Why I Despise my HSA – Part One
Posted by eemilla on January 16, 2011
For the past couple of years my employer has given the option of being in a traditional health plan with co-pays, co-insurance, deductibles, and maximum annual out of pocket expenses or an HSA package, and I’ve resisted the HSA until this year. The hesitancy hinged on the lack of significant savings to offset the greatly increased risk that having a health savings account (HSA) and a high deductible health plan (HDHP) entail, but my employer contributes a moderate sum each year so I decided to forgo my reservations and sign up. My HSA/HDHP went into effect about four days before I conceived the baby we’re expecting this summer.
HSAs are supposed to be ideal for the young and the healthy, which thankfully we are (although now that I’m pregnant I’m really sick in the eyes of the insurance company). Preventive care is fully covered with no co-pays (unless you are pregnant because pregnancy is an illness), but everything else, including prescriptions and lab work and sick visits, must be paid out of the HSA until the deductible is met; with our plans once we meet the annual deductible we’re covered 100% (until the year starts over that is even if the sickness/treatment straddles two years). With the HSA, we still get the health insurance companies’ contracted price with the provider, so the uninsured still subsidize our care. By law the deductible has to be over $1,200 (but not greater than $5,950 in 2010); frankly, many deductibles for traditional health plans are higher than or equal to HDHP then follow with 20% or more co-insurance until the even higher maximum annual out of pocket expense is met. However, one does need to set up an HSA (which not one of the local credit unions we are eligible to be members of provide) and then contribute to that account. The contributions are tax free, and an individual can contribute up to $3050 for 2010. Unfortunately, this breaks down to about two extra car payments so maxing out our contributions won’t be something we will generally be able to do with the minimal premium savings between the HSA/HDHP and traditional health insurance.
My husband’s employer decided to stop providing health insurance under a group plan last year, but they do provide a monthly healthcare reimbursement (which covers about half of the monthly premium based on 2010 premiums). Due to the thirty dollars a month cost savings along with the hoped for tax benefits and the long term savings we decided to move to the HSA for him. Even though his employer is still covering some of the cost, moving from group insurance to the individual market (even with the increased risk we carry with the HSA/HDHP) his premium increased by about thirty dollars a month (so if we hadn’t gone with the HSA we would be paying sixty dollars more a month, again all based on 2010 premiums). As an aside, the 2011 HSA/HDHP premiums are about the same as the 2010 traditional health plan premium (which represents about a 20% increase in one year with no claims). Finally, we can use the HSA to pay for his contacts and eyeglasses, which are not covered by most traditional health plans.
Since we were already dealing with one HSA, I figured it was time to jump on the bandwagon and collect my employer’s much more generous contribution; my employer pays about 90% of my health premiums (if I added my spouse it would basically cost three times as much as his current policy, which is why we have a two individual policies), so my monthly premiums are three-eights of his, plus my employer contributes an additional moderate sum each year to my health savings account. I reasoned if I got pregnant I could always change back to the traditional health plan, because of course the timing would work for me to do that.
To be continued in Part Two.