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#1
07-12-2007, 03:18 PM
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HSA\'s (Health Savings Accounts)
What is the deal with these? I've heard good things about them, but I'd like to hear if any of you use them, such as the money rolling over, and the ability to invest.
My boss is talking about going this route for us. Thanks! 
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#2
07-12-2007, 03:54 PM
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Re: HSA\'s (Health Savings Accounts)
[ QUOTE ]
What is the deal with these? I've heard good things about them, but I'd like to hear if any of you use them, such as the money rolling over, and the ability to invest. My boss is talking about going this route for us. Thanks! [/ QUOTE ] The most significant thing you should be worried about is that the value of the "new" package to you is less than the "old" package. It is a given that the risk to you is higher now. What I mean by value is as follows: You are presumably exchanging some sort of defined coverage plan (with premiums paid by your employer) for a monthly cash flow into your HSA from the employer. The advantages are: - You get control of the investments of the money. - You get more tailored coverage. Under a defined coverage plan, you only benefit to the extent that your needs match up with the coverage. Under a HSA, you can get any medical issue dealt with so long as you can afford it with the HSA. In other words, there's no exclusions (except those too expensive) and you don't pay premiums for something someone else in the coverage group needs. The big issue for you (IMO) is that it is very hard to put a value on the coverage you've got right now. It may be that, taking into account your health and other factors, that the value of the current plan is, say, $5,000 per year but the new HSA provides you with $2,000 per year. Your employer with have access to specialists (actuaries, probably) that can determine the value of your current plan but you probably won't have access to such specialists. You'll need to critically examine communication from your employer because they will (rationally) emphasize the flexibility of the HSA but won't necessarily explain the actuarial value you are giving up.
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#3
07-12-2007, 04:10 PM
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Re: HSA\'s (Health Savings Accounts)
Isn't it basically like 90% of people will benefit from HSA's, and 10% will hate it?
In other words, like you say, my boss may decrease from having to pay 5k per employee per year to only 2k, which at my age is probably fine. I don't think I've had one adult year where I've spent that much (2k) on medical treatment. But a small handful of people may come down with something that costs well over 2k in a given year. If I'm understanding it correctly, isn't the idea trying to cutout the middle man (insurers?), and putting more money into employers' pockets?
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#4
07-12-2007, 04:28 PM
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Re: HSA\'s (Health Savings Accounts)
[ QUOTE ]
Isn't it basically like 90% of people will benefit from HSA's, and 10% will hate it? [/ QUOTE ] After the fact, yes. I will elaborate below: [ QUOTE ] In other words, like you say, my boss may decrease from having to pay 5k per employee per year to only 2k, which at my age is probably fine. I don't think I've had one adult year where I've spent that much (2k) on medical treatment. [/ QUOTE ] Be careful here. "I spent $1,000 on health care last year" is not the same as "My necessary health care cost coverage were $1,000 last year." The necessary coverage will include expected costs associated with rare but costly events. You need to figure out the value of the down side insurance provided by the traditional plan, not the cash outlay in particular years where no really bad events happen. [ QUOTE ] But a small handful of people may come down with something that costs well over 2k in a given year. [/ QUOTE ] That could be you in the future though, so you need to acknowledge this risk. [ QUOTE ] If I'm understanding it correctly, isn't the idea trying to cutout the middle man (insurers?), and putting more money into employers' pockets? [/ QUOTE ] Yes, combined with additional savings to employers because many employees value $1,000 in an account more than $5,000 of expected value that they don't understand. You don't want to be one of these people that are glad to get $1,000 because you aren't retaining an actuary that is telling you that the value of what you're giving up is $5,000.
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#5
07-12-2007, 05:13 PM
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Re: HSA\'s (Health Savings Accounts)
[ QUOTE ]
[ QUOTE ] In other words, like you say, my boss may decrease from having to pay 5k per employee per year to only 2k, which at my age is probably fine. I don't think I've had one adult year where I've spent that much (2k) on medical treatment. [/ QUOTE ] Be careful here. "I spent $1,000 on health care last year" is not the same as "My necessary health care cost coverage were $1,000 last year." The necessary coverage will include expected costs associated with rare but costly events. You need to figure out the value of the down side insurance provided by the traditional plan, not the cash outlay in particular years where no really bad events happen. [/ QUOTE ] Understood. I didn't know how, or didn't feel like attempting to put that into words. Obviously my median yearly costs will be (potentially) much lower than my average yearly costs (say I go through Cancer treatment, etc.). I wasn't trying to dismiss that. But how am I supposed to figure out the break-even point? Consult an actuary??? lol.
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#6
07-12-2007, 05:18 PM
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Re: HSA\'s (Health Savings Accounts)
[ QUOTE ]
But how am I supposed to figure out the break-even point? Consult an actuary??? lol. [/ QUOTE ] Yeah, paying one of us to figure it our for you would probably be prohibitively high. I guess my warning to you is that your employer will consult with their actuaries to figure our the cost of the old benefit, and when they turn it into an HSA they will for sure design an HSA with employer contribution less than the current employer value provided. Of course, this likely won't be included in their communication regarding the change. If at all possible, pump them for such information.
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#7
07-12-2007, 11:13 PM
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Re: HSA\'s (Health Savings Accounts)
[ QUOTE ]
[ QUOTE ] But how am I supposed to figure out the break-even point? Consult an actuary??? lol. [/ QUOTE ] Yeah, paying one of us to figure it our for you would probably be prohibitively high. I guess my warning to you is that your employer will consult with their actuaries to figure our the cost of the old benefit, and when they turn it into an HSA they will for sure design an HSA with employer contribution less than the current employer value provided. Of course, this likely won't be included in their communication regarding the change. If at all possible, pump them for such information. [/ QUOTE ] It's not that hard to figure out, I know I've seen a list that showed each employee's cost (we only have about 15 people here). Mine is (was) somewhere between 4k-5k IIRC. Today our boss was talking about "contributing like 50 dollars a month to your HSA", but I don't think the plan is to go from 5k to .6k per employee. My boss was half-talking out of his ass. If he only contributes $600 a year to my benefits, I'll raise hell. Unless it's accompanied by a $4400 raise. Thanks for the advice.
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#8
07-12-2007, 11:47 PM
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Re: HSA\'s (Health Savings Accounts)
[ QUOTE ]
If he only contributes $600 a year to my benefits, I'll raise hell. Unless it's accompanied by a $4400 raise. [/ QUOTE ] If you have a HSA you MUST also be enrolled in a HDHP (High Deductable Health Plan). Your employer will be contributing $600 to your HSA and will be paying the costs of your HDHP... so he is not just paying $600 a year. I'm enrolled in an HSA and HDHP and my employer contributes $750 while I add an optional $750 a year as well. My deductible is $1500 versus $500 on the regular plan. When you consider that the $750 I contribute is pre-tax money, if I need to see a doctor my actual deductible works out to be roughly equal on both plans. My out of pocket maximum is actually lower with the HDHP versus the PPO option while perscription drugs are slightly more with my HDHP. All other costs and coverage levels are the same. If you are a typical young healthy male, with no known conditions and are not on medication, a HDHP might be the better way to go. I will not see a doctor this year and won't need any meds so i'll have $1500 to my name at years end which i can invest in a number of different funds.
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#10
07-13-2007, 06:44 AM
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Re: HSA\'s (Health Savings Accounts)
[ QUOTE ]
[ QUOTE ] It is a given that the risk to you is higher now. [/ QUOTE ] How can you say this without knowing anything about the coverage of his HDHP versus his HMO or PPO? [/ QUOTE ] In my experience working on these types of conversions, the employee takes on significant investment risk in the HSA (that they don't have in a traditional plan) and not all come with a free high-deductible "emergency" plan on the side (disclaimer: I mostly consult in Canada and the Caribbean so there may be some US rules I don't know) which introduces significant morbidity risk to the employee as well. Employers change plans for a reason. Unless there is huge demand for a HSA plan from employees, the only motivation to change is to reduce cost and/or risk. The cost and/or risk the employer sheds needs to land somewhere.
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