If you have a HSA, have ever really looked hard at the online stats concerning your activity to date? I can’t call to ask until Monday, but their cute little online graphics shows total costs 2x what I’ve paid in to this account! If you even go 1 penny negative, I was told the HSA claim will bounce. You can resubmit once funds are available. So, I just want to ask the wisdom of the SD… How could it be possible that my “total payments to date” are so out of whack with what I’ve agreed to have withheld from each paycheck? Also weird, the breakdown of these costs by category, including “Pay My Provider” category shows $0.00! Yet, we use it for all doctor visits, etc. Maybe it’s their website that’s whacky?
As far as I can tell, HSAs are a form of gambling where you wager against the government about how much you’re going to have to spend on healthcare in a given year, where the only way to win is to get sicker than you expect to be.
So I just steer clear of the whole mess entirely and pay my coinsurance out of pocket.
I think you are confused as to what HSA’s are. You do not have to “gamble” on how much in health care costs you will have with an HSA each year because the balance in an HSA does not go away if you do not use it. It just grows tax free and you can use the balance at any later date for health care costs. You seem to be confusing them with FSA’s, flexible spending accounts, which have a “use it or lose it” functionality in that any balance in those accounts at the end of the year will be lost if not used on health care costs.
Jinx, as far as your question about your account, i think it will be hard to determine what is going on without more information. Does your employer contribute anything to your HSA, or is it entirely funded by pre-tax contributions on your part from your paychecks?
My HSA experience is better. I know how much my max out of pocket is, so I just put that in the HSA. If don’t spend that much, I just put in enough the next year to get me up to my max out of pocket again.
To the OP: is it possible you’re looking at the undiscounted doctor’s fee rather than the charge your insurance (and you) is actually paying?
… why, so I have.
I retract my statement and reserve the right to apply it to any future thread about FSAs.
I love having an HSA. It’s so easy to manage your health care spending and to analyze what you’ve consumed over the past year. It makes it easy to be knowledgeable about your behavior.
If you are showing 2x the contributions, is it possible your employer is matching them? Mine does…up to a certain point, and I’m way below that point.
I do too. It is just like an additional tax-free bank account except you can (supposedly) only use it for approved health related costs. However, there is nothing stopping you from taking the cash from it at any time. The cards work just like ATM or credit cards and you can use them for anything. That can be legitimate in cases where you pay yourself back for a health related expense you paid for some other way or it can be fraudulent if you go on a spending spree and use it to buy a new wardrobe. The contribution limits are low enough that the IRS doesn’t seem too concerned about the potential for abuse but keep good records in case you ever get audited.
That is the only downside that I know of. The money is yours forever unlike an FSA because you can lose thousands if you put money into an FSA and don’t use it. I worked for a benefits administration company for a few years and I still do not understand why FSA’s exist at all. It is about the dumbest idea for a health account I can conceive of and it invites abuse on both sides. The one little known ‘neat’ feature of an FSA is that you can sign up to have a regular payroll contribution taken out of your account over the year to make a total yearly contribution of say, $5000. January 1st rolls around and you haven’t put anything into the account yet but you have the whole $5000 available to you immediately so you get a few elective procedures done and then quit the company. Do you have to pay that money back? Believe it or not, you do not. Your little deception is supposed to be offset by all of the other people that bet the wrong way and did not use their funds from the prior year so that they revert back to the company. Like I said, it is a stupid idea.
HSA’s are much more straightforward and like a regular savings account with tax benefits. You can only spend what you have already put it and it remains yours even if you leave the company.
The way the OP describes it, it’s not an annual flex spending account (because you CAN usually go negative on those, you just can’t exceed your annual figure), it’s an HSA where you can keep the money basically in perpetuity.
If you get sicker, you spend all your money. If you have a healthy year, the money is still there and can be used next year or next decade.
And yeah, you won’t be able to go negative - if it’s March and you’ve put aside only 1500 so far, you can’t pay a bill that adds up to 1,600 dollars. But in April when you’ve put aside another 500 dollars you can get the remaining hundred out.
The real gamble is that these are only offered when you’re on a high-deductible plan. HD plans are great if you never have anything go wrong, or if you have a LOT go wrong. They’re also tough if you have a lot of expenses early in the year when your HSA funding level is low.
Hah - I found this one out by accident. My company had a fiscal year from July to June. I had signed up for, let’s say 2,000 dollars that year, so when the company was sold starting October 1, I’d put aside 500 dollars.
I had about 1,000 out of pocket during that time. I would’t have filed for reimbursement for the 500 dollars - but at that time our insurance was tied directly into the flex account so that our copays were automatically reimbursed.
So there I was, with an extra 500 dollars I didn’t think I was entitled to. I called the benefits adminstrator who said “call HR”. I called HR and they said “call the benefits administrator”. At that point I gave up.
Another FSA aspect (also an aspect with HSAs I think) is that they are pretax including social security. So not only do you not pay income tax, you don’t pay social security or medicare. If you’re earning 100,000 dollars and you have 10,000 going to your 401(k), you pay SS/Medicare on the whole 100,000. If you put 2,500 into a FSA (or HSA), you save the SS/Medicare on that 2,500 dollars. I think the company ALSO saves on the employer part though I don’t know for sure. That’s one of their incentives to have such a plan, in addition to any gains they have from money left behind.
As far as why FSAs exist at all: they predate HSAs, and they also work with regular insurance (i.e. not high deductible). The rules really tightened down - e.g. max of 2,500 a year vs 5,000 before. They can be used with your regular insurance where your out of pocket might be a lot less than with a high deductible plan. But as all have noted, you do have to guess very carefully.
I just signed up for 2015 insurance and I’m pretty sure HSAs were offered for all of the plans we were offered, even those with low deductibles.
ETA I see that “high” has a defined meaning, and it’s only $1300/$2600 single/family.
With an FSA, your employer now has the option to allow up to $500 to roll over each year. So as long as you use up all but $500 or less, you don’t lose anything.
An FSA is great for someone who has expensive maintenance prescriptions. You pretty much know your fixed costs for the year, and can set up the FSA in that amount. I just ordered my last 90-day prescription for the year, and it should just about use up the rest of my FSA.
My bank doesn’t provide information like graphs, but their amounts on YTD contributions and expenses have always been correct.
Here are a couple of thoughts (some of which others have echoed):
- If an employer is matching, the bank could be reporting the total paid into the account, not just your share. (In fact, HSAs don’t even require matching; the employer could pay 100% of the contributions if they opted to.)
- Tax-year 2013 contributions could be made as late as April 15, 2014. So it is possible to have a disconnect between “calendar year” and “tax year” contributions. When you’re looking at reports, watch for the distinction.
- Many website require some input from you before they can classify expenses by category. If you’re seeing $0 in expenses, maybe you need to do some data entry of categories.
Not that I have proof its happened, but I always had the impression that since what an employer deposits into an HSA is totally up to the employer and is completely tax free for use at any time in the future, that it was a great “Bonus”
tax dodge between employer and employee ( as long as there is no paper trail to show that what the employer deposited out of the goodness of their hearts was not income.) 
Someone already addressed the HSA/FSA distinction, but I wanted to address one other point.
An FSA has an advantage in that it reduced taxable income for both payroll tax and income tax purposes. The payroll tax savings is 7.65% at the federal level and income tax could be anywhere from 10% to 40% (probably 15-25, for most middle class households). 32% total tax savings is not an unrealistic number.
So let’s say you have $1000 in FSA deduction and you only use $900 of it. While you’ve lost $100 there, it was offset by savings of $320 in taxes. You’re still ahead by a net savings of $220. So the “gamble” you describe is not difficult to win.
HSA contributions are generally a pre-tax benefit, just like the health insurance premiums themselves. So it is kind of a tax dodge, but the idea is that a high-deductible plan has a lower monthly premium, so the HSA is a way to offset that. It lets the employer control costs - instead of a $600/month premium, they might have $300/month premium and $200/month HSA contribution.
There’s no need to hide the paper trail. This is all legit. If it applies to you, you’ll find it coded on your W-2 in box 12.
This is exactly why I have an FSA, and it’s been very useful for me. The thing about FSAs is, you should be conservative in estimating how much to put aside each year. If you’re in a situation where you know you’re going to have fairly predictable medical expenses over the year, they can be a good way to go. And as mentioned, with an FSA you have access to the full amount immediately, so you don’t have to wait until you have enough money accumulated if you need to go the doctor or need to have an unexpected procedure done.
A few years ago, FSAs could be used to pay for over-the-counter medications. So if you did have money left over at the end of the year, you could always use it up by stocking up on aspirin and cold pills and such. The law changed recently, and FSA funds can’t be used for OTC meds anymore. So that’s kind of a bummer.
I’ve occasionally contemplated switching to an HSA, since my employer would contribute money to it. What causes me to hesitate is the requirement to have the high-deductible plan. I have hypertension, for which I get regular check-ups (plus the aforementioned maintenance meds). Under my current plan, doctor visits for chronic conditions are exempt from the deductible. Under the High Deductible plan, they wouldn’t be. I fear that would result in higher costs in the long run.
I’ll have to start running the numbers again, since open enrollment is coming up!
OTC stuff can be reimbursed if you have a doctor’s prescription to take it.
We did the crunching last year before switching to the HSA. What decided us was that my husband’s insurance has an out-of-pocket limit of only 7,400 dollars even for 4 people. Based on our expenses from last year, it looked highly likely that we would do OK on that plan because we’d hit our out of pocket limit just based on normal usage (my daughter and I are on some expensive prescriptions).
The first couple of months were a bit grim, as I had some testing in February that put us right over the deductible and of course we hadn’t saved that much! We wound up just paying that out of pocket, didn’t attempt to get reimbursed for most of it even when the money had been put aside. This means we’ll have more left over for the beginning of this next year.
My employer’s insurance has a similar deductible but a MUCH higher out of pocket limit (12,000 or so). While overall this might not cost us much more unless we have a REALLY bad year, (like another 50,000 or so in bills) it was still a bit daunting.
Heard the “lets employers control costs” bit quite often; you repeat it well. 
Hypothetically: You’re a Wall Street Type and your bonus gets massively scrutinized. Or you’re a young “high value employee” reaping enough beaucoup-bucks to choke a Nathan’s Hotdog eating champ on a contract gig, like a movie.
(FINALLY, I get to use an example like Jennifer Lawrence w/o using Skald’s Razor)
So, whats to stop a handshake deal where 7 digits gets paid/deposted to the employee’s HSA from the employers end annually for lets say … a 5 year (I can never remember if “multi-movie deal” is hyphenated or not) contract
from the EMPLOYER’S end, so the employee doesn’t trip over any pesky contribution limits? After that contract, the employment position or title (or even the employer) changes and they could opt over to a POS plan if they chose.
But… that hypothetical 5 mil in the HSA? Its there, tax free, til the employee uses it… forever. So, if they’re 25?
They’ll still be using it to offset their retirement home medical expenses when they are 95, without ever paying dime-one in taxes on it.
Of course, this loop hole would only apply to the super-rich, so why should the rest of us worry about it? :dubious:
The fact that there are legal limits to the annual contribution to an HSA (for 2015, the limit is $3,350 for a single employee, and $6,650 for a married employee), and that contributions from any source (including from the employer) count towards that maximum.