Teach me about HSA accounts

[dullard]

My wife and I are considering an HSA account this year (in combination with a typical high deductable insurance plan). It seems the best match (cheapest) for our expected low medical expenses, it is also the cheapest option if we happen to have major expenses, and it honestly is the way health insurance should be done.

But, I have a few questions before taking the plunge.

1) If I understand it correctly, the HSA doesn't limit our 401k or IRA contributions. If so, we can each put $16,500 into a 401k, $5000 into an IRA, and $3050 into the HSA each year tax free (total of $49,100/year). Is that correct?

2) Are there any good HSA providers? A quick search seemed to show little, if any real differences other than the investment options available. Or is there a hidden gem with low fees and great investment selections that I missed?

3) I'd likely just go with Vanguard investments, anyone know what HSA providers let you do that?

4) See my question in post #9 below regarding how to get out of the HSA. Is it possible, or does it just sit there collecting fees until retirement?

5) Any other hints/advice?

 

[QuantumPion]

I have an HSA. It's nice because I have pretty much zero medical expenses, so my deductible is teeny, but still have coverage in case of some sort of catastrophe. All the money I put into it gets saved up for when I do need it down the road, even if I drop the HSA and get a regular plan in the future.

Also, it's funny listening to dentists/doctors/etc moan in disbelief when you try to pay for service with cash "WHAT DO YOU MEAN YOU DON'T HAVE INSURANCE? EVERYONE HAS TO HAVE INSURANCE! WE DON'T KNOW WHAT TO CHARGE YOU! AHHHH!!"

 

[MrChad]

We switched to a high-deductible plan with HSA this year. My employer covers half of the plan deductible in 4 quarterly contributions, and I set up an additional HSA contribution each paycheck to cover the rest of the health plan deductible. For me, the cost of the high deductible plan plus the HSA contributions was equal to the cost of the traditional health plan (not including co-pays), and with the HSA I have the potential to keep some of the money if I don't use the entire deductible.

Make sure you have some decent savings to cover unexpected medical expenses that may occur early on in the plan. We got hit with an ER trip that cost over $1000 within a month of switching to the new plan. Since I had next to nothing in my HSA, I had to pay out of pocket (I can reimburse myself from the HSA once it has sufficient funds).

Our HSA offers some limited investment options, but they aren't great. Check for account fees.

The process at the doctors is pretty straightforward, and we've never had to pay cash before leaving. Typically they will take you insurance info, submit the claim (no co-pay), then mail you a bill once the insurance company processes the claim.

 

[lykaon78]

Also under a high deductible plan attached to an HSA through 5/3rd. The actual HSA account sucks (scant investment options) but I don't have a choice since it is through my wife's employer.

The first three years my wife and I banked almost 5k in the HSA paying the exact amount we used to for traditional health insurance. That included about 3k from my wife's employer and was reduced by about 2k in medical expenses.

We never pay a penny at the doctor, just show them our insurance card and about 2-3 weeks later we get a bill that shows the amount billed reduced by the amount allowed through the health plan and the balance due from our HSA.

Compared to my health plan which is 80/20 with no maximum the High deductible + HSA is much better.

 

[Fritzo]

They're going to suck next year when you're not allowed to buy over the counter stuff with them anymore

Used to be great for my allergy meds and such. Stupid govt--take the one thing they did right in health care are screwed it up.

 

[Sluggo]

Would you guys who post to this thread post who your plan is with? My wife and I have been looking into an HSA plan, and I just wanted to know all the companies to look at.

 

[spacejamz]

I use Chase for mine...

https://www.chase.com/ccp/index.jsp?pg_name=ccpmapp/shared/assets/page/hsa_home

 

[Xcobra]

Company uses First Horizon for mine. Do note that it's just low interest account. I like it because it is not bound to the volatility of the market. Can be a bad thing.

http://www.firsthorizonmsaver.com/

 

[dullard]

I thought of another question. Is there a proper end-game to an HSA? Eventually, we'll no longer be young and healthy and will probably want to switch to a more normal insurance plan. Is there anything that can be done with that HSA? Or is it just ours until we are 65, for minor copays and deductable payments, but mostly collecting $25+ yearly fees each for the next 35 years?

Meaning if I fully fund the HSA for one year and save $1000, will the $25 * 2 people * 35 year = $1750 in fees outweigh any savings?

 

[highland145]

Giving a bump because we're fixing to be among the uninsured or, at least, the $5K+ deductible group and looking for options.

 

[QuantumPion]

I thought of another question. Is there a proper end-game to an HSA? Eventually, we'll no longer be young and healthy and will probably want to switch to a more normal insurance plan. Is there anything that can be done with that HSA? Or is it just ours until we are 65, for minor copays and deductable payments, but mostly collecting $25+ yearly fees each for the next 35 years?

Meaning if I fully fund the HSA for one year and save $1000, will the $25 * 2 people * 35 year = $1750 in fees outweigh any savings?

Yes, as I posted before. You save up money in your HSA while you are healthy and have little medical expenses. Then when you get older you switch to a low deductible plan and have what's in your HSA as a reserve for major illnesses (e.g. cancer). It's like a 401k except instead of waiting until you retire to spend it, you wait until you get sick

 

[blinblue]

The HSA is a great idea. To answer your first question, I'm 99% sure you are correct, the HSA is another account that you can put money in addition to the limits on your IRA, 401k, etc.
If you can find a place that lets you do good investments, I'd put money in the HSA first before putting it in an IRA. Because the HSA is just like a regular IRA except you can take the money out for medical purposes tax free.

I personally use HSA Bank for my HSA, they have no fees if you have >$3000 in the account. Their regular account offers a fairly measly interest. But they offer a nice array of mutual funds (though I'm pretty sure you need at least $3000 in your regular account to avoid fees)


You cannot roll an HSA into an IRA, but you can roll an HSA to another HSA. And it seems you can always use money in an HSA for medical purposes, even if you no longer qualify to put new money into an HSA (if you change insurance or whatever).

You should be able to find a bank that will waive fees for balances >$x,xxx , so you shouldn't have to worry about your investment getting eaten away by fees while you wait for retirement.

here is a small list of HSA accounts
http://www.ehealthinsurance.com/ehi/individual/hsa-administrators


Anyway, HSAs are great, and for many people a high deductible plan will save you lots of money both monthly and long term


On a side note, part of the idea behind the HSA and high deductible plans was to encourage people to shop around for the best health coverage for the best price. Great idea in theory, but since no doctor office has a "menu" of what things costs, there really is almost no way to do price comparison. And if we want to see some real change in health costs, we need to truly make it an open market where doctors/hospitals have to compete on price as well; instead of hiding the true cost behind co-pays/insurance/etc. But that's another topic for another day (and another forum).