>$1000 per hour for nothing

[tlombard]

I'm not the best source but even with the HSA there are still co-pays, out of pocket maximums and negotiated rates through the insurance company, etc. so the insurance company is on the hook and you are protected from catastrophic medical bills even if that level of protection may be a bit lower.

My main concern was that I can manage the out of pocket maximum even if something bad happened to me this year so I went with it looking towards the future benefits of having that money I (hopefully) don't spend this year working in my favor in the future.

[Swirls]

I'm confused as to why having an HSA impacts health insurance.

We're talking about Health Savings Accounts right?

You are not legally eligible to have an HSA unless you are enrolled in a HDHP (high deductible healthcare plan). If you use a traditional healthcare plan (such as a $250 deductible, 80%/20% coinsurance, $1500/year max out of pocket), then you are not eligible for an HSA.

I kind of alluded to the math stuff in an earlier post above - basically if you have an HDHP and an HSA, you are gambling on staying healthy and not paying a bunch in medical bills each year. If you traditionally hit you max out of pocket in medical expenses each year, an HDHP + HSA is not for you.

[Swirls]

I'm not the best source but even with the HSA there are still co-pays, out of pocket maximums and negotiated rates through the insurance company, etc. so the insurance company is on the hook and you are protected from catastrophic medical bills even if that level of protection may be a bit lower.

You may or may not have co-pays to pay when you visit a doctor's office (I don't with my current provider, although when I lived in New York and South Carolina we still did). Like with a traditional insurance plan, you're still going to have a coinsurance amount - the "discounted" amount you pay after you have reached your deductible.

Let's compare two healthcare plans available from an employer. A traditional and a HDHP + HSA. Note the numbers below are not real insurance figures - just numbers I threw out to convey the magnitude of differences in prices between the two types of plans. Assume a bi-monthly pay period with family coverage for the same family being insured and the same insurance provider for both plans.

Plan A: Traditional
Premiums are $200/paycheck, $500 deductible, 85%/15% coinsurance, $2500 max out of pocket

Plan B: HDHP + HSA
Premiums are $25/paycheck, $2500 deductible, 85%/15% coinsurance, $7500 max out of pocket, $2000 contributed annually to their HSA

Whether or not the family should take Plan A or Plan B is entirely dependent on their overall health.

In Plan A, they're going to spend $4800/year on premiums alone, whether or not they ever go visit a doctor. Worst case they would end up paying $7300/year ($4800 + $2500) if they visit a doctor a bunch and hit their max out of pocket for the year.

In Plan B, they're going to spend $600/year on premiums alone, whether or not they ever go visit a doctor. Money contributed to an HSA is pre-tax, so if you contribute $2000 to it, the net hit to your paycheck is closer to $1500 - just like a 401k contribution. So now this family is actually out $2100/year whether or not they ever go visit a doctor. Worst case they would end up paying $9600/year ($2100 + $7500) if they visit a doctor a bunch and hit their max out of pocket for the year. They could also choose to not contribute to their HSA, which would put them at a max of $8100/year ($600 + $7500).

If you and/or your family is/are generally healthy and don't visit a doctor much, you're usually better off going with an HDHP + HSA. If you see a doctor a lot every year, you're better off going with a traditional plan. If you know you have a bunch of expenses coming up in a particular calendar year, consider getting an FSA (flexible spending account). It kind of acts like an HSA, except it doesn't earn interest and the funds are lost at the end of the calendar year (but you can invest pre-tax funds in it).

[cardsfansince82]

I've had quite a few medical things and prescriptions the last few years so I'm pretty sure I would have gotten crushed with an HSA plan. I admittedly have better insurance options than most people though. My self insurance on a traditional plan is like $60 a paycheck and I end up paying about $500 a year out of pocket for copays. I don't see a reason to switch in my situation.

[Arthur Dent]

It's all excessively complicated and will depend on the specifics of your plan, likely medical needs, etc., but generally speaking HSAs can be a good deal if you're richer and healthier than average. My conclusion working through this for myself was that a good strategy, if you can afford to save a lot and are unlikely to have immediate medical costs, would be to take the HSA for a few years making excess contributions to it to build up a balance, e.g. up to some multiple of your annual out of pocket maximum, and then switch back to the more standard insurance to limit risk and to take advantage of the allowance of co-pays for doctor's office visit. Some office procedures e.g. having small skin cancers removed could cost you $1000+ on an HSA versus a $30, or whatever, co-pay on a traditional plan.

On a larger level, as health policy, HSAs are lousy: they exclusively benefit richer healthier households with a regressive benefit giving more to people in high tax brackets with extra money on their hands to stuff in special account, and there's little evidence that they reduce wasteful medical procedures through "skin in the game" (which is supposedly their reason to exist).

Edit: And one gotcha with HSAs is that you may find they start charging a monthly fee on you once you are no longer eligible to make contributions. I switched out of mine when I got married only to learn that a $2.50/mo fee, never disclosed to me, suddenly appeared converting the account from savings vehicle into a desavings vehicle.

[Arthur Dent]

So for 50 minutes of visiting, where no treatments or tests or anything were done, they are asking for $926. We have the money in an HSA, but I'm not paying it. It's just outrageous. I guess someone has to pay for that new Children's hospital.

Do you have a way to not pay it other than powerlessly complaining and then getting stuck in collection?

Having a "market" system for medically required services makes zero sense for a whole variety of reasons, among them that you hardly ever know what the prices are until the bill is in your hand.

[AWvsCBsteeeerike3]

I had an hsa once but could never find a better deal than my checking account which pays 1.25% apr. Eventually my employer got tired of holding all this money and made me give them a bank account number where i just jused the checking account. Of course i spent every last penny within the year but im not so sure that was legal. Regardless unless youve got a lot of money in there, the hsa isnt a great vehicle to save money and if the argument is they are for later in life when needed, the money is better spent in a general fund ira, either roth or traditional...where it can then be used for anything not just medical bills.

[Swirls]

I had an hsa once but could never find a better deal than my checking account which pays 1.25% apr. Eventually my employer got tired of holding all this money and made me give them a bank account number where i just jused the checking account. Of course i spent every last penny within the year but im not so sure that was legal. Regardless unless youve got a lot of money in there, the hsa isnt a great vehicle to save money and if the argument is they are for later in life when needed, the money is better spent in a general fund ira, either roth or traditional...where it can then be used for anything not just medical bills.

The purpose of an HSA isn't to save money for later in life. Obviously if you're investing for the future then yes you'd want to use an IRA/Roth IRA/401k/something else of that ilk.

[AWvsCBsteeeerike3]

Oh, I thought the purpose of it was to save. If it's not there to save, you can always use a flex spending account which is pre-tax earnings as well. But, it can not be carried over year to year.

[Arthur Dent]

Eventually my employer got tired of holding all this money and made me give them a bank account number where i just jused the checking account. Of course i spent every last penny within the year but im not so sure that was legal.

Yeah, that sounds illegal if you did not pay the required tax. Did your employer transfer these funds to you as a rollover distribution? If so, you were required to deposit those funds in another HSA within 60 days. If you did not, the distribution adds to your taxable income and is also subject to an additional 20% tax.

I'm not sure how exactly the enforcement works on this, but I believe your employer would have filed a form with the IRS reporting their distribution to you, so if you did not then report having contributed the funds to another HSA or having spent the money on qualified medical expenses, the IRS would have a record.