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Hsa Insurance Rules Question & Answers

2013 November 26
by Sarah Fields

Charles asks…

What would happen if we pass health care reform, and yet we can’t cut Fraud out of Medicare and the Supreme?

Court rules that Mandatory health insurance is unconstitutional?

I was just wondering this, I mean if we need to insure everyone fine, either have insurance companies compete with each other at a National Level and increase HSA‘s etc, or just go to a Single Payer system. Instead of complicating the system even further.

Sarah Fields answers:

We will not be able to cut fraud out of medicare, that is a joke the democrats are playing on the naive. Single payer is worse, because now you have total government control. We Americans get pissed off if we have to wait 2 hours for an MRI, let along waiting 6-9 months like they have to do in some areas in Canada.

Jenny asks…

Does it make sense to have both a HSA and FSA?

I have the option of enrolling in a high deductible health plan which offers a HSA. My company also offers the option of a FSA with other lower deductible health plans. I know the similarities and differences between a FSA and HSA. Does it make any sense to enroll in a FSA when I can get a HSA? Does it make any sense to have both?

Sarah Fields answers:

Actually, you CAN have both an HSA and an FSA. The law makes it illegal for you to receive contributions to an HSA while you have “other underlying medical coverage” (meaning an insurance plan that is not a high-deductible health plan, or an FSA), though. I think it’s important to differentiate that. You can always have an HSA, but it can receive no contributions (from you or your employer) if you have health insurance that is NOT a high-deductible health plan or you have an FSA. So for all intents and purposes, while you can have both, you can’t contribute to both in the same plan year.

There are pros and cons to both. An HSA is designed to go hand-in-hand with a high-deductible health plan. Typically an employee arranges for contributions equal to the deductible to go into the HSA. A benefit of the HSA is that if you don’t use it all, it’s considered the same as retirement contributions, and you get to keep it until you withdraw it at retirement age…or you can withdraw it anytime if you use it for qualified medical expenses (that aren’t covered by an FSA). A drawback of an HSA is that you must have contributed the money to your account in order to use it (unlike an FSA).

An FSA is designed to go with HMO or PPO insurance, where you have a co-pay and certain deductibles. You make your elections for contributions for the year (and your employer may provide a contribution as well), and then as you incur qualified expenses, you can get reimbursement from your FSA for up to the full amount of your annual election, even if you haven’t yet contributed it. Of course, the “use-it-or-lose-it” rule is in force here…you MUST use your FSA funds by the end of the plan year (or the end of the grace period, if your employer offers one), or you’ll forfeit the contributions to your employer.

My boss likes to say, “An HSA is a retirement account which you can withdraw from to make health-related expenditures.”

My advice: If you have sufficient savings to be able to cover the deductible in a high-deductible health plan at the start of the year, then it is much more advantageous to utilize an HSA than it is an FSA, if all other things are equal. (I do an FSA because my employer will contribute $1000 per year to my FSA, but does not make any contribution to an HSA).

If you aren’t able to cover the deductible in a high-deductible health plan on the first day of your plan year, then an FSA makes the most sense.

Paul asks…

switch to health HSA before i cancel Oxford health plan.Shall i still pay the premium for the overlapped month

change my health plans to HSA ( high savings account) of Golden Rule insurance company on Jan.31,2007 and cancel my prior plans with Oxford sometime on Feb. 2007. Oxford still wants me to pay the premium of Feb. I refused. Oxford now are lawsuiting me. Shall i pay them?

Sarah Fields answers:

If you have a broker/agent, get them involved. In Ohio, we typically just tell clients to stop paying the previous insurer and by default that cancels the policy…I have never seen what is happening to you.

Here are some things to consider.
Is Oxford demanding payment because they bill 30 late….In other words, is the bill they are coming after you for actually for the coverage you received in January – if so – Pay it.

Did you or anyone else use the Oxford benefits in the month of Feb? If so, you better pay it.

If the answer is no to the above questions, call them and ask them what is going on…..Email me and I would be happy to discuss this with you privately….

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