The health savings accounts are pure BS! If you don't have enough $$

to afford to go to a Dr. or buy ins. what the hell make anybody think you have the $$ to put into a HSA? This is nothing but a reduction in taxes for the rich AGAIN!

...through that job which doesn't cover certain things (like cosmetic dentistry) then it's a way for that middle class person to pay lower taxes.

As long as there is a reasonable maximum which is tax-free, I think HSA's are OK.

guess how much you think you'll need for the year. if you have money left at the end of the year, the government gets it. so you can't accrue any large amount. secondly, you have to pay for whatever it is and then get reimbursed. Now, if you didn't have the money to begin with, how do you have double the money up front to get half of it back??? She is always waiting for her reimbursements for something or another. trying to figure out how she will ahve enough to pay for this or that appointment if she doesn't get the reimbursement from the last time soon.

That is total crap - who would open such a highway robbery account?

that way if something bad happens beyond a mere copayment of a doctor's visit that you have to pay for... it will be there. but instead you have to guess how much you think you may need for the whole year!! good luck not overestimating or underestimating.

It rolls over from year to year.

pay for whatever the thing is and then put in for reimbursement. and they don't always reimburse her for things either.

of the year goes away. I'm not actually sure to who! I still say they're BS!

the parent post refers to health care reimbursement accounts, which allow you to sock away money on a pretax basis to be spent on health care (approved items/services only!) during the year. These plans are administered by private companies (not "the government"), and it is true that they pocket any unspent funds at the end of the plan year. Which is why you must budget carefully the amount you contribute to your reimbursement account each year - or end up going on a drugstore shopping spree at the end of your plan year. Health Savings Accounts are a different animal - they are not run on a annual use-it-or-lose-it basis.

The FSA is a compliment to your insurance plan that you can use to cover deductibles and copays. There is a limit to how much you can put into it annually and it is true that if you don't spend it all it goes to the IRS (FSAs are also pretax dollars). You can use the FSA to pay for OTC products like aspirin or contact lens solution so if you get to the end of the year with money left in the account you can stock up.

HSAs take the place of real insurance. They usually have very high deductibles and copays. They're one of the types of plans that are referred to as "consumer driven" - making them sound like the insured has some say in it. The idea behind these craptacular plans is that "consumers" (sometimes referred to as "patients" in other countries) will think twice about the cost of medical care if they pay more out of pocket and this will save money. There is some evidence that this is partly true. People are thinking twice about filling prescriptions and having routine maintenance done. However, the evidence also suggests that, while they save the employer and insured some money in the short term, in the long term they cost more because people are putting off routine care and not seeing their doctors until they are sicker. These policies actually result in more ER visits, as well as more admits and longer hospital days.

The last I heard my employer is going to a HSA account next year. The irony being that I work for a wellness company and with some of our customers we're already seeing less compliance (using prescriptions/keeping appointments) among their employees who have high out of pocket plans because the employees don't feel they can afford it.

One of the real hazards with HSAs is that some companies give you various places to invest the money not unlike a 401. Good luck using the account to pay for that hip replacement if the market tanks.

If you are middle class and can afford to budget for health expenses such as co-pays, etc. it is quite helpful. If you don't have a job than you probably don't have access to one (and boy do we miss ours since we're unemployed).

They both work the same, and are used for the same things. The only real difference is that with an FSA, you have to "use it or lose it" every plan year. With an HSA, the funds roll over into the next year... you own the HSA, not your employer, or an insurance company.

The way my HSA is set up (which is typical) is that I can receive my full contribution for the entire year right away. Let's say someone has a $1000 family deductible each year that they always meet. Let's say they set up their HSA for only $1000 and they meet their $1000 deductible in the first 3 months. The HSA will pay them the full $1000 even though they won't pay it all out until December. Some doctors (not all) will just bill you for the amount that insurance doesn't cover. My insurance is tied into my HSA, so whatever the insurance doesn't pay, my HSA automatically deposits the difference in my account, even before the doctor bills me.

So it's possible in some situations that your HSA can be a tax deductible payment plan for your deductible (sounds redundant, but it isn't). Also the amount deposited into the HSA is tax deductible on the front end on many employer sponsored plans, so there's that immediate benefit also.

HSA's aren't perfect, but I think they are here to stay and they aren't a bad program other than they do disproportionately benefit those in higher income brackets.

It works well for me, but I'm fairly healthy and don't have any dependants.

It won't work for the lower income person, or those that have a lot of medical expenses.

For example,

My company does not have dental or eyecare.
My company contributes $100/month, while I contribute $17/month.
I have over a $1000 in my account.
I've had this account for about eight months.
I've used it five times this year. Twice for medical (Totalling $160), twice for dental (Totalling $250), and once for contacts ($250).
Without it, I would have spent $540 out of my own pocket.
I keep every anything I don't spend. I can also use the VISA card for this account on any other purchases.

It's certainly not perfect, and it's not necessarily something I would recommend, but it works for me and my situation.

Almost all our lives we have been in the lower middle class income bracket. After our boys got married and left the house we had a few disposable dollars, but before that, there was no way we had the $ to put in an HSA. Besides, big friggin deal it's pretax dollars. We didn't pay that much in taxes anyway!

Our tax rate is progressive so while your overall tax rate may be say 8% you may be in the 25% bracket. This means each additional dollar will now be taxed at $0.25.

HSA, FSA, IRA, 401K are useful because they eliminate funds from your highest tax bracket.

Someone in the 25% tax bracket, with 5% federal & 15% FICA saves 40% by paying with an FSA.

Example:
$500 in medical costs.

To pay that with cash would require you to earn $830 which would give you $500 after taxes.

To pay that with an HSA or FSA would cost $500 - $0 in taxes = $500 to spend.

So same treatment, same products, same services save you $320.

I don't know about you but for me paying $320 less and getting the same exact thing is a good deal.

As the employee share of FICA + Medicare is up to 7.65%. The employer is going to save up to 7.65% as well, but that doesn't get passed on to the employee.

It gets a bit complicated also if you go over the FICA maximum. If your income exceeds the SS maximum after the FSA deduction, then you derive no FICA benefit at all (but you still get the 1.45% Medicare deduction). I put our FSA in my wife's name because she doesn't exceed the SS maximum.

Nothing like that is mentioned in this US government FAQ page:
http://www.ustreas.gov/offices/public-affairs/hsa/faq_basics.shtml#hsa4

FSA = Flexible Spending Account (money lots at the end of the year)
HSA = Health Spending Account

FSA aren't that bad though. You don't need to pay them up front them come out of each paycheck. I KNOW we will have so much in medical expenses every year. We have a $500 FSA. That works out to about $20 per paycheck.

If after 1 pay period I have paid $20 but the balance starts at the annual ammount. So say I have an emergency room visit of $300 I can pay it from the FSA after one week.

The reason we use FSA is some cards are known. I know I will have about $100 in copays durring the year for checkups and stuff like that. I know we will have about $50-$100 at least in dental costs. I know I am going to get 4 months of Zertec every year. I know my wife needs a years supply of contact solution, and contacts. I know we need a years supply of birth control (which my insurance doesn't cover).

So we know we have at least $500 in medical costs (including over the counter).
I have used the $500 every year and never gave any back to the govt.

Saving:
25% Federal Income
5% State Income
15% FICA
=======
40%. $500 in FSA money is worth about $830 in cash.

is a tax free account to pay medical expenses and daycare, which doesn't rollover or bear interest. An HSA or health savings account is part of a high-deductible comprehensive medical insurance policy, the HSA can't be opened unless there is also a high-deductible policy. An HSA bears interest and can be rolled to an IRA. Dana ; )

I think the employer and/or firm that administers the plan gets the money.

Be nice if they left you accrue the money so you could afford the lasik surgery, or extra dental work, or pay for unexpected medical expense.

How in the hell are you supposed to know a year in advance that you may need a new prescription or an unexpected medical expense may crop up etc.

Today I'm trying to figure out how to spend the remaining $519 I have on my account that must be used by end of June. I got new glasses, tried to balance my prescription and tonight I'm going to go to the grocery store to buy several bottles of contact lens solution to use it up.

into the next year.

use-it-or-lose-it applies only to an fsa.

i've had both, and i usually wound up buying new glasses in december when i've had an fsa to use the remnants.


and by the way, the government doesn't get the fsa leftovers, your employer does!

It's a tremendous benefit for me, but it definitely disproportionately helps those with higher incomes. Even if someone else contributed the same amount as me and they were in the 15% tax bracket, I would get twice as much benefit as them.

It's still a good program for those who can participate. However that's the way things work when you have too many Republicans in office. In order for the lower middle classes to see any benefit, those who are better off must get far more.

The premiums are lower so I don't really notice the amount being toward towards the HSA. The company puts in about twice what I do to the HSA. If I spend $5000 in a year everything after that is covered 100%. We have a debit card for the HSA so whenever I have an expense I use that and it doesn't mess up my monthly budget. It took a year or two to build up the HSA to $5000 so I should be able to handle anything medical without out of pocket expenses now. We have had it for about three or four years and prefer it to the 80% thing we were doing.

works. she is a federal employee btw... she has her federal insurance and the health savings account also. which if she doesn't use it by the end of the year she loses whatever is in it.

An HSA is health SAVINGS account. You keep any money you don't spend.

You just have to use your imagination at the end of the year if you haven't used it all. OTC medications and some medical supplies are covered, so you can stock up on those. It can also be used on certain elective procedures not covered by insurance (can you say boob-job?).

FSA's work a bit differently and can be carried over under certain circumstances. I'm not exactly sure how they work because I don't have one.

Unlike a flexible spending account (FSA), funds roll over and accumulate year over year if not spent. HSAs are owned by the individual, which differentiates them from the company-owned Health Reimbursement Arrangement (HRA) that is an alternate tax-deductible source of funds paired with HDHPs. Funds may be used to pay for qualified medical expenses at any time without federal tax liability. Withdrawals for non-medical expenses are treated very similarly to those in an IRA in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier. These accounts are a component of consumer driven health care.

http://en.wikipedia.org/wiki/Health_savings_account

FSA = funds must be used in a single year.

HSA = funds can be kept for life

I have a FSA.

I've never lost any funds, but I'm pretty conservative with my yearly estimation, which means it usually runs out with a couple of months left to go in the year.

It sounds like your sister is in an FSA not an HSA. They may call it a Health Care Spending Account, which adds to the confusion. What state is she in? Check out this website, maybe it'll help.

http://www.flexspend.state.ny.us/

her husband also works for the IRS.

Check with the HR department or whoever administers the plan. You might find some general help here but plans differ from state to state and from carrier to carrier. The key is to understand the benefits of the plan to make full use of them.

Some may consider this time consuming, others think it's worth it if it save them money. Good luck to you and your sister.

OOPS!

Or cancer treatment? Something that's going to last more than a year and will go through that $5,000 in a day?

:hi:

When you've spent the $5,000 in your HSA and don't have it anymore. And the year after that. Then what do you do?

I would agree that this scenario is not perfect. An HSA works well for the young and healthy.

It's not perfect for everyone.

Until They're Not.

It's not perfect for anybody who is purchasing INSURANCE to protect against catastrophic illness -- and preventive care which people are going to avoid which means they're bound to end up sick and need more expensive care and not have adequate coverage. It's stupid for everybody.

For the first 5 years I had insurance (my first "real job"), I paid premiums and never went to the doctor except twice. If I had an HSA and was saving $6000 per year I would have had $30K banked up (plus interest) so I could have built a cushion for a catastrophic event.

How many people with medical insurance who still had to file bankruptcy might not have had to if they had $25K, $30K, $40K saved up in an HSA?

It's $1500 or so a year, which would leave you with $7500 after 5 years, which would pay one year deductible.

Then what do you do the next year if you're still undergoing cancer treatment? There's no more savings and there isn't likely to be for years.

You're still bankrupt.

The plan at out work (started too late for me) was $6000. $3000 contributed by employer and $3000 by employee.

Some plans are as high as $10K per year.

Obviously you have your mind made up so..... don't use them. Nobody is forcing you or anyone to use them.

If they are useless people won't use them will they.

What is it about lifelong illness that you people do not understand? It will wipe out your "savings" and you'll be stuck trying to figure out how to pay into the account AND pay for doctors until the $5,000 is met. It's January and the doctor demands $500 up front. What do you do?

The full $6000 is added to the account up front and usable after day 1. You simply make payments throughout the year (via paychecks) to fund it.

As far lifelong illness, well lifelong illness will bankrupt most people even those not using an HSA.
What about dying? If you die then you wasted the HSA also.

Once again it is a tool like anything else.

How is paying a doctor $500 cash (post taxes) somehow better than paying a doctor from an HSA in which you saved $500 pretax from last year?

It builds over the years. You don't get 5 years payments up front.

Yes a lifelong illness bankrupts most people. That's why we're trying to get some health care reform. And why HSA's aren't the answer.

Obviously you know everything about HSA and believe they should be illegal so no sense talking to a wall.

Have fun in your echo chamber.

The point sandnsea is trying to make is valid for those whose employers contribute little if anything at all to the HSA. There are also self employed people (or people who buy insurance on an individual basis) who don't/can't afford to contribute to much or anything to the HSA because the premiums are still expensive for them.

I know people who contribute money only when they know they are going to the doctor to get the benefit of the HSA, otherwise the account sits unfunded. These high deductible plans can be disastrous for some people who get chronically ill.

and your company puts money in too. I have $5000 in mine and if I use it all this year (which will be all I will spend since everything about $5000 is covered at 100%), say in May, then I have seven months worth of contributions to start next January with and it won't take much longer to get back to the $5000. The maximum I will ever spend in a year is $5000, whether it comes out of my HSA savings or my own pocket, but the HSA is usually there to cover it. Of course that means "allowed expenses", which is a whole 'nother ballgame but I digress.

So, again, what if you need a transplant, get MS, get a cancer that goes on for years -- where does that $5,000 deductible come from - year after year after year?

if you are using it up year after year but at that point you are having some very hefty medical bills and what it is paying after the $5000 is probably very substantial.

The contributions are deducted before ANY taxes come out on your paycheck AND you do not pay any taxes on it when you withdraw to pay your deductible.

HSA's are not intended for those to pay for medical care on an all cash basis

Then what do you do next year when your HSA is depleted.

most plans are setup so that you contribute half, your employer contributes half.

So for example my employer has three plans:
full plan - about $250 per month
minimal HMO plan - about $20 per month
HDIP plan - $0 per month.

If you pick the HDIP you can contribute up to $3000 per year ($120 per paycheck) and the employer matches it. For up to $6K total.

So if in a hypothetical year you use $800 then $5200 gets "banked".

The goal being that your build up a substantial amount in the "good years" to offset any large costs in the bad years.

The HDIP usually has a high deductible ($3,000 to $6,000) but it also has a catastrophic cap in which insurance pays 100% after tha ($10,000 for ours I think).

So as you can see if you get a couple good years behind you and save up $20K, $30K then even if you hit the cap it the insurance plus HSA would cover 100% of medical needs for multiple years in a row.

They aren't perfect but they do offer some security.

If I was cynical (and I am) I would think the industry is pushing these plans because they are off the hook for the first $1,500, $5,000, $10,000, etc. (whatever the deductible is). This would lead to many people avoiding the doctor if they don't have the necessary funds in the HSA.

People that make a lot of money view these plans differently. If you have a lot of money, the out of pocket costs aren't a big factor and you use this plan to stash more tax free money for retirement if you've already maxed out your IRA/401K contributions.

People that don't make a lot of money can't put extra cash in the HSA account and are left wondering what's the point of this insurance.

I read one article about it being "invested" just like a 401K. Meaning, of course, that it may not be there when you need it. These really just sound like another scam to shore up the stock market and/or add to the insurance companies' bottom lines.

the insurance agent told us to get our moneys worth we should lie .she told us what to say and not say to use the plan.

my daughter`s insurance offers one but the company she works for has a doctor or a doctors assistant in the plant three -four days a week. they do routine exams,work related injuries,and refill or write perscriptions.

It comes with my choice of a high deductible insurance plan. I'm in good health and rarely go to the doctor and would rarely use up the deductible.

My employer gets to pay less for my insurance. I don't pay a thing for it. I also get from my employer money put into my HSA along with money I put in. The employer will put in $900 per year. I think I put in the same amount.

I have a credit card and use it to pay medical bills. It's sort of like having a prepaid credit card. The money stays in the account until I use it. It can be used for over the counter purchases also. The HSA can be used to pay for the things that are not paid because if the deductable.

Basically it is like putting money aside for medical purchases.

My employer contributes most of the initial $4000 deductible, the rest comes out of my paycheck each week. After that, the insurance company covers everything. We have a dedicated HSA checking account and debit card with which we pay for prescriptions, doctor's visits, etc. All the money is contributed pre-tax, so we also get a break on our income tax. And you don't lose it at the end of the year if you don't reach your $4000 deductible.

I understand that HSAs are not for everybody. If you're employer doesn't contribute at least something, then you're on the hook for the $4000 yourself.

It's not a one-size-fits-all solution, that's for sure.

.

I've had it for three or four years now. You save 30% off the top! (Or whatever your income tax rate is) I use it to pay copays, and buy over-the-counter healthcare items. At the end of the year, if there is any $$ left over, I either buy another pair of eyeglasses, or I go stock my medicine cabinet with aspirin, acetaminophen, bandages, Neosporin, anything that is on the list of approved purchases that I think I may need over the next year or so. My account has a debit card... swipe and go... rarely am I asked for a substantiation receipt, but I save the receipts anyway, just in case.

They take the money out of your check PRE TAX, so you save a lot. BTW, I'm not rich, and it saves me 30+%.

You are removing your dollars from the pool of money that could pay for necessary stuff for everyone.

or get nailed with extremely high premiums due to pre-existing, cannot afford an HSA either. As an accountant for small businesses and tax preparer, I see less and less HSA's. They are not as popular as they were when they first came out. I realize they are good for some people in certain situations. I hate it when our representatives who argue against a public option, bring up HSA, as if it will solve all the health insurance problems. That is BS. They just don't get it.

If there is a pre-existing condition, the HSAs aren't such a good deal because you're guaranteed to whatever the deductible is every year on top of the rated premium every month. Middle class people who take meds or have some kind of condition don't have the kind of money to fund the HSA AND pay the premiums and out of pocket costs every year.

Health Savings accounts do nothing to insure members of a family of four including two minors with an income of less than $50,000 per year. Health savings accounts may be good for some purposes, but it is ridiculous to discuss them in the context of health care reform if the purpose of the reform is to lower the cost of healthcare for everyone. Health savings accounts do nothing to lower medical costs or to broaden access to health insurance in the U.S.

since sliced bread.

I hope this whole plan is not just more and more appeasing the GOP.


why did we elect Democrats??? Sarcasm

And while it's a good deal for people who have a general idea of their yearly expenses, I don't contribute. I very rarely ever get sick (knock wood) and my yearly ob/gyn visit + mammography is covered 100%. Most years my medical/dental expenses are zero. So the thought of putting money into an account that goes away at the end of the year isn't a good idea for me at this time. I would much prefer they offer us an HSA. I would absolutely contribute to a plan that was able to accrue year-to-year. (Just fyi, my company does offer very reasonable health insurance, so I am covered by insurance.)

it's offered instead of health insurance.

Except for some dental problems my medical expenses were always the same as the ones you describe for yourself. Until last year when it cost just over $6,000 (about $800 out of my pocket) to find out the weirdness that showed up on my mammogram was not cancer (worth every penny to find that out). If this were to happen to me next year, after my employer goes to a HSA, at least $5,000 would come out of my pocket. I won't be able to afford to find out what those funny little dots on the film are.

First an MSA, then an HSA. It's pretty good and reasonably priced. I don't have to visit a doctor very often, maybe once every five years. It works for me.

First of all, the monthly premiums for an HSA are MORE than for a regular policy with the same deductible. Then you have to pay a bunch of money (about $200 extra per month) to fill up the savings account. In effect, you're just paying your deductible in advance. Complication number two: Only CERTAIN high deductible health insurance plans can be used for HSAs.

Like most Bush initiatives, it's a terrific deal for the affluent, a cruel hoax for the non-affluent.

that HSAs can be a little cheaper than standard plans with similar deductibles but when you factor in the money needed to fund the HSA they become closer in cost (or sometimes more expensive).

I'm not arguing your point. I'm just saying that when people look at the premium and hear about adding money to the HSA, they don't see that as being a better deal.

I agree 100% with the "cruel hoax" comment.

and there's an added wrinkle. You can use your HSA for all sorts of things not covered by insurance policies, such as paying the optician for your glasses, but if you do use it for something that insurance doesn't ordinarily cover it doesn't apply toward your deductible.