charges are applied to your deductible. People with high drug use will pay more out of their pocket.

2. Some states, including mine (MN), do not allow the tax deductibility yet...so it's federal only in our state.

We looked at an HSA, but the insurance premium didn't save us over our current plan, which is already a high deductible plan. We have about 20-25% of our people that would have had a big increase in their drug expenses under the HSA.

Overall, I am for these type of plans. The problem with health insurance is that people who use health insurance get subsidized by those who don't. There has to be a better balance to make sure people who "use the system" more pay higher premiums than those who don't. Our current health insurance is like buying insurance for oil changes on our cars....it doesn't make sense and you get buried in the bureaucracy.

Tom Hawkins

[mbrandon]

We just set up health care for our company and we did a lot of research on this.

As an idividual, an HSA is an awesome plan provided you can manage your use of the health care system for more routine kinds of visits.

On the other hand, an employee HSA plan ,from the providers we were working with, had no real advantage from a premium standpoint. Also, the cap on contributions was lower.

So, after several months of research, we went back to a PPO plan.

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Mark Brandon
DealerLOGIX
The cheese has moved. Time to go find new cheese.