Leyther

I just started a new job and although I am not eligible to enroll in the company's health insurance program just yet, I am trying to learn more about what my options will be.

Apparently new for 2012, there will be no more traditional PPO and HMO insurance and it is being switched to account-based. Does anyone have any experience with these, good or bad?

From the limited information that is available about the HSA and HRA from my company it looks like that the HSA account takes less from your pay-check but the deductible is incredibly high while the the HRA takes more from your paycheck but has a lower deductible. The company also contributes $50 more to the HSA than the HRA.

I was leaning towards taking the HRA option since it has the more affordable deductible should something happen but on the other hand, I don't go to the doctor all that often-- in fact I have only been once in the past 12 years and that was for my immigration medical-- so perhaps more in the paycheck would be beneficial, but then I am not sure if I could afford the additional out-of-pocket expenses

Are there any insurance guides out there for people that are completely new that give a little more information? Would also like to hear any experience from others who have these savings-based health plans.

oxonlad

HSA's are the way to go, if you're a healthier individual. I have one through my company, and have nothing bad to say about it.

cranston

Sounds really bad to me.

Leyther

This is what I have heard and it does appear to be the consensus amongst those who I have spoken too and that is why I am struggling to decide.

I am healthy-- 28 y/o, non-smoker, marathon runner, regular gym user, climber and pretty much partake in any other out-door sports available in Colorado and so the likely-hood of actually needing anything major is slim and so the HSA seems the way to go, but the deductible is high and is likely out of my immediate price range--- what happens when you cannot pay the deductible in full immediately? Billed, interest?


Well those who are currently enrolled in PPO and HMO plans from 2011 are eligible to continue on such plans through 2012. New employees and those who did not enroll in 2011 have only the option to enroll in the HSA or HRA plans.

The PPO and HMO will be scraped in 2013 for our company, so in 2013 the only options for our employees will be either an HSA or HRA.

On an aside, I am currently un-insured have been for the last two years due to my status-- so any insurance is surely better than no insurance? So it doesn't "sound really bad to me"-- unless I am missing something.

oxonlad

What kind of deductible are we talking?

With my High Deductible Health Plan, I'm responsible for the first $1500, then the plan covers 50% of the next $1500 in my out of pocket expenses. My max out of pocket is $3,000/year.

I work for a smaller silicon valley company, and they pay $250 into my Health Savings Account each month, to cover any potential deductible I may need to pay.

Leyther

- HSA deductible (Single): $2,700
- HRA deductible (Single): $950

Max out of pocket:
- HSA (Single): $5,000
- HRA: (Single) $3,500

I am not sure my pay-in or my employer's pay-in.

oxonlad

I'd go with an HSA. The money never expires - and you can put up to $3,000/year into the account tax free. The only issue is that if you need to take that money back out - not only do you pay your standard income taxes - but thanks to Obamacare - you also pay a 20% penalty... Nothing like being fined for using your own money. Additionally - whereas you used to be able to purchase most over the counter medicines using the funds in your HSA - that has also been banned with that horrible piece of legislation.

Giantaxe

You're being fined because you got a tax break on contributions (and earnings on contributions) to use them for healthcare. By withdrawing money, you are not using it for the purposes the tax break was given for. I don't see what's wrong with this. The same principle is also used for contributions to 401(k) retirement savings that are withdrawn pre-retirement (bar some hardship situations).

Again, I think this is correct. When over the counter medicines were purchasable using an HSA account, there was no guarantee that those medications would be used by the person who had the HSA account. Apparently, many people were buying for others and then sharing the savings. At least twith the tightened rules, there is a higher probability that the usage will be for the individual holding the account or their dependents.

oxonlad

There is no "tax break" for contributing to an HSA, besides the fact that the contributions are "pre tax". To pay an additional 20% to take out your own money (for instance - if you leave a job, and switch from a HDHP) is nothing more than state-sanctioned theft.

The argument for imposing the no-OTC purchasing is laughable. If you're the head of the household, then anyone in your household could legally use the OTC medications, since they'd be on your HDHP. Unless you're making the argument that people were running illicit Nyquil-rings, by saving the % they would have paid in income tax - your argument is only valid in a minute number of cases.

Sally Redux

Er...exactly.

Giantaxe

By virtue of the fact that you are contributing pre-tax, you are not paying tax on that money. Ergo, you are getting a tax break on that money. As you are on earnings. If there were no additional penalty on withdrawals, then people would be able to use them simply as a tax-deferral vehicle without using a cent of the account on healthcare.

Which is why I said " individual holding the account or their dependents".

From what I've read, not so. Apparently many used their accounts to buy over the counter medications for other non-dependent family members.

Jscl

I think the "no PPO or HMO" thing is specific to your company by the way (or if it's not, so far I haven't heard anything about it, and there would have been a stink if it were true for everyone!).

I haven't used an HRA so can't comment on that, but the HSA worked very well for us.

Just an idea of costs (at least in California, I don't know how much they vary nationwide):

Visit to a regular doctor is about $100-$120
Visit to a specialist (e.g. gynae (don't know if you're male or female!)) is about $170-$240
Prescription costs very widely, some are only about $5, most we had were about $30 a prescription, but I know for some expensive drugs it's $100s
If you fall over and break your leg it's going to be $10,000s so you usually max out your plan limits anyway, regardless of deductible.

By law an annual physical exam is now free, even with an HSA plan.

Also, assuming your HSA plan is provided under an insurance provider as administrator (I don't know one that isn't, but it might be new that they're not) then although you pay the entire cost of the visit, you still pay the negotiated cost that the insurer sets. I.e. if you go "in-network" (basically to an approved list of physicians, should be quite a long list and nothing to worry about) then the physician can't just charge anything they want, they can only charge a maximum of what the insurer allows.

Yes, you put PRE-tax money into an HSA, so if you don't use it for approved purposes (medical stuff) then clearly the tax you would have paid on that money is due and you have to pay it. The fine is to stop people using it as a tax free savings account, as all interest that your HSA account receives also grow tax free. Same principle as with a pre-tax retirement account.

Oh, and you can use HSA funds for medical and dental costs, so if you wear glasses/contact lenses or go to the dentist regularly, that can help too (and can be an easy way to use up a chunk of your HSA funds!)

Also the money your employer puts into your HSA account is essentially free money, so say they put in $100 a month, and you go see a doctor once that year at $120, which results in $30 prescription, then all your employers contribution ($1200 for the year) minus what you spent ($150) = $1050 is yours to keep for medical expenses in later years. It soon adds up if you're healthy.

Jscl

Also you can definitely keep your HSA account and DO NOT have to withdraw funds (so you won't be fined) if you leave your job. The company that administers the HSA will keep on administering it (you may have to pay a small monthly fee, ours was $3) and you can still withdraw money for medical needs until the money in the account is gone, even if you are not covered by a HDHP.

What you cannot do if you're not currently covered by an HDHP is contribute to an HSA.

nun

I stopped reading here.

oxonlad

Obviously because you don't understand basic tax terminology.

A tax break/writeoff is generally non-recoverable (for instance, writing off dependents, qualifying expenses, etc). With a HSA (I'm assuming you have one, because your'e obviously familiar?) - any withdrawal is taxed at the standard rate & with a 20% penalty.

Unlike 401k contributions, HSA contributions do not grow with time (besides the minimal interest you earn). Therefore, there is no reason to penalize withdrawal, beyond standard taxes on the balance + interest.