Experiences with HSAs and Health Insurance?

In My Humble Opinion (IMHO)
#1

Health insurance at my company continues to rise every year. This year we are considering a plan that would totally change the way we do things, and I’m wondering if anyone here has had experiences, good or bad, with Health Savings Accounts.

The idea is that we get low-cost health insurance through a nationwide well-know carrier (IOW, not a fly by night) that has a high deductible. We also set up pre-tax health savings account that the employee can use to cover the expenses from the high deductible. All contributions are pre-tax, and any money used for medical expenses are tax free. It continues to build through employee contributions and if they never ever use it they can withdraw it to use for retirement or, say, a child’s wedding (incurring the tax penalties for non-medical use, of course).

Have any of you had something like this at your jobs? What did you think? Good idea or colossal waste of money?

#2

My experience and opinions of HSAs/MSAs and HDHPs (high-deductible health plans) are detailed in this thread.
In short: Unless you’re gonna have gobs of money to keep that HSA topped off, HSAs are Teh Suck.

#3

Thank you so much for the link! I am going through it now looking for all the pros and cons before I make my recommendation.
It’s very helpful.
I do notice that the replies are from 2006 so if anyone has had a change of heart in that thread please let me know that as well! I really want to do what is best for the employees (I’m only making suggestions, not the deciding vote) while keeping the company from going broke in the process. I just know I can’t afford our health insurance as it stands right now, so I don’t expect people that are on a different ‘level’ than I to be able to afford it either.

#4

All I have to say is, I wish you were my wife’s employer. I’d kill to have them offer an HSA. We are getting screwed now paying for regular insurance that we rarely, if ever, use. We’d be much better off being able to save money in an HSA so we’d have a good chunk if we’d ever have a medical need.

#5

My company offered an HSA/HDHP plan for the first time this year, which I decided to try out. I’m still not sure if I like it or not, and in retrospect it’s probably NOT the right plan for me at the moment, since I’m seeing doctors pretty regularly and expecting to have major surgery later this year.

My plan has a $5,000 deductible, $7,500 max oop (my husband is included in this - an individual would have a lower deductible). I’m contributing the maximum allowable to it so the deductible isn’t such a big deal, and the way the billing works I’m already halfway through my deductible - basically everyone charges you a percentage, rather than a co-pay, so a regular office visit costs a lot more. With prescriptions I have to pay 100% until the deductible is met… which was no big deal last fall when I signed up for the plan and wasn’t taking any drugs, but sucks now that I’m on 5 different medications (one of them costs $150 for a one-month supply).

This kind of plan is probably ideal for someone who’s rarely sick and has few doctor’s visits (one annual physical is fully covered on my plan), but you never know what’s going to happen.

My previous plan cost me around $300/month in premiums, plus I had an FSA I was contributing around $150/month to. The new plan is only $45/month in premiums, but I’m putting close to $500/month into the HSA to cover the extra expenses. It is very flexible, though, unlike an FSA, in that I could change my contribution amount at any time, as long as I stay below the max amount. The other difference from an FSA is that the HSA funds aren’t 100% available at the beginning of the plan year… it’s just like a checking account, so there’s only as much funds available as you’ve contributed so far. I still have a $900 bill I paid in January that I need to get reimbursed for since I hadn’t made any contributions to my HSA yet to cover it.

I’m not so concerned with the money, honestly. The main reason I signed up for the account was because the FSA we had before was a “use it or lose it” type of account, which I didn’t like. I anticipate having good health for a couple years, at least, once I have my surgery, in which case with the HSA we’ll have a nice savings that’s earning interest and that we can potentially invest for retirement or something. This also means that I can put more money away that Uncle Sam can’t get to so I end up paying less taxes (my philosophy on taxes is: if I broke even, I did something right).

Luckily, my husband and I make enough money to cover most of the extra expenses, in general. We just don’t have a whole lot left over for extra stuff, but that’s more because we just bought a house than anything else.

If your company offers an FSA, perhaps you could try that along with the cheapest HMO plan? It’s not as flexible, but does offer you some cushion on expenses.

#6

I would see what levels of deductible are available. I sell an HSA plan with a $1500 deductible ($3000 for a family) but that is also the out of pocket max. If you can get a relatively low deductible and get a nice premium savings then it can certainly be a good option.

#7

I’ve gotten almost burned twice by my HSA, and both times they were run by the same company.

There’s a rule in there that the company providing the HSA can audit you on what purchases you’ve made using the HSA credit card. You either provide receipts, pay them back for what you can’t prove, or the freeze your account, and you eventually lose the money.

Both times, my HSA company pulled an audit on me when the purchases were clearly made at a grocery store pharmacy and doctor’s office. I’m crap at keeping receipts, both places dug up what they could for me, but there was a gap that I’d have had to pay back.

Yes, it’s my responsibility to keep receipts, and should I ever choose to have an HSA again, I will. However, I suspect that the company running my HSA is abusing the audit procedure to either a) get more money to use as capital, and b) freeze accounts until they expire and then keep it.

#8

I am the “money person” at my work too (there’s 3 of us) and I chose to offer HSA and traditional account types. I may have posted this in that previous thread but here it is anyway…

The traditional insurance plan is for my partner and his wife and baby. It’s about $800/mo and he says it’s very good for what they need.

My co-worker and I have $4500 deductible HSAs. The reason we got the HSA plans in the first place was to save money, and we (as a company) agreed that the lower monthly costs would benefit the company and whenever the company had extra money, some cash would go into the HSA or whenever one of us needed money put in, the company would put money in. Otherwise, there’s really not much money in the HSAs.

We pay about $80/mo for my co-worker (30, male, single) and quite a bit more for me - $200 because I’m baby-makin’-age (28).

We chose this plan for us because we just never go to the doctor.

Here’s some pros and cons:

PROS
It saves the company a lot of money in health care. No way we could afford 3*$800/mo

The way we work it, my health care is basically “free” - if I need something done, I make sure I put some company money in the account. I never have to spend any out-of-pocket money on anything.

Interest is awesome, like 4.3%

It’s really easy to use the debit card.

We still get the benefit of insurance discounts - the $ we spend a month on our plan does help defer costs.

I don’t feel like I am stuck using in-network doctors. I can go anywhere and get treated and just put it on my card (this does cost more, of course…but like I said, not my pocket…)

That money is ours forever. Unlike FSA’s (I think), it just rolls over to the next year.

CONS:
As an employer, it kills me that the only way I am able to put money in my employee’s accounts is to write them a check in their name. They could very easily cash the check and not put it in their HSA. I called the bank that manages the accounts and spoke to a dozen people and they agreed this does suck but there’s nothing they can do. My workaround is that I can now email the nice branch manager lady at my local branch and have her make transfers from our account to the HSA accounts (the HSA accounts happen to be at the same bank as our business accounts - YMMV)

Sometimes the company doesn’t have money to put in my account. Recently I needed $1400 of dental work done and we did not have $1400 in the bank. I had to have money transferred over from our line of credit instead.

At the beginning, the bank that managed our accounts was seriously clueless about what HSAs really were. There was also a middleman company involved somehow. Recently, things changed, the middleman got kicked out, and everyone at the bank is MUCH more hip to the HSA.

If I ever get really sick, I need to come up with $4500. (I hate to say this but I decided on this deductible because I know I have financially stable parents who would help me out)

Anyway, I like HSAs as an option, as an employee because I am young and healthy and I don’t need to go to the doctor much. I definitely feel protected.

I like them as an option as an employer too, because I like people to be able to use them. As the ONLY option they would probably suck. But they’re a great alternative to traditional plans.

#9

Thanks for all the great feedback. I will definitely check into the audits. I had not heard of that. We have a “guy” that we are working with on this (meaning he’s selling it to us) and through this company we would be using United Health Care and we’ve already set some preliminary deductibles. The company is probably going to cover up to $3K until the coworker can get the money into the HSA to keep anyone from being in the situation of having an emergency before they get any real money into their HSA.

I was also confused about your story, Zipper, because they was it was explained to us was that the HSAs would be individual and managed by the person on their own. Of course, I am sure there are a million different plans and ways to do it, but I will ask about that as well.

We’ve just reached the point where it’s more cost effective for me to pay the doctor every month if I have to instead of paying the ridiculously high insurance premiums. For the $500+ per month I could have a car wreck uninsured and make payment plans with the hospital to pay off the bill easier than I can gamble $500+ every month on the chance I might get sick. But I also realize that I am thinking of this only from my perspective and I could potentially affect several people whose experiences are not my own so it’s nice to get other’s reactions to it.

I’ll let you know how it turns out! I will be off boards for a couple of days while I recover from surgery. I am still on traditional insurance so I am going to take the bills from my surgery and see how it would have played out using the new plan I am considering (would I have had that much in my HSA, would I have been put in a position to hold off on surgery because of money, that sort of thing).