Health Savings Accounts

[user_id]

Even if you are self-employed you have to pay FICA taxes on the premiums, though there is a "Self-employed insurance deduction" that allows you to deduct it from your taxable income. You have to pay FICA taxes on whatever you put in your HSA too, so the self-employed making under ~$100k pay 15% tax on money used for health care, if you make over $100k than its around 3% (as you can't pay social security on income above ~$100k). Of course, you could always restructure as a corporation and file sub-chapter-S and put yourself on payroll, but this involves costs/complexities that are beyond most self-employed making under $100k/year.

McCain wanted to address the way tax policy favors employer health plans, but Obama does not seem particularly interested in changing anything.

[sterlinggirl]

Originally Posted by user_id

McCain wanted to address the way tax policy favors employer health plans, but Obama does not seem particularly interested in changing anything.

That's one change that would actually make a difference. I haven't bothered to look up the stats, but it wouldn't surprise me if there are literally millions of people out there who only stay in the workforce for discounted insurance. Severing the ties of employer provided insurance could help them to retire, which would provide more jobs for the people who really need them.

[emilybh]

Originally Posted by ndfmnlf

I bought a conventional health insurance policy from BCBS years ago on the individual market. It's a high deductible plan which suits me well since I'm fairly young and healthy, and I have sufficient cash reserves to pay the deductible if needed. Problem is, premiums have increased significantly over the last few years despite the fact I have never used my plan. Between 2008 to 2009, my premiums jumped 25%. The reason given was inflation.....even though the CPI barely moved over the past year. We're even in defllationary mode, if anything!

So, I'm thinking of switching to an HSA plan which has lower premiums. Fortunately, BCBS will allow me to convert my current high deductible non HSA plan without having to undergo underwriting all over again. The thing that has kept me from pulling the trigger is the current push for health care reform which - if such reforms are enacted - may render the tax and cost advantages of HSAs moot.

Anyone have any experience with HSAs? Do you like your plan? Do you think HSAs will survive health care reform?

I'm an independent health insurance agent with a couple decades of experience and I can tell you that not only will the insurance premiums be lower, but if you actually open up the side HSA account and put in the maximum contribution (or up to the size of your deductible), let's say $3000, then once you do that and if you have 100% COINSURANCE, between the insurance and your HSA account you have 100% protection.

That's not even all. It gets better. Since you made the $3000 contribution, if you are in a 30 percent tax bracket you ALSO saved $900 in taxes since HSAs are like IRAs but for health insurance. That averages out to an additional $75 per month savings. Also if you had to meet the deductible, your net cost wouldn't even be $3000. It would be $2100 due to the tax advantage.

There is no other renewable plan that can provide better protection for the money. Co-pay plans should be avoided like the PLAGUE. With co-pay plans the sicker you get the more expensive the insurance is --as opposed to with HSA compatible plans that cover you 100% for EVERYTHING once you reach your deductible or maximum out of pocket responsibility.

So yes, your thinking is right on this. The plan you have now, if it has co-pays, is and as always been overpriced and will never provide the catastrophic stop-loss protection an HSA compatible plan can provide.

Drop the co-pay plan and get the non-co-pay 100% plan that is HSA compatible. There is absolutely NO SITUATION where a co-pay plan is better for someone -- especially an elderly person or a diabetic so many of the so-called (clueless) "experts" who write nationally syndicated articles say should stay with co-pay plans to avoid "risks" associated with HSA plans --which is REDICULOUS ---as there ARE NO RISKS.

There are FAR WORSE risks associated with staying with a co-pay plan . Ten $50 co-pays on 10 Rx drugs per month adds up to $6000 per year just for one person's prescription drug copays. Copay plans are expensive and offer zero protection as far as I'm concerned.

If you can get a $3000 deductible where after tax savings really only costs you $2100 in a worst case scenario if you are in a 30% tax bracket, isn't that better than a more expensive co-pay pan that can add up to thousands and thousands of dollars? if people actually looked at the numbers and could see what they are getting for what they are paying and figure in both a bad year and a good year how both plans would perform. It is a NO BRAINER. The HSA compatible plan wins every time.

[ndfmnlf]

Originally Posted by emilybh

I'm an independent health insurance agent with a couple decades of experience and I can tell you that not only will the insurance premiums be lower, but if you actually open up the side HSA account and put in the maximum contribution (or up to the size of your deductible), let's say $3000, then once you do that and if you have 100% COINSURANCE, between the insurance and your HSA account you have 100% protection.

That's not even all. It gets better. Since you made the $3000 contribution, if you are in a 30 percent tax bracket you ALSO saved $900 in taxes since HSAs are like IRAs but for health insurance. That averages out to an additional $75 per month savings. Also if you had to meet the deductible, your net cost wouldn't even be $3000. It would be $2100 due to the tax advantage.

There is no other renewable plan that can provide better protection for the money. Co-pay plans should be avoided like the PLAGUE. With co-pay plans the sicker you get the more expensive the insurance is --as opposed to with HSA compatible plans that cover you 100% for EVERYTHING once you reach your deductible or maximum out of pocket responsibility.

So yes, your thinking is right on this. The plan you have now, if it has co-pays, is and as always been overpriced and will never provide the catastrophic stop-loss protection an HSA compatible plan can provide.

Drop the co-pay plan and get the non-co-pay 100% plan that is HSA compatible. There is absolutely NO SITUATION where a co-pay plan is better for someone -- especially an elderly person or a diabetic so many of the so-called (clueless) "experts" who write nationally syndicated articles say should stay with co-pay plans to avoid "risks" associated with HSA plans --which is REDICULOUS ---as there ARE NO RISKS.

There are FAR WORSE risks associated with staying with a co-pay plan . Ten $50 co-pays on 10 Rx drugs per month adds up to $6000 per year just for one person's prescription drug copays. Copay plans are expensive and offer zero protection as far as I'm concerned.

If you can get a $3000 deductible where after tax savings really only costs you $2100 in a worst case scenario if you are in a 30% tax bracket, isn't that better than a more expensive co-pay pan that can add up to thousands and thousands of dollars? if people actually looked at the numbers and could see what they are getting for what they are paying and figure in both a bad year and a good year how both plans would perform. It is a NO BRAINER. The HSA compatible plan wins every time.

Thanks for your input. The more I look into this, the more the HSA compatible plans become attractive. HSA plans are also mandated by law to cap the maximum out of pocket expenses for the patient and family at $10K a year. So, no matter how sick you or your family will get, you are only on the hook for $10K, and the insurance company will cover the rest. I don't think conventional health plans have such a cap. Am I understanding this right?

[DressageGirl]

I'm sorry to bring this back up but I did a search and this was the most relevant and I had a few questions.

I am hopefully going to be considering employment with a company that offers a high deductible healthcare plan and an HSA. It is just for me and my son so my premiums for the two of us would be $188.30/month. I am not sure if that would be considered "family" since it is just the two of us but our deductible would be $2850 individual and 5700 family. The company does contribute some to the HSA if you are a nonsmoker and your BMI is less than 35 which I am both, I forget the exact numbers but I think it was about $100 give or take a month so lets say $1200/year.

Here is where I am confused. On the benefit sheet it also says this:

Out of pocket (deductibles not included): individual in-network $2000/ Family in-network 4000 (out of network of course higher, lets just assume I stay in network)

Co-insurance: in-network 80%

Preventative benefits in network 100%

With the deductible mentioned first, does that apply to major medical, hospital, etc and the out of pocket mean towards sick visits, etc? What is the differenc there, I am not quite clear?

And what does the co-insurance mean? Does that mean that after I have paid my high deductible I am still responsible for 20%? I thought the whole point in these was you pay the high deductible in case something major happens but then you don't have to worry about paying anything after something major happens, or am I not clear?

Thanks in advance. Perhaps I am jumping the gun as I haven't been made an offer yet but I think they were interested enough that the told me about the health insurance plan.