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Hsa Insurance Account Question & Answers

2014 January 17
by Sarah Fields

Donna asks…

Can anyone tell me about the pros and cons of a Health Care Account?

I am looking at a potential employer and for health care they use a health care account where the company puts in about $700 a month all of your preventive care is 100% paid for and you get a 1500 deductible. I am uneasy about going this route but I am not very familiar about it.

Sarah Fields answers:

$700 a month is a great contribution.

This sounds like a Health Savings account. If so, then it is a personal bank account that you can use for a long list of personal health care expenses. The expenses that are paid for are listed in section 213d of the IRS code, which you can Yahoo (or Google) to see. Usually the bank will give you a debit card and checks to use for these expenses. On an HSA the money is YOURS and rolls over from year to year.

In this case, if your expenses exceed $1500, then the insurance picks up. You can use your HSA funds to pay the deductible, or pay them out of pocket, and just let the funds accumulate, earning interest tax free indefinitely.

There is also something called a Flexible Spending Account where the money does NOT roll over year to year, and something similar called a Health Reimbursement Account. You should check to see which type of account this is.

Most people really like these plans once they understand them.

Sandra asks…

Do health savings accounts provide any benefit for me ?

I have no earned income. Just passive investment income & dividends of less than $50k per year.

Just got high deductible health insurance. After going years without.

My state does NOT provide any benefit for HSAs.
I meant a tax benefit, I have savings. Is there any reason to have a separate account ?
I meant a tax benefit, I have savings. Is there any reason to have a separate account ?

Sarah Fields answers:

Probably no benefit to you.

I originally had a HSA because my employer switched to a high deductible health insurance. And because I was earning income, I had a portion of every paycheck sent directly into the HSA. And of course, this was pre-tax dollars. Thus, the HSA allowed me to put pre-tax dollars aside, and have a nice nest egg to help with that high deductible health plan. So that made sense.

Then my job ended, and I got a letter from the bank administering the HSA, and they said my employer had previously paid the fee to manage my HSA, and now they were going to charge me $15 per month. This was really crazy. I had about $5,000 in my HSA, and earned no interest on that money. And now the bank wants to charge me $15 per month just to hold on to my money?

So I had to transfer all this money to another bank that handles HSA. The problem was, all the banks are charging just to hold the money. It’s like a total scam. I finally found a Credit Union that had no fees, and had the money transferred to them. Then a few months later, that Credit Union sent me a letter to say the HSA accounts were not profitable, and they were no longer handling them. So I had to find another bank to transfer the HSA money to. Again, it was hard to find any bank to hold my money, and not charge me a fee to do so.

I think I need to use up all the HSA money before I reach the age of 65 because I think the account turns into a pumpkin at that time. You need to think twice before you decide to get an HSA account. Watch for hidden fees.

George asks…

Ok, should the average guy go with a health savings account type of health insurance?

What is one to do for health insurance out there by yourself?

Sarah Fields answers:

An HSA can be a great plan for families. Sometimes the HSA is not that great of a deal for the single person.

You should talk to a health insurance broker who can help you sort through the options for your specific situation.

Try using yellowpages.com to search for health insurance brokers in your area.

Don’t call your auto and home agent they specialise in property and causality insurance. You need someone that specialises in health insurance.

A Broker represents multiple carriers and can different insurance companies and plan options in your state.

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