HSA vs. PPO? Sell me on HSA

an HSA is a savings account that you can use if you are on a HDHP ....they are great...i have an old 5 figure account from a previous job that I rolled over to hsabank.com and I invest it in stocks (no tax on growth for) ...I'll have my own personal little medicare once it goes bankrupt!

So yea, HSAs are great b/c they are basically another retirement vehicle...so get one, but don't use it, just fund it ...think of it like extending your roth ira contribution limits :)

Sometimes, they make a lot of sense. HSA isn't an insurance plan, an HSA is a special savings account used in conjunction with a High Deductible Health Plan (HDHP). So it depends on how good the HDHP is, and how sick you are.

I was part of one in the past that had a $1500 deductible, and my employer put $750 each year into an HSA for us. I put in another $750. So basically, we had to pay for the first $1,500 in medical expenses, which we used the HSA for. After the deductible, the insurance company paid 100 percent of the medical expenses. It was a great plan.

If you are young and single and healthy, HDHPs can be great, especially if your employer will match some of your HSA contribution.

I have two young kids, and we are in a PPO plan. We had an option for a HDHP, but the family deductible was like $6,000. And, the premium wasn't much cheaper. Kids always get sick, break their arm riding a bike, etc.

Talk to your benefits company and see if they have a calculator available to play out different scenerios and see how it goes. If the premium differece is huge, use that premium difference to fund the HSA, and you might come out ahead.

quote:

---

However, this advantage goes if you need regular maintaince meds.

---

not necessarily the case. if your meds are much higher than deductible, then you may be better with HDHP and HSA. also, HDHP's tend to be significantly cheaper. the way i would figure it would be to sit down with last year's health expenses and see what i would pay under either plan. and don't forget to factor in tax free contributions to HSA.

I like the triple tax advantages, the $750 employer contribution and 1040 line item deduction, line 25. Speaking generically, but likely applicable to most, it is like a Roth medical savings plan + the contributions are deductible with the exception of I think 3 states. If the plan does not have good investment features it likely allows one to roll/transfer contributions to another administrator that has better options. You would need to evaluate it with the other insurance options offered to ensure it is the best thing for your family. Like others, we cash pay and build the account for future medical/dental/prescription costs.

quote:

---

the $750 employer contribution and 1040 line item deduction, line 25

---

Is your employer taking out your share of the contribution pre-tax? If so, then you can't take an additional deduction on the 1040.

I assume by triple tax advantage, you mean, it comes out pre-tax, it grows tax-deferred, and it comes out tax-free if you use it for medical expenses?

quote:

---

I did not know this...

---

check out HSA Bank

put your HSA account there, open up TD Ameritrade account through it and trade it just like anything else

I max out contribution (up to over 6k per year now) and use this as a trading account and never take anything out...great tax benefit and savings for old age medical bills

ETA: WHATEVER you do, don't set it up with Chase. Their options, site, and customer service was terrible.

quote:

---

Is your employer taking out your share of the contribution pre-tax? If so, then you can't take an additional deduction on the 1040.

---

You are on point, I had former self employed HDHP HSA on the brain. Still most employees would receive the tax deduction via reduction of W-2 wages for a Roth-like account.

quote:

---

I assume by triple tax advantage, you mean, it comes out pre-tax, it grows tax-deferred, and it comes out tax-free if you use it for medical expenses?

---

Primarily, yes, but many don't seem to grasp that the contributions are exempt from Fed and state taxes, + the 6.2% employee FICA burden, which obviously puts it a step ahead of a Roth IRA unless one is paying with money earned in excess of the FICA upper wage threshold or other income or savings sources. As mentioned 3-states (AL, CA, NJ) currently don't allow the HSA state tax exemption on contributions.