so lets say i can save $100 a month for a HSA

[LSK]

How is that going to pay if I break my leg and need $10,000 worth of hospital and doctor time???

How come this concept never made sense to me? Oh because its not supposed to make sense...

[SlipperySlope]

1. The way it "works"

In theory, if you are putting $100/mo into an HSA, then you should also have a HDHP with a $1200 deductable. The tax deduction of your HSA is linked directly to the deductable of your HDHP.

If you ran into $10,000 of medical expenses, you would first drain the $1200 from your HSA. At that point, you've also reached the deductable limit of your HDHP, so your insurance steps in. The specifics of what your insurance covers are (of course) dependent on the exact plan you have.

My analysis is that if you and your family are basically pretty healthy, then the combination HSA/HDHP could cost you less in the long run, and potentially provide an asset at retirement (since the HSA rolls over).

If you have ongoing expensive health problems, or are planning a childbirth, the conventional plan looks better to me.

[LSK]

2. HDHP?

So its all about the deductible?

[SlipperySlope]

7. I think so...

I drove myself batty last week trying to figure this out, and I'm still not sure I completely understand it, but here goes.

A taxpayer is not eligible for an HSA unless they also have a HDHP (high-deductable health plan). In theory, you could have an HDHP without an HSA, but the sole reason HDHPs are created is to be compliant with the new law and to make the beneficiary eligible for an HSA.

The amount of tax-deferred income you can put into your HSA is directly linked to the deductable of your HDHP. So, in theory, your HDHP should kick in right when your HSA money ran out, if you had a year with a lot of medical expenses.

Certain things (like immunizations and well-child care) can be covered by the HDHP without having to dip into the HSA. But there is a lot of diversity in HDHPs, so I can't generalize on all of them.

Before 65:
You can take money out of your HSA tax-free for medical expenses, but insurance premiums are not considered "medical expenses".
You can take the money out of your HSA for any other reason, but you have to pay taxes and a 10% penalty.

After 65:
You can take money out of your HSA tax-free for medical expenses, and insurance premiums are considered "medical expenses".
You can take the money out of your HSA for any other reason, but you have to pay taxes (no 10% penalty)

That's how I think it works.

[3waygeek]

21. Yes.

HSAs are directly tied to high-deductible health plans. I've been in one since July. Our health plan has a $2000 deductible (individual; $4000 for family) and my employer kicks in $1800 (pre-tax) of that (most don't kick in any).

HSAs often pay interest, but they also charge fees that in my case more than offset that. Our insurer (United Healthcare) has opened its own bank to handle HSAs -- they issue you a debit card and some pre-printed checks you can use against the account. You can spend the HSA money on just about any health-related expense -- I've used mine to buy Claritin (I have horrendous nasal allergies).

[elehhhhna]

3. You forgot to add in the cost of the insurance premiums.

[Hamlette]

5. but, but, but

If I save money by using the HSA, where does that money come from? Yes, I know, I put it in, but if everyone takes say $1,000 out of the health care budget/market/costs each year, do the doctors/hospitals make less? Will my insurance company make less money?

Nah. The cost of insurance will go up to offset "my savings".

It's a shell game.

[The Whiskey Priest]

8. The one thing overlooked is the administrative cost

on the HSA....whoever is going to administer the HSA is going to charge you for doing so...there is no cap on what they can charge...so you put a dollar in and they charge you twenty-five cents...you only have seventy-five cents to pay for your deductible.

[northzax]

18. well, much of that is covered by people who don't spend their accounts

and this is the catch, right? do you have to spend the money in that calendar year, like now, or can it roll over and therefore get interest? There is something to be said for an employer offering a high deductible insurance (saving a lot of money on the premium) and a roll over HSA, like a 401K. Heck, some could be employer paid or matched, like a 401K. There would be years that you didn't use the entire thing, obviously, especially younger workers. So you use $600 and $600 rolls over to next year. you keep saving, and as you get older, and have more health care expenses, you have more resources, tax free and earning interest, to spend on your own health care. And the account moves with you, not the employer.

[3waygeek]

23. HSA funds roll over

and can earn interest -- see my other post above.

[northzax]

24. ahh, I have only had the MSAs then

the use it or lose it accounts. Which is why I have very expensive eyeglasses.

[SoCalDem]

9. The devil's always in the details.

Catastrophic policy....who defines catastrophe?

"planning" childbirth or health problems.....most people don't exactly plan these things..

You can be in perfect health and go in for a check up and then find out you have diabetes or a "suspicious" bump.. Once you are on the record with something like that, insurance pretty much becomes unaffordable..

The ONLY way insurance "works" is for all the young and healthy ones to be in the SAME pool as the older sicker ones.. If you remove the young ones from the pool, the concentration of older sicker in one group,pretty much makes it impossible for them to afford it.

Marginally employed people like paycheck to paychek and don;t have an extra $1200 (or whatever the deductible is) PLUS the monthly premium amount. They are lucky to stretch their incomes to pay their heat, water, rent, food.

National coverage with EVERY citizen in the same big ole DEEP pool is the only way it works.. One reason that medicare is always under fire is that because all of its people are older and sicker. If we had ONE plan, the costs for medicare would actually drop..as would everyone else's costs.

[sarcasmo]

26. The 45 million Americans with out Insurance are still screwed.

[Cleita]

4. Exactly, but you will be lucky if it's only $10,000.

Also, if you don't have a job, how are you supposed to save, while your leg heals?

[whododayis]

6. insurance

AFLAC!!!...sorry couldn't resist

[Cleita]

11. 40% of Americans are uninsured because of low paying jobs,

lack of jobs or are unable to work because of various handicaps or diseases. This will not change with medical savings accounts. Those people will still go uninsured and the insurance companies will make more money and sustain fewer liabilities than ever.

In other words, not only will you be paying into insurance, but you will be paying your medical expenses on top of it. We already have this. It's known as catastrophic insurance coverage. They are just repackaging a plan that already exists, just like they did with the medicare prescription BS.

[pitohui]

10. what if you break your leg the first month you're in the program?

my friends w. high deductible plans tell me that they get billed the higher un-insured rates until they meet the deductible which means that anything you save under yr high deductible plan in the HSA is eaten away much more quickly than under the system of co-pays

instead of a $25 co-pay for a doctor's visit, i would now pay $60 as an under-insured person -- people w. high deductibles are under-insured by definition -- and would keep paying until i reached the deductible ea. year

let us say i started the HSA this mo. and broke my leg this mo.

no savings in the plan

nothing there to pay a high deductible which for some plans is $10K and is usually at least $2K

one of my insurance agents told me that selling a high deductible plan should be considered fraud for my area, since you pay only a little less (at that time it was about $220 for HMO versus $160 for high $5K deductible) so you are not getting any real savings to offset the huge, huge cost to you each year that you have an injury or serious illness

my friend pays $200 a month for a high deductible plan, has for years, the plan has never paid anything, yet he's paid $2400 a year for worthless insurance, plus when he was injured, he basically had to just forgo the physical therapy because of the costs which he would have had to pay 100 percent before meeting a $10K deductible

if you get cancer or another serious disease, can you save and pay a high deductible every year AND pay for insurance which doesn't have to pay ANYTHING until you meet the deductible

not on most incomes you can't

the HSA is just silly for most people, altho i'm sure there is a minority of lucky people who might save money that way, there is always someone who profits under any plan

my thoughts might be a little out there because information and plans keep changing but i went many, many years w.out any insurance at all and my investigations suggested to me that a high deductible plan was just paying money to go the same bankrupt i would have gone if i'd been hurt or injured w.out any insurance at all

bankrupt is bankrupt and being under-insured is worse than no insurance at all, you could have at least enjoyed the money you paid for insurance if you're going to end up financially destroyed anyway

please note, a previous article on this issue claimed that after 5 years the average HSA account would have $3,200 -- after 5 years! that is just sad and sorry, what the heck is that going to do when you have a real health problem?

[Cleita]

14. The way it worked for me was the deductible was applied only

at their approved rates. So if I incurred a $25 bill they would approve $15 even though I had to pay the full amount. In order to meet my deductible I would often have to pay 40% more than they approved. After I reached the deductible, then they would pay 80% of the amount they approved.

So if my bill was $120 and they approved a hundred dollars, they would pay $80 and I was stuck with the $40 and I was still paying the premium which was $200 a month. That's if I went to a doctor that didn't accept my plan. In order to find a doctor who would accept my plan, I would have to drive 200 miles for the nearest one because very few doctors in my area are accepting these plans anymore.

It would have been cheaper for me not to have insurance but I was always looking at the fact that I could get cancer or some other debilitating disease and I needed the entrance ticket to health care and hospitalization, which is your insurance card.

[moonlady0623]

12. Here's what happens:

My husband was on an HSA a couple of years ago. He is diabetic. $100/month paid for his medication, PERIOD. No doctor vists, no lab work, nothing. When our GP asked why he hadn't made an appointment for his annual physical, I explained. The GP had been considering an HSA for their employees. He hadn't thought of what might happen if someone actually Needed medical care over the minimum a healthy person might use.

Husband is now back on my company provided policy. It cost me over $4K last year to insure him and my two children. That's over what company pitches in. Lowest cost option was Kaiser which I refuse to do because I have had same dr. for over 25 years. Besides, I saw just recently how Kaiser works: a friend went in for a test to see if gallstones had gone into her bile duct and ended up with pancreaitis; her GP never visited her and the specialist came once during a six-day hospital stay. No thanks.

I work for an international Forbes 500 top ten company; when I started 25 years ago health insurance covered all but 20%, and I paid nothing. Now for the same coverage, we would have a $750/year per person deductible, and 20% is way more than I can even begin to afford.

HSAs are a lie, as far as I'm concerned.

[Sadie5]

13. Insurance rates are sky high

from those who offer it. Although retired I sometimes take a seasonal job or one for six months or so at a time. I always make no more than $7 per hour as do the others I work with who are always much younger it seems. These workers need the health insurance but the rates are sky high. So even if it is offered they must choose between giving most of their weekly pay to insurance co. or paying rent.It is insurance Co. ripping off the public. I see them as nothing more than greedy predators just like those in the credit industry.

[TheFarseer]

27. I don't have insurance

I'm sure as hell not giving an insurance company $80 a month when I haven't seen a doctor for about 10 years, havn't been to a hospital since I was one day old and have no medical expenses. Sure I'm worried I'll be in a major accident or something but it's a risk I'm willing to take. Because I am not in the insurance pool - and alot of people like me are not in the insurance pool that makes everyone else's rates that much higher. But what am I supposed to do? I'm trying to get ahead and I can't do that paying $80 a month for nothing.

[Inland]

15. dup

[Inland]

16. As Paul Krugman said,

the purpose of HSAs is to give people an incentive to buy less health care by making it cost more.

If the problem with health care was that people get too much of it, particularly at the levels of HSA, then that would be great.

Bush thinks like an insurance co. whose interest is in eliminating claims. He doesn't care about health or how much it costs, as long as the little guy pays it.

[spinbaby]

17. And how much is the high-deductible insurance?

The boomers are now in their 50s and early 60s at an age where they have a few miles and a few health problems on them. How much are THEY going to pay for their high-deductible insurance? The lady who does my taxes complained that she and her husband were paying over $700 a month for insurance and STILL had high medical bills.

[SlipperySlope]

19. Real world numbers

Here are some real world numbers for my specific situation. YMMV.

I could switch to a HDHP version of my insurance and save $114 a month from what I am paying now. My deductable would go up by around $2200 annually.

If I took that $114/mo and put it into an HSA then I would have ~$1400 saved at the end of the year.

If I had a healthy year, I'd be $1400 ahead.
If I had a sick year, I'd be ($2200 - $1400) = $800 behind.

[LSK]

20. soooo basically with a HSA you save up to pay a higher deductible

Is that the gist of it? How does this solve anything??? :shrug:

[wishlist]

22. Wouldn't low risk people participate, raising premiums for high risk folk?

I would think that the health savings accounts would mostly appeal to younger and/or healthier people with disposable income because they could reduce their health insurance premiums considerably with less chance of exhausting their savings accounts. But wouldn't healthier people opting for these savings plans result in even higher premiums for the older and/or less healthy who cannot afford or risk participating in these plans?

[0007]

25. This plan is as confusing as the Medicare Prescription drug plan for

seniors.