Show me your creative HSA (and other healthcare) options!
January 26, 2018 10:13 PM Subscribe
We pay more for health insurance than we do for rent. We plan to start an HSA and are wondering what our best options are. Our collection of part-time jobs won’t allow us to buy in, so we’re shopping around. What have you?
Our deductible is $6500 apiece and, I think, the 13k family deductible just barely keeps us within range of qualifying to buy into a Health Savings Account (who’d a thunk there’d be a cap on how much deductible you’re allowed to have if you want to be smart and save for your health care?). I read this interesting Bloomberg article and was prompted to post here to ask about real experiences.
We are looking for the best HSA option for two (currently) healthy people pushing 50. Is there anything like the Acorns credit-card rounding-up savings program but for HSAs?
Also interested in hearing about health insurance alternatives. Like, is it stupid to consider these healthcare ministries we read about? If they’re a viable option, must we actually be religious to sign up? What’s the best way to ensure our health and avoid future financial ruin for $10-15k/year?
Our deductible is $6500 apiece and, I think, the 13k family deductible just barely keeps us within range of qualifying to buy into a Health Savings Account (who’d a thunk there’d be a cap on how much deductible you’re allowed to have if you want to be smart and save for your health care?). I read this interesting Bloomberg article and was prompted to post here to ask about real experiences.
We are looking for the best HSA option for two (currently) healthy people pushing 50. Is there anything like the Acorns credit-card rounding-up savings program but for HSAs?
Also interested in hearing about health insurance alternatives. Like, is it stupid to consider these healthcare ministries we read about? If they’re a viable option, must we actually be religious to sign up? What’s the best way to ensure our health and avoid future financial ruin for $10-15k/year?
It sounds like you'd spend the $6750/year on healthcare that you could put through the HSA (meaning you wouldn't have a significant amount left over to save/invest for future healthcare needs) so the biggest thing in choosing an HSA provider is going to be finding one that has the lowest monthly account fees. At the moment there's not going to be anything out there that offers you incentives like the Acorns card you linked (HSAs just aren't profitable enough for providers for them to offer money on top of what you save yourself), so low-fee is going to be the best approach for you. This NYT piece summarizes a recent roundup of providers and recommends Alliant, SelectAccount, and HSA Authority for people in your situation.
The part of the article that michswiss quotes is talking about a certain retirement saving strategy in which you contribute to an HSA but don't spend the money that year, instead investing it and letting it grow tax-free to be used in retirement. It's a valid strategy, but for most people HSAs are worthwhile even if you simply contribute each year and then use it immediately to cover your healthcare expenses. And yes, the amount you save will be dwarfed by the cost of a life-changing chronic illness, but so will pretty much any other money-saving technique, doesn't mean it isn't worthwhile. If you're in the 12% federal tax bracket, 6% state, and you spend at least $6750 on health care each year, you're saving $1215 every year by using the HSA to pay those bills (this is assuming you aren't saving payroll taxes as well, which would increase your savings, since you sound like you're buying health insurance independently from your income from part time jobs). Yeah, it's not going to pay for six months of rehabilitation after a serious car accident but it's not peanuts either.
I'm no expert on those healthcare ministry plans, but from what I understand, they can be good value if you know exactly what your healthcare needs will be and know that the plan will cover them. But for those who are buying insurance to cover unexpected events, lots and lots of people find that those types of plans don't cover things that they would have expected and/or desperately needed.
posted by exutima at 9:11 AM on January 27, 2018
The part of the article that michswiss quotes is talking about a certain retirement saving strategy in which you contribute to an HSA but don't spend the money that year, instead investing it and letting it grow tax-free to be used in retirement. It's a valid strategy, but for most people HSAs are worthwhile even if you simply contribute each year and then use it immediately to cover your healthcare expenses. And yes, the amount you save will be dwarfed by the cost of a life-changing chronic illness, but so will pretty much any other money-saving technique, doesn't mean it isn't worthwhile. If you're in the 12% federal tax bracket, 6% state, and you spend at least $6750 on health care each year, you're saving $1215 every year by using the HSA to pay those bills (this is assuming you aren't saving payroll taxes as well, which would increase your savings, since you sound like you're buying health insurance independently from your income from part time jobs). Yeah, it's not going to pay for six months of rehabilitation after a serious car accident but it's not peanuts either.
I'm no expert on those healthcare ministry plans, but from what I understand, they can be good value if you know exactly what your healthcare needs will be and know that the plan will cover them. But for those who are buying insurance to cover unexpected events, lots and lots of people find that those types of plans don't cover things that they would have expected and/or desperately needed.
posted by exutima at 9:11 AM on January 27, 2018
Before you establish an HSA, first make sure that the insurance plan you have makes you eligible. A high deductible is only one of several requirements for a HSA-eligible plan. Only a small percentage of high deductible health plans are HSA eligible. Your plan provider can tell you for sure. Usually the plan will be labeled in its name as HSA.
An HSA eligible plan, in addition to meeting the deductible and out of pocket limits must provide no benefits at all before reaching the deductible other than approved preventive care. That means no prescription drug coverage, no office visit co-pays, and no emergency room co-pays below the deductible. You must pay 100% of these out of pocket below the deductible. Many high deductible plans do not meet these provisions and are not HSA eligible.
By the way, the reason for the HSA maximum out of pocket limit is because the ACA and HSA rules were defined by different laws and formulas. The Dept. of Health and Human Services sets the ACA maximum while the IRS sets the HSA maximum since it is related to tax deductions. For example the highest out of pocket for a family ACA plan is $14,700 while the maximum out of pocket for an HSA plan is $13,300. Not a big difference but an important one for HSA eligibility.
posted by JackFlash at 12:26 PM on January 27, 2018
An HSA eligible plan, in addition to meeting the deductible and out of pocket limits must provide no benefits at all before reaching the deductible other than approved preventive care. That means no prescription drug coverage, no office visit co-pays, and no emergency room co-pays below the deductible. You must pay 100% of these out of pocket below the deductible. Many high deductible plans do not meet these provisions and are not HSA eligible.
By the way, the reason for the HSA maximum out of pocket limit is because the ACA and HSA rules were defined by different laws and formulas. The Dept. of Health and Human Services sets the ACA maximum while the IRS sets the HSA maximum since it is related to tax deductions. For example the highest out of pocket for a family ACA plan is $14,700 while the maximum out of pocket for an HSA plan is $13,300. Not a big difference but an important one for HSA eligibility.
posted by JackFlash at 12:26 PM on January 27, 2018
Regarding healthcare ministries, keep in mind that they are not health insurance. They are set up as charities. You contribute to them and they decide whether or not to fund your healthcare expenses. It is entirely their discretion. You have absolutely no legal claim to coverage. They are not regulated by government rules. You have no recourse if they deny your claims. They can cut you off if your medical condition becomes too expensive.
posted by JackFlash at 12:32 PM on January 27, 2018 [1 favorite]
posted by JackFlash at 12:32 PM on January 27, 2018 [1 favorite]
I would avoid healthcare "ministries" like the plague. There was a good longform article about them somewhere (maybe NYT?) a few months ago and basically you have to write a letter to the group saying what your health problem is and asking for money, and then ALL THE OTHER PEOPLE have to decide WHO they think is "deserving" of getting their check for however much their "premium" amount is that month.
Like. I have enough religious nosey parkers wanting to judge me for free without paying for the privilege and still winding up SOL when something really unexpected and expensive happens.
posted by oblique red at 3:51 PM on January 30, 2018
Like. I have enough religious nosey parkers wanting to judge me for free without paying for the privilege and still winding up SOL when something really unexpected and expensive happens.
posted by oblique red at 3:51 PM on January 30, 2018
Response by poster: Thanks for the comments. So yeah, it looks like we aren’t eligible for an HSA. Our $6500/13000 deductible plan isn’t considered high deductible enough to be a HDHP, at least not for the purposes of enrolling in an HSA. Damn. And nope, not in the 1%, michswiss, not even close (the “multiple part-time jobs” part gives that away). Steering clear of the healthcare ministries. But still really interested in learning about creative alternatives for saving up dedicated healthcare dollars.
posted by AnOrigamiLife at 1:01 AM on February 4, 2018
posted by AnOrigamiLife at 1:01 AM on February 4, 2018
This thread is closed to new comments.
The article you linked to is more about how much money is currently under management within HSAs. Basically, how much is being made by those managing the funds, not how much it is actually helping those with healthcare needs. From the article: Are you in this category? Again, I've been outside of USA system for a long while. But this seems to assume a large amount of capital that generates income after retirement which would put you in a very entitled category. Maybe I'm missing something?
All that said, unless you are a secure 1%'er, a major medical event or a life changing chronic illness will wipe away the relevance of an HSA. A life insurance policy might protect income in case of disability (it did for me). Single payer health care manages most of the rest. I still take advantage of private health insurance for most of my specialist.
I have no knowledge of Healthcare Ministries. But at the surface, it sounds like a collective group insuring all involved are covered. Or do they exclude those of faith, but weak health?
TL;DR
The best thing you could do is review your life and health insurance. Make sure they meet your needs in case things go seriously pear shaped. Tax avoidance doesn't guarantee good health. The only way to make sure your wealth is protected from a health crisis is a solid shared risk pool, be it private or single payor.
posted by michswiss at 4:16 AM on January 27, 2018