Do you have a Health Savings Account and if so, how do you like it?

Question

I have just begun to read up on Health Savings Accounts, and I think I like what I see... I would like to hear what people who have them say... and can they be made available, even if your company offers other health insurance plans?

Answer 1

The ONLY problem I have with HSAs is they require a High Deductible insurance plan. If I put the full premium for such a plan IN the HSA, I would not NEED the insurance.

Note: An HMO and MOST 'health plans' offered today ARE NOT insurance. To call then insurance is the same as calling a plan that pays for routine auto maintenance AND gasoline auto insurance.

Answer 2

I participate in a Health Savings Account along with a qualified High Deductible Health plan and loving it. It is not everyday that uncle sam will offer a $5,000+ tax break for anything.

Since I am employed by the insurance industry myself I use my account somewhat differently. My Health Savings Account is merely an extension of my financial nest egg and a glorified emergency fund. I have not paid one penny towards health cost at this time and automatically put the IRS maxium in yearly. I pay the periodic sick visits out of pocket.

Logic: My industry is cut-throat and often changes which can result in me being laid off at any point. Therefore, my health savings account is established to pay for the unpreditable when it comes. For instance, if I were to loose my job today I would use the fund to pay for my Cobra premiums. Also, if I had a catastophic event I can get away with paying the maximum out of pocket expenses with the HSA.

There are many ways to manage an HSA and frankly, most brokers themselves dont understand them well.

The real key to an hsa account is how the gov't keeps adding value to them year over year. It is a matter of time before they allow additional benefits such as roll-overs to IRA's etc...

I have attached some myths from a presentation I recently had with my sales team. This sales team trains their teritory brokers to sell our HSA accounts: (I have removed some data to keep my company confidental)

Myth #1

A High Deductible Health (HDHP) plan is a glorified tax preferred umbrella policy intended for catastrophic events.

Counterstatement-

Isn’t a rich benefit plan a good way for insurance company to collect unused premiums to add it to their bottom line. (Please don’t say this, just making a point)

Myth #2

These highly compensated employees I represent will not find this plan attractive. They are seeking rich plans that cover everything. Why present it?

Counterstatement-

Do you feel your customer would receive a $5,650 tax deduction favorable or would they rather waive on that opportunity to pay higher taxes, premiums and post-tax co-pays?

Myth #3

The customers I represent are extremely sick and are taking full advantage of the protections provided by AB 1672. They would not be interested in this plan.

Counterstatement-

Does your customer seek price certainty while maintaining an element of affordable premiums? After all, the maximum out of pocket limits (Deductible & Coinsurance combined) between the $500 80/60 & HDHP $2300 are the same $4000.00? Wouldn’t the HDHP go even farther for your customer because it bears an embedded deductible versus the 2 member max? Also, if you have people on self-injection medications they would loose that 30% unlimited co-pay by April positioning yourself for a very good renewal.

Answer 3

I'm not sure if this is the exact same thing but I have what we call a Flex Spending account. Where money is taken out pre-tax and saved for medical expenses like deductables and everyday medicines. We have prescription medications that are monthly so we use it to also pay for these. We save up and turn in our receipts quarterly.

Depending on what tax bracket you are in but on average most people save about 28%. It also is nice because you don't have to dip into your emergency cash to pay for dedcutable costs.

It does take a bit of work to plan how much we will need each year as with a flex plan we do not get back any monies left in the account at the end of the year! There's always a mad dash to the drug store to spend the last remaining balance. Stock up on cold medicine!