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Investing Advice Inspired by Jack Bogle
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caldy
Joined: 18 Oct 2007
Posts: 26
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 Posted: Fri Nov 06, 2009 11:40 am Post subject: HSA's |
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One of my projects this weekend is to research Health Saving's Accounts. I currently have my medical insurance through my wife's employer and we were just notified of the premium increases which are over 100% so I am seriously considering the High Deductible Plan along with a HSA even though I will be 61 years of age in January. I am pretty familiar with how they work but not sure where I can locate the best HSA with the lowest fees that offer Vanguard funds. My goal is to fully fund for the next 4 years and pay the expenses with other monies so I can let the account grow. I noticed Vanguard offers HSA's but thought I would throw this out to all who may have an HSA to see where the best plans might be.
Thank you, |
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tadamsmar
Joined: 07 May 2007
Posts: 2407
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| Posted: Fri Nov 06, 2009 2:23 pm Post subject: |
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You may only be able to contribute to an HSA for relatively short time. You cannot contribute after you enroll in Medicare.
So, you will only be able to build up a small account. With the fees and limits on an HSA account with a relatively small balance, you might find it to be a relatively high-fee investment option.
But you can still get the tax break on funding your HSA and using it for qualified expenses even if it turns out to not be a good long-term investment vehicle for you. |
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BruceM
Joined: 08 Aug 2008
Posts: 1078
Location: Manzanita, Oregon
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| Posted: Fri Nov 06, 2009 2:54 pm Post subject: Re: HSA's |
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| caldy wrote: | One of my projects this weekend is to research Health Saving's Accounts. I currently have my medical insurance through my wife's employer and we were just notified of the premium increases which are over 100% so I am seriously considering the High Deductible Plan along with a HSA even though I will be 61 years of age in January. I am pretty familiar with how they work but not sure where I can locate the best HSA with the lowest fees that offer Vanguard funds. My goal is to fully fund for the next 4 years and pay the expenses with other monies so I can let the account grow. I noticed Vanguard offers HSA's but thought I would throw this out to all who may have an HSA to see where the best plans might be.
Thank you, |
I agree with the above comment.
At 5,950 + 1,000 catch-up, beginning this year and going through age 64, this would be a maximum pretax contribution (you deduct your contributions 'above the line' on your 1040) of 27,800 for a family HDHP plus whatever maximum contribution inflation increases are added during the next 4 years.
But this requires that you and wife drop your wife's employer coverage and are not covered by any other health plan (specialty health coverage like dental, hearing, vision, etc, can be carried at the same time). You could set up one just for yourself if you drop coverage from your wife's plan, but the maximum contribution amount each year would drop to 3,000.
Take a look at IRS Publication 969 for detailed information on HSAs at
http://www.irs.gov/pub/irs-pdf/p969.pdf
and form 8889 that must be filed each year you make contributions to the HSA, at
http://www.irs.gov/pub/irs-pdf/f8889.pdf
Note that you can use the savings for Medicare qualified medical out of pocket expenses, but not to pay premiums for supplemental health plan premiums, although as the previous poster points out, you may not contribute to the plan after beginning Medicare.
As to which plan, the listing of available plan may be on your state insurance commissioner's web site, as the state regulates the offering of these plans.
The costs of health insurance are getting rediculous
BruceM |
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mikep
Joined: 22 Apr 2009
Posts: 1548
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caldy
Joined: 18 Oct 2007
Posts: 26
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| Posted: Fri Nov 06, 2009 4:54 pm Post subject: BruceM |
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| Thank you for the comments. One thing I forgot to post was that the HDHP is one of the options through my wife's employer so I would not be cancelling her coverage. My wife is 5 years younger than me so from what I understand once I hit 65 I can no longer make contributions due to Medicare but my wife could until she is 65. |
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allancoleman
Joined: 11 Sep 2007
Posts: 302
Location: Alaska & Hawaii
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| Posted: Fri Nov 06, 2009 9:59 pm Post subject: |
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We've had HSA's for a few years now . We presently have over $21k in our family HSA and since I am presently on Medicare and can no longer deposit to a HSA for myself , we opened a seperate individual HSA for my wife this year ( 2009 ) and will make another deposit for the wife again for next calendar year of 2010 in her own individual HSA .
One of the mistakes I made in our HSA strategy was that from the begining I should have opened a individual HSA for both the wife and I . That way we would have gotten the extra " catch - up " allowance for both HSA accounts and not just our family HSA those first few years . Love the direct tax deduction for each years tax return . After we make next years HSA deposit for the wife , we'll have over $29k for medical expenses use in the future .
Last edited by allancoleman on Sat Nov 07, 2009 1:29 am; edited 1 time in total |
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tarnation
Joined: 26 Apr 2007
Posts: 1371
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| Posted: Sat Nov 07, 2009 12:12 am Post subject: |
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| allancoleman wrote: |
One of the mistakes I made in our HSA strategy was that from the begining I should have opened a individual HSA for both the wife and I . That way we would have gotten the extra " catch - up " allowance for both HSA accounts and not just our family HSA those first few years . |
We are considering a switch to HDHP's this year. I don't think I quite understand the problem you describe. Could you elucidate?
Also, we are concerned that if we switch, HDHP's and HSA's may not be available and we would have to switch back very soon.
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allancoleman
Joined: 11 Sep 2007
Posts: 302
Location: Alaska & Hawaii
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| Posted: Sat Nov 07, 2009 1:02 am Post subject: |
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| tarnation wrote: | | allancoleman wrote: |
One of the mistakes I made in our HSA strategy was that from the begining I should have opened a individual HSA for both the wife and I . That way we would have gotten the extra " catch - up " allowance for both HSA accounts and not just our family HSA those first few years . |
We are considering a switch to HDHP's this year. I don't think I quite understand the problem you describe. Could you elucidate?
Also, we are concerned that if we switch, HDHP's and HSA's may not be available and we would have to switch back very soon. |
Each Health Savings Account ( HSA ) , tarnation , is allowed a " catch - up " additional allowance for older individuals . In the begining I originally set up a " family " HSA that had a higher deposit limit BUT only one single extra additional catch - up allowance added to our deposit limit . IF I had set up TWO individual HSAs for the wife and I both , we would have had two individual HSAs each with their own additional catch - up additional allowances added to our deposits each calendar year .
If you read the rules on HSA deposit limits , its more clear . 
For example :
For 2010 single HSA deposit limit is $3,050
For 2010 family HSA deposit limit is $6,150
" Catch - up contribution " ( 55 or older ) ( single and family ) is $1,000
If a couple opens one single " family " HSA with a catch - up contribution the total deposit would be $7,150 .
And if the couple opens two seperate individual HSA accounts , the single HSA deposit limit is $3,050 and with the $1,000 catch - up contribution adds up to $4,050 times two seperate individual HSAs equals $8,100 for that couple instead of the max $7,150 for a family HSA .
Common sense and math , tarnation . |
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tarnation
Joined: 26 Apr 2007
Posts: 1371
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| Posted: Sat Nov 07, 2009 2:11 am Post subject: |
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| allancoleman wrote: | Each Health Savings Account ( HSA ) , tarnation , is allowed a " catch - up " additional allowance for older individuals . In the begining I originally set up a " family " HSA that had a higher deposit limit BUT only one single extra additional catch - up allowance added to our deposit limit . IF I had set up TWO individual HSAs for the wife and I both , we would have had two individual HSAs each with their own additional catch - up additional allowances added to our deposits each calendar year .
If you read the rules on HSA deposit limits , its more clear .
For example :
For 2010 single HSA deposit limit is $3,050
For 2010 family HSA deposit limit is $6,150
" Catch - up contribution " ( 55 or older ) ( single and family ) is $1,000
If a couple opens one single " family " HSA with a catch - up contribution the total deposit would be $7,150 .
And if the couple opens two seperate individual HSA accounts , the single HSA deposit limit is $3,050 and with the $1,000 catch - up contribution adds up to $4,050 times two seperate individual HSAs equals $8,100 for that couple instead of the max $7,150 for a family HSA .
Common sense and math , tarnation . |
Thank you for your time.
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BruceM
Joined: 08 Aug 2008
Posts: 1078
Location: Manzanita, Oregon
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| Posted: Sat Nov 07, 2009 2:34 pm Post subject: |
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One point to keep in mind when considering two HSAs instead of one family HSAs....the cost of the HDHP insurance itself.
Now, I'm making up the following numbers, but consider the calculation:
Cost of $6,000 deductible family HDHP (max 3,000 each): 3,600/yr
Deductible contribution: 5,950 + 1,000 = 6,950
Tax savings on contribution (.15 Fed + .05 state): 6,950 X .2 = 1,390
Net cost: 3,600 - 1,390 = 2,210
Cost of two $3,000 deductible HDHPs: $5,400/yr
Deductible contribution: (3,000+1,000) X 2 = 8,000
Tax savings on contribution: 8,000 X .2 = 1,600
Net cost: 5,400 - 1,600 = 3,800
Run your own calculations, but be sure that the two plans have the same coverage and the same max out of pocket deductibles.
BruceM |
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mvm
Joined: 31 Jan 2008
Posts: 264
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| Posted: Sat Nov 07, 2009 2:50 pm Post subject: |
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| the future of HSA's is very limited, perhaps even curtailed, in the health care bills being debated by congress...the WSJ reported today. |
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mikep
Joined: 22 Apr 2009
Posts: 1548
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| Posted: Sat Nov 07, 2009 3:39 pm Post subject: |
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| BruceM wrote: | One point to keep in mind when considering two HSAs instead of one family HSAs....the cost of the HDHP insurance itself.
Now, I'm making up the following numbers, but consider the calculation:
Cost of $6,000 deductible family HDHP (max 3,000 each): 3,600/yr
Deductible contribution: 5,950 + 1,000 = 6,950
Tax savings on contribution (.15 Fed + .05 state): 6,950 X .2 = 1,390
Net cost: 3,600 - 1,390 = 2,210
Cost of two $3,000 deductible HDHPs: $5,400/yr
Deductible contribution: (3,000+1,000) X 2 = 8,000
Tax savings on contribution: 8,000 X .2 = 1,600
Net cost: 5,400 - 1,600 = 3,800
Run your own calculations, but be sure that the two plans have the same coverage and the same max out of pocket deductibles.
BruceM |
Bruce,
Do you have to get separate HDHP's to have separate HSA's? I thought you could have separate HSA's even if you were covered by a single family HDHP.
Thanks,
Mike |
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BruceM
Joined: 08 Aug 2008
Posts: 1078
Location: Manzanita, Oregon
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| Posted: Sat Nov 07, 2009 4:29 pm Post subject: |
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| mvm wrote: | | the future of HSA's is very limited, perhaps even curtailed, in the health care bills being debated by congress...the WSJ reported today. |
I think the fate of the HSA's future is still in the 'proposed ammendment' stage, as I've seen Congressional proposals ranging from limiting deductions to the HDHP's deductible, to limiting drugs to presecription vs. over the counter, to a 20% penalty for non-qualified withdrawals, and so on.
HSAs have become popular and are rapidly becoming more popular with employers, so I don't think Congress will have the courage to discontinue them....although from a macroeconomic standpoint, they probably should be discontinued. HSA's work well for the relatively young and healthy, and do just what they are intended to do...put savings incentives and market forces into the consumption of health services, while providing true insurance (not cash management) for possible catestrophic loss. Perfect!
Problem is, there is a sizable chunk of the population for which HSA's do not work. Elderly, chronically sick or very low income. If the objective is to provide broad health insurance coverage to all (or almost all), then all must participate and contribute to the 'pool'. HSAs serve to remove the most healthy from the insured pool.
Sorry, I don't mean this to sound politicial, just practical.
BruceM |
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tarnation
Joined: 26 Apr 2007
Posts: 1371
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| Posted: Sat Nov 07, 2009 4:49 pm Post subject: |
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| mvm wrote: | | the future of HSA's is very limited, perhaps even curtailed, in the health care bills being debated by congress...the WSJ reported today. |
I was concerned about that too. I couldn't find the WSJ article, so I found H.R. 3962. It looks like it only makes what I would consider modest changes to HSA's.
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celia
Joined: 09 Mar 2008
Posts: 876
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| Posted: Sat Nov 07, 2009 5:10 pm Post subject: |
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Is someone able to answer my question:
I am working and spouse and I are not eligible for HSA. But we took a dependent off my employer coverage this year and his new insurance is HSA-compatible (high deductible).
Are we eligible to open a family HSA or only an individual one? If we open a family HSA, can we put money in it for the one dependent, but spend it on anyone in the family? I don't think this is what is meant by the plans, but just thought I'd ask.
celia |
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pshonore
Joined: 28 Jun 2009
Posts: 857
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| Posted: Sat Nov 07, 2009 5:11 pm Post subject: |
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| BruceM wrote: | | mvm wrote: | | the future of HSA's is very limited, perhaps even curtailed, in the health care bills being debated by congress...the WSJ reported today. |
I think the fate of the HSA's future is still in the 'proposed ammendment' stage, as I've seen Congressional proposals ranging from limiting deductions to the HDHP's deductible, to limiting drugs to presecription vs. over the counter, to a 20% penalty for non-qualified withdrawals, and so on.
HSAs have become popular and are rapidly becoming more popular with employers, so I don't think Congress will have the courage to discontinue them....although from a macroeconomic standpoint, they probably should be discontinued. HSA's work well for the relatively young and healthy, and do just what they are intended to do...put savings incentives and market forces into the consumption of health services, while providing true insurance (not cash management) for possible catestrophic loss. Perfect!
Problem is, there is a sizable chunk of the population for which HSA's do not work. Elderly, chronically sick or very low income. If the objective is to provide broad health insurance coverage to all (or almost all), then all must participate and contribute to the 'pool'. HSAs serve to remove the most healthy from the insured pool.
Sorry, I don't mean this to sound politicial, just practical.
BruceM |
Agreed but don't understand how HSAs remove healthy people from the "pool". Its basically the same insurance written by the same insurers with a higher deductible and a mechanism for paying that deductible with pre-tax dollars. However you do have to understand the program. I know lots of people who hear $2000 deductible and immediately lose interest even though they could save money in the long run. |
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tarnation
Joined: 26 Apr 2007
Posts: 1371
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| Posted: Sat Nov 07, 2009 5:30 pm Post subject: |
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| celia wrote: | Is someone able to answer my question:
I am working and spouse and I are not eligible for HSA. But we took a dependent off my employer coverage this year and his new insurance is HSA-compatible (high deductible).
Are we eligible to open a family HSA or only an individual one? If we open a family HSA, can we put money in it for the one dependent, but spend it on anyone in the family? I don't think this is what is meant by the plans, but just thought I'd ask.
celia |
If you are still claiming him as a dependent, I don't think so. Read Pub 969 (link above).
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tadamsmar
Joined: 07 May 2007
Posts: 2407
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| Posted: Sat Nov 07, 2009 8:44 pm Post subject: |
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| celia wrote: | Is someone able to answer my question:
I am working and spouse and I are not eligible for HSA. But we took a dependent off my employer coverage this year and his new insurance is HSA-compatible (high deductible).
Are we eligible to open a family HSA or only an individual one? If we open a family HSA, can we put money in it for the one dependent, but spend it on anyone in the family? I don't think this is what is meant by the plans, but just thought I'd ask.
celia |
If your former dependent has an HSA, he can only spend on himself, his spouse, and his dependents. If it's his HDHP, then the HSA will be in his name. |
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tadamsmar
Joined: 07 May 2007
Posts: 2407
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| Posted: Sat Nov 07, 2009 8:47 pm Post subject: |
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| mikep wrote: | | BruceM wrote: | One point to keep in mind when considering two HSAs instead of one family HSAs....the cost of the HDHP insurance itself.
Now, I'm making up the following numbers, but consider the calculation:
Cost of $6,000 deductible family HDHP (max 3,000 each): 3,600/yr
Deductible contribution: 5,950 + 1,000 = 6,950
Tax savings on contribution (.15 Fed + .05 state): 6,950 X .2 = 1,390
Net cost: 3,600 - 1,390 = 2,210
Cost of two $3,000 deductible HDHPs: $5,400/yr
Deductible contribution: (3,000+1,000) X 2 = 8,000
Tax savings on contribution: 8,000 X .2 = 1,600
Net cost: 5,400 - 1,600 = 3,800
Run your own calculations, but be sure that the two plans have the same coverage and the same max out of pocket deductibles.
BruceM |
Bruce,
Do you have to get separate HDHP's to have separate HSA's? I thought you could have separate HSA's even if you were covered by a single family HDHP.
Thanks,
Mike |
You can have separate HSAs if you are covered by a family HDHP. And you must to get the catch-up for the spouse not named as primary on the HDHP. |
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tarnation
Joined: 26 Apr 2007
Posts: 1371
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| Posted: Sun Nov 08, 2009 12:26 am Post subject: |
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So it seems under current tax laws, our path forward is to do a family HSA to the yearly max (via payroll deduction to avoid SS tax). Once we are both 55, open an HSA for myself to deposit just the additional catch-up contribution in.
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grabiner
Joined: 21 Feb 2007
Posts: 3882
Location: Columbia, MD
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| Posted: Sun Nov 08, 2009 6:51 pm Post subject: |
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| pshonore wrote: | | Agreed but don't understand how HSAs remove healthy people from the "pool". Its basically the same insurance written by the same insurers with a higher deductible and a mechanism for paying that deductible with pre-tax dollars. However you do have to understand the program. I know lots of people who hear $2000 deductible and immediately lose interest even though they could save money in the long run. |
It's an economic decision. If your employer offers a health plan with a $500 deductible which costs $2000, and a plan with a $2000 deductible which costs $1500, you should prefer the low deductible if the difference in benefits is expected to exceed $500. If you have $2000 in medical bills and the low-deductible plan covers $1200 of the $1500 after the deductible, then the low-deductible plan is a better deal, even if you could save an extra $500 in taxes with an HSA. People who do work out the numbers, or estimate them, will prefer high-deductible plans if they are in good health, and low-deductible plans if they are in poor health.
With most types of insurance, this isn't an issue. You can insure your car for a $500 deductible or a $1000 deductible, but if you are a poor driver, you will pay a lot more for the $500 deductible, and thus it won't save you money. But employer-provided health insurance is offered at the same rate to all employees.
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David Grabiner |
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grabiner
Joined: 21 Feb 2007
Posts: 3882
Location: Columbia, MD
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| Posted: Sun Nov 08, 2009 6:51 pm Post subject: |
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| pshonore wrote: | | Agreed but don't understand how HSAs remove healthy people from the "pool". Its basically the same insurance written by the same insurers with a higher deductible and a mechanism for paying that deductible with pre-tax dollars. However you do have to understand the program. I know lots of people who hear $2000 deductible and immediately lose interest even though they could save money in the long run. |
It's an economic decision. If your employer offers a health plan with a $500 deductible which costs $2000, and a plan with a $2000 deductible which costs $1500, you should prefer the low deductible if the difference in benefits is expected to exceed $500. If you have $2000 in medical bills and the low-deductible plan covers $1200 of the $1500 after the deductible, then the low-deductible plan is a better deal, even if you could save an extra $500 in taxes with an HSA. People who do work out the numbers, or estimate them, will prefer high-deductible plans if they are in good health, and low-deductible plans if they are in poor health.
With most types of insurance, this isn't an issue. You can insure your car for a $500 deductible or a $1000 deductible, but if you are a poor driver, you will pay a lot more for the $500 deductible, and thus it won't save you money. But employer-provided health insurance is offered at the same rate to all employees.
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David Grabiner |
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mikep
Joined: 22 Apr 2009
Posts: 1548
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| Posted: Sun Nov 08, 2009 7:07 pm Post subject: |
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| BruceM wrote: | | mvm wrote: | | the future of HSA's is very limited, perhaps even curtailed, in the health care bills being debated by congress...the WSJ reported today. |
I think the fate of the HSA's future is still in the 'proposed ammendment' stage, as I've seen Congressional proposals ranging from limiting deductions to the HDHP's deductible, to limiting drugs to presecription vs. over the counter, to a 20% penalty for non-qualified withdrawals, and so on.
HSAs have become popular and are rapidly becoming more popular with employers, so I don't think Congress will have the courage to discontinue them....although from a macroeconomic standpoint, they probably should be discontinued. HSA's work well for the relatively young and healthy, and do just what they are intended to do...put savings incentives and market forces into the consumption of health services, while providing true insurance (not cash management) for possible catestrophic loss. Perfect!
Problem is, there is a sizable chunk of the population for which HSA's do not work. Elderly, chronically sick or very low income. If the objective is to provide broad health insurance coverage to all (or almost all), then all must participate and contribute to the 'pool'. HSAs serve to remove the most healthy from the insured pool.
Sorry, I don't mean this to sound politicial, just practical.
BruceM |
Bruce,
There is a misconception that HSA's are only for the healthy. Most of the time, yes, but not everyone has to be healthy to benefit from an HSA. We have high medical expenses but the HSA still works! The entire out of pocket maximum of our HDHP + HDHP premium is lower than just the premium of the alternative traditional copayment plan I can choose through my employer. No matter what the HSA still works!
Mike |
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ksc
Joined: 05 Jul 2007
Posts: 25
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| Posted: Sun Nov 08, 2009 9:51 pm Post subject: |
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| This maybe a dumb question, but do you have to be employed to participate in a HSA ? |
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pshonore
Joined: 28 Jun 2009
Posts: 857
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| Posted: Sun Nov 08, 2009 9:55 pm Post subject: |
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| ksc wrote: | | This maybe a dumb question, but do you have to be employed to participate in a HSA ? |
Absolutely not. You can be retired or unemployed. But you do a High Deductible Health Plan (HDHP) |
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tadamsmar
Joined: 07 May 2007
Posts: 2407
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| Posted: Sun Nov 08, 2009 10:57 pm Post subject: |
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| tadamsmar wrote: | | celia wrote: | Is someone able to answer my question:
I am working and spouse and I are not eligible for HSA. But we took a dependent off my employer coverage this year and his new insurance is HSA-compatible (high deductible).
Are we eligible to open a family HSA or only an individual one? If we open a family HSA, can we put money in it for the one dependent, but spend it on anyone in the family? I don't think this is what is meant by the plans, but just thought I'd ask.
celia |
If your former dependent has an HSA, he can only spend on himself, his spouse, and his dependents. If it's his HDHP, then the HSA will be in his name. |
BTW, there is no such thing as a family HSA. All HSAs are in the name of an individual, all HSAs can be used tax-free to cover qualified expenses for that individual and his or her spouse and dependents.
There is a family HDHP. Both spouses covered by a family HDHP may have one or more HSAs in their name. |
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grabiner
Joined: 21 Feb 2007
Posts: 3882
Location: Columbia, MD
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| Posted: Sun Nov 08, 2009 11:14 pm Post subject: |
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| mikep wrote: | | There is a misconception that HSA's are only for the healthy. Most of the time, yes, but not everyone has to be healthy to benefit from an HSA. We have high medical expenses but the HSA still works! The entire out of pocket maximum of our HDHP + HDHP premium is lower than just the premium of the alternative traditional copayment plan I can choose through my employer. No matter what the HSA still works! |
It really depends on the structure of the plan. If your employer offers an HDHP with a pass-through payment to an HSA, and also subsidizes the health insurance, then the HDHP/HSA combination may be the best no matter what your situation. The reason is that an HDHP can always increase its price by $1000 by contributing $1000 to your HSA, but if your employer pays 75% of the premium, it only costs you $250 to get that $1000.
If your HDHP isn't subsidized, it is unlikely that you will be better off with an HDHP than with a conventional plan unless you are either in good health or have very high prescription drug costs (not normally covered by the deductible for a conventional plan).
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David Grabiner |
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neil
Joined: 15 Aug 2007
Posts: 9
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| Posted: Mon Nov 09, 2009 3:08 pm Post subject: |
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While I am young, I have been anything but healthy the last few years, and I'd say that my HDHP & HSA has been a big money saver. By switching to a HDHP, I save about $1000 per month on my family's insurance with the same insurance company (Blue Cross). There is no way I could possibly lose all of that $12,000 over the course of the year, because eventually I hit my deductible and the insurance company starts paying claims.
If your employer is subsidizing your health plan, then you are likely paying for that insurance with lower income. While choosing the more costly insurance might save you money in the short term, I don't think it will pay off in the long term. |
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mikep
Joined: 22 Apr 2009
Posts: 1548
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| Posted: Mon Nov 09, 2009 4:15 pm Post subject: |
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| grabiner wrote: | | mikep wrote: | | There is a misconception that HSA's are only for the healthy. Most of the time, yes, but not everyone has to be healthy to benefit from an HSA. We have high medical expenses but the HSA still works! The entire out of pocket maximum of our HDHP + HDHP premium is lower than just the premium of the alternative traditional copayment plan I can choose through my employer. No matter what the HSA still works! |
It really depends on the structure of the plan. If your employer offers an HDHP with a pass-through payment to an HSA, and also subsidizes the health insurance, then the HDHP/HSA combination may be the best no matter what your situation. The reason is that an HDHP can always increase its price by $1000 by contributing $1000 to your HSA, but if your employer pays 75% of the premium, it only costs you $250 to get that $1000.
If your HDHP isn't subsidized, it is unlikely that you will be better off with an HDHP than with a conventional plan unless you are either in good health or have very high prescription drug costs (not normally covered by the deductible for a conventional plan). |
I guess its subsidized.
HSA/HDHP plan:
Premium: $0
deductible: $2400
Pay 10% coinsurance post-deductible
out of pocket maximum: $4200 ($2400 deductible + $1800 10% coinsurance)
Alternative copayment plan:
Annual premium $4596
Copayments range from $10 generic prescription - $100 hospitalization
out of pocket maximum: $4000 ( + premium = $8596)
I'd pay more with the copayment plan if I used nothing than if I used the HSA/HDHP plan and was in the hospital all year. That makes it a "can't lose" decision.
Also please let me know if you can add those links to the HSA wiki page (4th reply from top) I think they would be useful.
Thanks,
Mike |
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BruceM
Joined: 08 Aug 2008
Posts: 1078
Location: Manzanita, Oregon
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| Posted: Wed Nov 11, 2009 9:01 pm Post subject: |
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| mikep wrote: | There is a misconception that HSA's are only for the healthy. Most of the time, yes, but not everyone has to be healthy to benefit from an HSA. We have high medical expenses but the HSA still works! The entire out of pocket maximum of our HDHP + HDHP premium is lower than just the premium of the alternative traditional copayment plan I can choose through my employer. No matter what the HSA still works!
Mike |
Mike
What I'm referring to is inability of ill or sick persons from being able to get the HDHP coverage. HDHP's associated with HSA's, like individual health plans, are medically underwritten, which means the insurer is not required to offer the coverage, which would likely preclude individuals or families with pre-existing conditions.
But if you could get it, it just seems odd that the premiums on the HDHP plus out of pockets still are less than what you're paying through your employer. I mean, why wouldn't your employer just offer an HSA and HDHP?
And for those hi use families that do have the HSA-HDHP, if the out of pocket annual expenses equal or exceed pretax HSA contributions, then the only benefit would be the deductibility of the HSA contribution. But even this tax benefit would be reduced if the total of our of pocket medical expenses exceeds 7.5% of AGI, as they would be deductible on the individuals Schedule A anyway.
So I guess that for high-medical use individuals or families, the HSA may offer some benefit, but may offer none, and would most likely offer no compounding tax free growth of HSA savings, as it would get used up as fast as it gets contributed in.
BruceM[/code] |
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tadamsmar
Joined: 07 May 2007
Posts: 2407
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| Posted: Thu Nov 12, 2009 10:14 am Post subject: |
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| BruceM wrote: | | mikep wrote: | There is a misconception that HSA's are only for the healthy. Most of the time, yes, but not everyone has to be healthy to benefit from an HSA. We have high medical expenses but the HSA still works! The entire out of pocket maximum of our HDHP + HDHP premium is lower than just the premium of the alternative traditional copayment plan I can choose through my employer. No matter what the HSA still works!
Mike |
Mike
What I'm referring to is inability of ill or sick persons from being able to get the HDHP coverage. HDHP's associated with HSA's, like individual health plans, are medically underwritten, which means the insurer is not required to offer the coverage, which would likely preclude individuals or families with pre-existing conditions.
But if you could get it, it just seems odd that the premiums on the HDHP plus out of pockets still are less than what you're paying through your employer. I mean, why wouldn't your employer just offer an HSA and HDHP?
And for those hi use families that do have the HSA-HDHP, if the out of pocket annual expenses equal or exceed pretax HSA contributions, then the only benefit would be the deductibility of the HSA contribution. But even this tax benefit would be reduced if the total of our of pocket medical expenses exceeds 7.5% of AGI, as they would be deductible on the individuals Schedule A anyway.
So I guess that for high-medical use individuals or families, the HSA may offer some benefit, but may offer none, and would most likely offer no compounding tax free growth of HSA savings, as it would get used up as fast as it gets contributed in.
BruceM |
Federal employees have access to HDHP, and there is no pre-existing condition qualifications for that one.
If you go out to the private market for a health plan, then you always have to pre-qualify. But I am not sure that any employer-provided HDHPs have any more qualification requirements than the employer's other health plan offerings.
By the way, going out the the private market instead of using an employer group plan that requires no pre-qualification has some additional risk. There is a risk that you will get denied coverage for a huge medical bill based on some trumped-up evidence of a pre-exisiting condition (like an over-the-counter medication that you bought) that you failed to reveal. |
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mikep
Joined: 22 Apr 2009
Posts: 1548
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| Posted: Thu Nov 12, 2009 1:57 pm Post subject: |
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| BruceM wrote: | | mikep wrote: | There is a misconception that HSA's are only for the healthy. Most of the time, yes, but not everyone has to be healthy to benefit from an HSA. We have high medical expenses but the HSA still works! The entire out of pocket maximum of our HDHP + HDHP premium is lower than just the premium of the alternative traditional copayment plan I can choose through my employer. No matter what the HSA still works!
Mike |
Mike
What I'm referring to is inability of ill or sick persons from being able to get the HDHP coverage. HDHP's associated with HSA's, like individual health plans, are medically underwritten, which means the insurer is not required to offer the coverage, which would likely preclude individuals or families with pre-existing conditions.
But if you could get it, it just seems odd that the premiums on the HDHP plus out of pockets still are less than what you're paying through your employer. I mean, why wouldn't your employer just offer an HSA and HDHP?
And for those hi use families that do have the HSA-HDHP, if the out of pocket annual expenses equal or exceed pretax HSA contributions, then the only benefit would be the deductibility of the HSA contribution. But even this tax benefit would be reduced if the total of our of pocket medical expenses exceeds 7.5% of AGI, as they would be deductible on the individuals Schedule A anyway.
So I guess that for high-medical use individuals or families, the HSA may offer some benefit, but may offer none, and would most likely offer no compounding tax free growth of HSA savings, as it would get used up as fast as it gets contributed in.
BruceM[/code] |
In some cases the premium of alternative plans are less, such as individual-only coverage. Also, some people are used to the copay type plans and don't want to deal with / take the time to learn about HSA/HDHP's but it is a very costly mistake. Some people may not have the deductible/maximum in their emergency fund for a big claim early in the year.
Mike |
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