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HSA verses HRA health accounts

HSA verses HRA health accounts

Old May 15th 2012, 2:50 pm
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Default Re: HSA verses HRA health accounts

Originally Posted by Leyther View Post

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...
But the likely hood of having a accident is also higher...cost of a helicopter call out $10-60K straight off the bat if you fell and broke a leg in the mountains...

Just something to consider
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Old May 15th 2012, 2:51 pm
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Default Re: HSA verses HRA health accounts

Originally Posted by moadikum View Post
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.
Why do you assume that interest rates will always remain at their current low levels? Additionally you can invest HSA funds in other types of investments. And, as has been pointed out, you don't have to close an HSA if you move to an employer that doesn't have a high-deductible plan. There is absolutely a reason to penalize withdrawals from these accounts that aren't used for medical expenses.
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Old May 15th 2012, 3:21 pm
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Default Re: HSA verses HRA health accounts

Originally Posted by Giantaxe View Post
Why do you assume that interest rates will always remain at their current low levels? Additionally you can invest HSA funds in other types of investments. And, as has been pointed out, you don't have to close an HSA if you move to an employer that doesn't have a high-deductible plan. There is absolutely a reason to penalize withdrawals from these accounts that aren't used for medical expenses.
If you switch from a HDHP to a standard HMO, it should be up to you whether you reclaim the money that you (in good faith) placed in a HSA to fund your previous plan. To pay a penalty to recover these funds makes absolutely no sense. The fact that a HSA can only be opened if you have a HDHP should inversely allow you to withdraw funds (without penalty) if you leave such a plan.

Seeing as most people don't have HDHP/HSA's, but everyone has an opinion - perhaps you'd feel differently if it was your own money.
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Old May 15th 2012, 3:37 pm
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Default Re: HSA verses HRA health accounts

Originally Posted by moadikum View Post
If you switch from a HDHP to a standard HMO, it should be up to you whether you reclaim the money that you (in good faith) placed in a HSA to fund your previous plan. To pay a penalty to recover these funds makes absolutely no sense. The fact that a HSA can only be opened if you have a HDHP should inversely allow you to withdraw funds (without penalty) if you leave such a plan.

Seeing as most people don't have HDHP/HSA's, but everyone has an opinion - perhaps you'd feel differently if it was your own money.
You can use the funds for medical expenses for the rest of your life. Heck, there are even special rules that allow you to use the funds for insurance premiums and for what Medicare eligible people can use them for. Plus you get tax free growth on the funds. I really don't see an issue with the withdrawal penalty at all, and in fact strongly advised my daughter to sign up for one.

Last edited by Giantaxe; May 15th 2012 at 3:39 pm.
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Old May 15th 2012, 4:40 pm
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Default Re: HSA verses HRA health accounts

Originally Posted by moadikum View Post
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.
Surely there is no tax or penalty on HSA withdrawals to pay medical expenses. I believe that it is appropriate for the Government to penalize withdrawals for anything other than medical expenses so that people are encouraged to keep the money for medical expenses, just as there is a penalty of IRA withdrawals before 59.5.

For the OP if they are young and healthy and feel comfortable with the higher deductible then the HSA is probably the way to go.
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Old May 15th 2012, 5:16 pm
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Default Re: HSA verses HRA health accounts

You don't have to put any of your own funds into an HSA account if you don't want to, so "reclaim" isn't really the appropriate word. Take the employer contribution and don't add your own, then you have nothing to grumble about when THEIR money is left in YOUR HSA for YOU to use, even after you leave their company!!

It really is pretty much win-win if you're young and healthy, both you and your employer pay less on premiums, and you have your employer's HSA contributions to use if you do have minor issues, and if not you keep the funds to use when something medical is needed later on.
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Old May 15th 2012, 5:34 pm
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Default Re: HSA verses HRA health accounts

My company just did similar, we had a choice of a HDHP (HSA) or the old EPO with an increased deductable. The EPO (FSA) is use it or loose it, the HSA roll's over year on year and can travel with you if you change employer. Push come to shove if you are healthy then the HSA is the way forward.
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Old May 15th 2012, 6:45 pm
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Default Re: HSA verses HRA health accounts

Originally Posted by sanfranjones View Post
My company just did similar, we had a choice of a HDHP (HSA) or the old EPO with an increased deductable. The EPO (FSA) is use it or loose it, the HSA roll's over year on year and can travel with you if you change employer. Push come to shove if you are healthy then the HSA is the way forward.
HSA or HRA with deductibles and out of pocket expenses are both pretty bad deals if you compare them to the benefits that companies once offered. It's amazing what US workers will stand for.
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Old May 15th 2012, 6:50 pm
  #24  
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Default Re: HSA verses HRA health accounts

Originally Posted by nun View Post
For the OP if they are young and healthy and feel comfortable with the higher deductible then the HSA is probably the way to go.
I think that I am leaning towards the HSA.

One more question, if I enroll my spouse into the HSA plan-- does that mean that the deductible & max-out-of-pocket expenses double or is there usually just a small increase in both amounts?

The current $2,700 deductible & $5K out-of-pocket is do-able, but if the max out of pocket jumps to $10K for us both then we may have to re-think some options.

Originally Posted by Bob View Post
But the likely hood of having a accident is also higher...cost of a helicopter call out $10-60K straight off the bat if you fell and broke a leg in the mountains...

Just something to consider
In Colorado, the helicopter in the mountains is funded by Search & Rescue and provided you have a CORSAR card, $12 per year, then the rescue team is re-inbursed by the State for the entire operation and is of no additional cost to you.
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Old May 15th 2012, 6:55 pm
  #25  
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Default Re: HSA verses HRA health accounts

Originally Posted by Leyther View Post
I think that I am leaning towards the HSA.

One more question, if I enroll my spouse into the HSA plan-- does that mean that the deductible & max-out-of-pocket expenses double or is there usually just a small increase in both amounts?

The current $2,700 deductible & $5K out-of-pocket is do-able, but if the max out of pocket jumps to $10K for us both then we may have to re-think some options.



In Colorado, the helicopter in the mountains is funded by Search & Rescue and provided you have a CORSAR card, $12 per year, then the rescue team is re-inbursed by the State for the entire operation and is of no additional cost to you.
It will most likely double the max out of pocket - but it also increases your max yearly contribution to the HSA to $6,000.
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Old May 15th 2012, 9:02 pm
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Default Re: HSA verses HRA health accounts

It will depend on the policies of the employer. Some employers only contribute into the HSA for the employee, some will double it for a family or spouse. Some pay 100% of the premiums for the employee, and 70% for the extra for the family, some pay 70% (or 80% or whatever) of the total. It also depends on the plan whether the deductible is per person or for the family.

You should be able to ask your HR person (or HR-to-be if you haven't started yet) for an estimate for your premiums and they should also know exactly how your plan works. If you already have the policy options sheet you could copy the sections on deductibles and maximums here word for word (the relevant bit is usually in the form of a table), and we might be able to decipher exactly what it means!
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Old May 15th 2012, 9:19 pm
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Default Re: HSA verses HRA health accounts

Originally Posted by Jscl View Post
It will depend on the policies of the employer. Some employers only contribute into the HSA for the employee, some will double it for a family or spouse. Some pay 100% of the premiums for the employee, and 70% for the extra for the family, some pay 70% (or 80% or whatever) of the total. It also depends on the plan whether the deductible is per person or for the family.

You should be able to ask your HR person (or HR-to-be if you haven't started yet) for an estimate for your premiums and they should also know exactly how your plan works. If you already have the policy options sheet you could copy the sections on deductibles and maximums here word for word (the relevant bit is usually in the form of a table), and we might be able to decipher exactly what it means!
Contribution limits can be found here:
http://en.wikipedia.org/wiki/Health_savings_account
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Old May 15th 2012, 10:07 pm
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Default Re: HSA verses HRA health accounts

Those are the maximum limits by law, but each HSA plan will have its own limits, determined by the insurance plan it is attached to. No plan can have a limit higher than the maximum set by law, but they can, and often do, have a lower limit. You'd need to look at your own plan to see your own limits.
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Old May 16th 2012, 12:13 am
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Default Re: HSA verses HRA health accounts

Originally Posted by nun View Post
HSA or HRA with deductibles and out of pocket expenses are both pretty bad deals if you compare them to the benefits that companies once offered. It's amazing what US workers will stand for.
Just as 401(k)s are terrible compared to most defined-benefit pension plans. But what in reality can "US workers" do about it?
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Old May 16th 2012, 12:17 am
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Default Re: HSA verses HRA health accounts

Originally Posted by sanfranjones View Post
Push come to shove if you are healthy then the HSA is the way forward.
And that's exactly the problem with these HSAs attached to high-deductible insurance. Good if you are young and healthy (and thus have a relatively low probability of having major health expenditures. Not so good if either of those things aren't true.
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