HSA's (Health Savings Accounts)

[mrclean368]

I have an HSA plan and work for a small company, I'm the controller and buy the policy and pay the premiums. We use United Health and they give us two options HSA vs traditional.

The insured is responsible for health costs up to 2850 and in return the company gets savings of about 820 in premiums. We pay that 820 savings to the employee's HSA account. The company cost is no different for an HSA employee or one with the traditional plan.

I opted for the HSA plan because I didn't use the health insurance much and it seemed like wasting money. I just need an eye exam, a dental appt, physical which the traditional plan didn't cover the eyes or dentist now I can use my HSA money to pay for those. My biggest risk was getting injured playing baseball (MSBL) which our league has insurance for those injuries.

The worst part of the HSA plan in my opinion is the family coverage. You almost pay per person for the policy but the deductible is for the family coverage policy is 5600. Seems like this amount is a bit too high given the additional premiums.

As far as investment risk. It seems since this money will need to be available in short period of time you wouldn't have this in equity mutual funds until you built up a few years premium.

[mosdef]

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I opted for the HSA plan because I didn't use the health insurance much and it seemed like wasting money.

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Of course when you are given a choice you're going to get what's best for you (unless you make a poorly informed choice, but that's not necessarily the employer's fault). I am speaking mostly of cases were employers make a change to their plan from traditional to HSA in conjunction with an information circular that says on the front in size 20 type:

"Introducing the New Mega Corp. Flexible Employer Choice Plan!"

and also says on the bottom of the back in size 4 type:

"Warning: Investment returns on the HSA are not guaranteed and may be significantly different than indicated in projections. Plan does not provide any coverage above that provided by employee account. You should carefully consider the risks associated with this new plan, even though we really want to you think it's a great plan without critically analyzing it. We don't mind saying that because if your the type of independent thinker than reads these kinds of warnings instead of just drinking the company kool aid you frankly don't fit into our ideal workforce demographic anyway and would prefer it if you quit instead of making your co-workers better informed."

[Cubswin]

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In my experience working on these types of conversions, the employee takes on significant investment risk in the HSA

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The phrase 'investment risk' refers the risks associated with the investment vehicles of the HSA account and not with the actual health coverage.

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not all come with a free high-deductible "emergency" plan on the side

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In the United States, ALL HSAs must be paired with a HDHP.

[mosdef]

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In my experience working on these types of conversions, the employee takes on significant investment risk in the HSA

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The phrase 'investment risk' refers the risks associated with the investment vehicles of the HSA account and not with the actual health coverage.

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But it's still part of the risk to employees that is not there if they just obtain coverage under a plan at the employer's expense. In that case the investment risk resides with the insurer.

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not all come with a free high-deductible "emergency" plan on the side

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In the United States, ALL HSAs must be paired with a HDHP.

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Interesting. As noted, I consult in other jurisdictions that are not as restrictive and I admit that I did not know such pairing was mandatory. Pairing it with a HDHP really just makes it a combination of HSA and traditional, so I'm not sure this is an argument for HSA structures (you're basically saying that the flaws of the HSA can be reduced by maintaining some of the traditional arrangement).