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A few of us have touched on this issue in other threads. I thought I would start a thread just for HSAs.
HSAs are used with High-deductible health insurance plans. The insured or the employer can contribute money to the HSA pre-tax. The money can only be used for approved medical expenses but the definition is broad and also includes OTC drugs, Chiropractic, Acupunture, Dental, etc. Any money not used in a calendar year rolls over to the next year. The money can be used for any purpose with a 10% penalty. I think it can also be used for education expenses without penalty. Typically, once a deductible is met for the year then coverage is 100% after that. Our health plan has a deductible of $3000 per calendar year. We can contribute up to $5650 per year to the HSA.
I think HSAs are a great step forward because:
1) They introduce some market pressures into the health care industry. If you have to pay for labs, for example, out of your HSA then you are more likely to shop around and compare prices then if you are simply paying a $20 co-pay or even 10% of the total cost. Same thing for prescriptions.
2) The monthly premiums for a high-deductible plan are MUCH lower than a co-pay plan. Even if you meet the deductible each year the cost of the deductible + the lower monthly payments are still much less than the cost of annual cost of the payments for the co-pay plan.
3) The providers generally charge less for a visit that is paid for with the HSA because it is like a cash payment. They get money without having to go through the hassle of billing insurance and waiting.
4) The HSA money is yours to keep if you don't use it during the year, as I mentioned above.
There are other benefits to HSA but those are the most obvious that I thought of.
The downside to HSAs as they are regulated now is that you can't use the money to pay for premiums. I would love to be able to fund my employees' HSA with more money and allow them to purchase their own insurance that they could take with them if they left the job.
The other downside is if you incur high expenses early in the year if you don't have the cash flow to cover it. But you still will be saving money over the course of the year.
My employees like the HSAs. I am interested to hear from those who don't like them and why they don't.
[I posted this in the business forum because it seems more financial related than health.]
I love my HSA. I didn't like the administrator of our plan for a couple of years but they have "gotten with the program" and now they are much easier to deal with. We now have HSA credit/debit cards and they ask for less documentation from me and work closer with providers, stores, etc. I don't have to pay up front at time of transaction and submit receipts when I use the credit/debit card. Using the credit/debit card is a blessing for my dependents when they go to the pharmacy, dentist, etc. I appreciate having a HSA and the $$ savings. I think one of the scariest things for people considering a HSA is guesstimating how much to put in and not using it. A big thumbs up for HSA's for me!
I love my HSA. I didn't like the administrator of our plan for a couple of years but they have "gotten with the program" and now they are much easier to deal with. We now have HSA credit/debit cards and they ask for less documentation from me and work closer with providers, stores, etc. I don't have to pay up front at time of transaction and submit receipts when I use the credit/debit card. Using the credit/debit card is a blessing for my dependents when they go to the pharmacy, dentist, etc. I appreciate having a HSA and the $$ savings. I think one of the scariest things for people considering a HSA is guesstimating how much to put in and not using it. A big thumbs up for HSA's for me!
I think you are confusing a Health Spending Account (which it appears you have) with a Health Savings Account.
HSA Definition
The Basics
The health savings account, or HSA, was created recently by federal legislation. An HSA lets you set aside pre-tax dollars for future medical, retirement, or long-term care premium expenses. Invest these funds as you wish within a broad range of choices, then use them for qualified expenses. The funds can roll over from year to year. You take them with you when you change jobs.
High-Deductible Requirements
To open an HSA, you must be enrolled in a qualified high-deductible health plan, as defined by the US Treasury. For 2007, the minimum annual deductibles are $1,100 for a self-only plan and $2,200 for a family plan.
HSA vs. HRA vs. FSA
An HSA is different from other kinds of tax-advantaged savings accounts. You might be familiar with Health Reimbursement Arrangements (HRAs) or Flexible Spending Arrangements (FSAs). The main difference between an HRA and an HSA is that HRA funds are provided only by an employer for an employee, and do not follow an employee to a new employer. The main difference between a FSA and an HSA is that FSA funds must be used within the calendar year; otherwise they are forfeited.
HSA's are good for relatively healthy people or low utilizers of health care. For those that are not, the dollars barely stay there long enough to accrue interest, nor will it be there to carry over. Plus, most employers charge a fee for using a debit card attached to the HSA. It could be something like $2.00 per transaction and that includes use for OTC and Rx meds. Overall the costs are significantly less than traditional fee-for-service plans (e.g. PPO, HMO or POS).
There is a whole thread on another forum I visit on the topic, giving advice among other things on how to maximize your HSA with minimal cost, i.e. planning to quit earlier in the year and spending the "end of the year final amount" quitting and then not having to pay it back, (the flip side to you loosing the leftover amount at the end of the year). However they are good for covering copay costs and a lot of little expenses through the year.
I can't decide if I like my HSA or not. The only option this new job has is HSA/high deductible. My last job you could pick PPO or HSA/high deductible, but I was too chicken to go HSA.
My new employer paid almost all my $2500 deductible for 2008 which is cool. That helped a lot. The amt we will get each year will vary. I am all of a sudden very aware of how much everything costs. I'm keeping my eye out for low cost clinics. I need an allergy med refill, the doc wants me to come in before she will refill it and I won't go pay a doctor for a stupid Nasonex script and no other reason. I'm checking with some Hispanic friends to see if they can pick me up some Nasonex in Mexico. This is what having an HSA has done to me!! I need the HSA money to just sit there and get bigger for a couple of years which is tough when you are in your 40s. I wish I had this when I was in my 20s so I could be building a huge HSA account. I did notice the FEES with the HSA accout are ridiculous. Just horrible. I don't see making anything as far as interest in the account. The fees will eat it up.
I love the HSA. I only wish they would have had them when I started working 20 years ago as I would have a nice chunk of change in there. They are GREAT for those of us that don't frequent the doctor. I always felt like I was subsidizing unhealthy/hypochondriac co-workers by paying health insurance premiums.
And like F.N.Dallas states, it will cause people to actually consider what costs they are paying for healthcare.
I like ours, it allows us to budget better for medical dental bills. Otherwise, we were getting hit with bills for $150-$200 every other month. (and we are healthy!) And no way to predict what our insurance would decide to cover. We know that $$ is coming out of the check into that HSA acct. It has helped us out since we have kids. We mostly have annual checkups and dental bills.
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