UnitedHealthcare One HSAs

Factual Questions
1

Quick background: I am currently employed, but my employer has decided that charging me an extra $1300/yr (only $50 per pay period! what a deal!) for the privilege of keeping my spouse on my plan is a good idea. He’s employed as well, but his employer is a right bastard and their insurance plan blows goats while mine does not.

I have decided that this, along with the rate increases for coverage, have made looking at different options an attractive course of action.

I’ve done a bunch of research, and found the United Healthcare One (via Golden Rule which does their non-commercial insurance) has an HSA plan that is looking interesting, and after all is said and done, I will end up paying almost $2000/yr less over staying in my employer plan (which is also administered by UHC, so my primary care doc won’t even have to change. All in network stays the same!).

Despite my best efforts at finding all the info I can on this, and actually talking to a rep at UHC, I still am a tad confused and turn to the collective for help!

First question is, once you purchase a plan, does the premium fund the savings account, or does the savings get deposited separately?

Second, can you deposit to the account on your own (separate from the premium)?

Lastly, everywhere the literature touts that it’s tax deferred. How does that help me out? Where does the tax benefit come from, exactly? I understand how it would work if it were being deducted from my paycheck through my employer, but this would not be the case since this would be individual insurance. I’m not really familiar with IRAs, which are supposedly similar to HSAs, as I’ve never had one, so this part of it is just confusing!

Any help and knowledge out there?

2

I’m a little confused - are you talking about going with a Golden Rule high-deductible policy along with an HSA? Or just the HSA? They’re different beasts.

An HSA is just a Health Savings Account. There’s various rules about them, but the general gist is that if you have a high-deductible insurance policy, you can sock money into an HSA and use that to pay your deductible. If used in this way, the money you put into an HSA is not subject to income tax. It has nothing to do with paying premiums.

An IRA is a different beast altogether. An IRA is a retirement fund, it has nothing to do with HSAs (though there are interesting benefits that have to do with HSA and retirement, but I won’t get into those here.)

I’ve had a high-deductible policy with Golden Rule for 4.5 years now. My husband and I are both self-employed, so we have no option of employer-based health insurance. The way it works is that we pay a premium every month for the policy. We have a deductible of about $3900, which means that each year, any health care charges up to $3900 are our responsibility to pay for.

We pay for those by funding our HSA (which is with our bank, not Golden Rule). We put money into the HSA, and we have a debit card we use to pay for doctor visits, prescriptions, and the like.

Once we pay $3900 in a calendar year, Golden Rule starts paying. We no longer pay out of pocket; Golden Rule gets the bills and pays for them, until Jan 1 of the following year.

The tax benefit comes from the HSA; every dollar we put in the HSA that we also use to pay medical bills is tax-deductible. It cannot be used to pay the premiums; that’s a whole separate thing. (Being self-employed, our premiums are also deductible, but I don’t think that’s the case if you’re not self-employed. I could be wrong, though.)

As far as the coverage itself, I can’t complain. We use our policy a lot - I’m diabetic and so have lots of medical expenses. Golden Rule has happily paid for things that I routinely hear other people complaining their insurance company won’t pay for. They’ve never hassled me about paying for anything, or given me the runaround.

The bad part: the cost. That great price you were quoted? Count on it going up a LOT. When I first got our policy, it was $270/month for the two of us. Now, 4.5 years later, it’s $580/month. I can pretty much count on the premiums going up $50-$100/month, every year. One year it got raised twice. That’s how these insurance policies make money - they rope you in with a good price, then it starts going up.

Maybe next year with the new health reform laws, it’ll change. But so far, I’m not seeing any relaxation with the rate they keep wanting more money from me.

3

Well crap, guess I should have read the quote a little more carefully. They combine the HSA with a high deductible plan, and that’s what they quoted me on. I knew something just didn’t feel completely right about how I was thinking it through. Do you fund the HSA separately from your premium?

I only mentioned the IRA as they state that the benefits are similar and I have no idea what those are really. I can research that later.

So I guess my brain was just not functioning properly after so long of stare and compare at different plans.

I like to hear you’re happy with them. I’ve been with UHC through my employers for the past 15 years and they’ve always taken stellar care of us so I would prefer to stay with them! It’s just much more affordable this way though. With the spouse surcharge and standard rate raise, I’d have to shell out almost $6100/year out of my paycheck to stay on my current plan. $5600/year for the cheap bastard plan.

As a plus, by opting out of their plan I get a credit on each paycheck. The UHC quote was $4300/yr, so savings right out of the gate. I don’t mind a rise in the rates so long as they are within reason, and I can always get back on my company insurance during the next open enrollment as a backup or if I’m not satisfied. I get to keep my vision, dental, STD, Life, etc through the company too, for a whopping $300/yr so not bad.

It will be interesting to see if they loose a lot of people on the company plan because of this and how it will affect them. I’m really hoping reform kicking in will affect things as well, but I figure they’ll just find some other way to bleed us dry. We shall see!

Thanks for the response and for making me re-read things!

4

Yes, the HSA is with Wells-Fargo, so it’s a completely different beast.

Do those prices include the deductible? Because if you use the insurance at all, you need to take that into account. If UHC is $4300/year + $4K deductible, that might not be cheaper if the employer-based plan is $6100/year but only a $500 deductible.

Well, I don’t consider an $800-$1200 rise every year “within reason”. It’s crap IMO. But I’m over a barrel; I’m uninsurable and can’t change, at least until 2013.

That’s a great backup plan. I’d probably be considering the same thing if I were you.

5

We had Golden Rule for a few years and the premium increases were huge and often. Also once they told us we could go anywhere for health care and approved a surgery then refused to pay for it saying it was out of network. Get written approval for any surgeries.

As long as you can get back on your employers health plan it might be worth a try but remember you can’t be canceled from your work insurance but you can from an individual policy. I think individual policies are also allowed to have preexisting conditions so make sure you look into this. I know the laws have changed but not sure how. Do not forget to put anything on the application no matter how small you think it is. They can use things you forget to put down as a reason to cancel you.

6

One more thing: within one year with Golden Rule we went from being able to go almost anywhere in the area to nowhere. Watch the approved provider list carefully it can change often. We live in a small town so I might be different in a big city.

7

General info about HSAs:

They have two components - the health plan component and the health savings component. For practical purposes, they are wholly separate.

The health plan component works the same as any health plan. You pay your premiums and you get benefits.

The health savings component is a specialized savings account where you deposit funds intended to help bridge the gap in your health plan. Since the health plan doesn’t pay 100% for everything, the money you save in the savings account is set aside and there for you when you incur health expenses. Deposits into the account are yours to keep and stay with you indefinitely. If you deposit directly from your paycheck automatically, you don’t pay income tax on that portion. And when used for qualified medical expenses, the money saved is never taxed.

If you choose to withdraw from your savings account for another purpose, you can do so without penalty, but you must then pay income taxes on that money. That’s how it is tax deferred.

If your savings account reaches a certain balance, you can then invest that balance (or a portion of it) in various types of mutual funds (much like a 401k or IRA). So long as the account balance is used to pay health expenses, you never pay income or gains taxes on the principal or income earned via investments.

Your premiums and account deposits are separate. Your premiums pay for the health plan. Your deposits go into the savings account.

8

Yeah, same here.

We did have one issue with out-of-network stuff. We had blood work taken for labs in an in-network doctor at an in-network hospital, but they sent the samples out to an out-of-network lab for processing, and we were stuck with a several hundred dollar bill. But at the same time, Golden Rule also paid for about $3K worth of stuff that we hadn’t expected them to, so overall we were OK with the outcome. I gather the out-of-network stuff can happen with any insurance, though, and it’s more of a symptom of how screwed up our health insurance industry is right now than a flaw of Golden Rule’s. I did all the legwork, made sure everyone was in-network - how in the world was I supposed to know that of all the blood work I had done, this one bit was going to be sent somewhere else? Crazy.

My experience is the opposite - everyone in my area is in-network for Golden Rule. I almost never even check anymore because I haven’t found one hospital/lab/doc who wasn’t in-network. We’re also in a small town, so I’m guessing the difference is regional.

9

We’ve been on a high-deductible / HSA plan with my employer for the past year. I’ve found there is a lot more involved in setting this up than for other health plans where you just check off which plan you want. It’s very much a do it yourself situation.

In my situation, my employer reduces my salary by the amount that goes into the HSA and they deposit the money into my credit union HSA account. The result is that, not only do I not pay income tax on this money, but I also don’t pay social security and medicare taxes on it. However, because it doesn’t count towards SS wages, my SS benefits will be reduced when I start collecting them.

When I turn 65 I have the option of converting the HSA account into a conventional IRA.

10

Thanks for all the info everyone.

I think I’d be covered as far as past medical and pre-existing. Both hubby and I have been with UHC on employer provided plans since 1997 so they have ready access to all my medical info and my history. I’m healthy, non-smoking and have no pre-existing conditions.

What I didn’t realize is that the HSA is a separate entity from the actual policy. That makes this an entirely different beast! I may be better off staying on my company plan at that point financially. It just irks the hell out of me that they’re fleecing us by requiring a spouse surcharge on top of standard increases, especially after several years of no raises in our income. Give me a cost of living raise and I wouldn’t give it more than a passing thought!

But what can I do? We both ride motorcycles, so not having a safety net is not an option in any way. Ah well. Guess it’s back to comparing and searching, but all the other plans out there seem to have ridiculous lists of exclusions (I’m looking at you State Farm! You don’t cover skiing? In Colorado?).