Archives for October 2005

Still on the search for the best health insurance plan that will let me contribute to a Health Savings Account (HSA). I need to contact my State Farm agent for one more quote, and then I can start crunching some numbers. First, I wanted to write down some basics of what I’ve found out about HSAs, including Pros and Cons. Overall, I think of them as a Traditional IRA for healthcare expenses.

Who’s eligible:
Anyone under age 65 can contribute to an HSA if they buy a high-deductible health insurance policy. The policy’s deductible must be at least $1,000 for individuals or $2,000 for families.

Pros:
» Contributions are tax-deductible, even if you don’t itemize.
» Portable; Like an IRA, it travels with you, not your job.
» Rolls over each year, unlike a Flexible Spending Account.
» Earnings grows tax fee (also like an IRA).
» No taxes on withdrawals used to pay healthcare expenses.
» Possible to invest in mutual funds to boost long-term returns
» Some companies match contributions to HSAs, like others to 401ks.
» HSAs are inheritable.

Cons:
» You’ll have to pay for everything (at least partially) out-of-pocket, including things like routine visits and prescription meds that you may not have been used to paying for.
» High-deductible health insurance means you have to have money on hand to cover the whole amount if needed.
» Best suited for young and healthy people, if you usually max out your benefits a lower deductible is probably best for you.
» You are limited to certain HSA providers.
» The account and maintenance fees can be high, some don’t let you invest in stocks.
» Watch out for exclusions of pre-existing conditions in the policy.
» Since these have only been around since 2004, there isn’t quite as much competition as would be ideal for a consumer.

How much can I put in?
You can contribute up to the amount of the deductible to an HSA, but no more than $2,600 for individuals; $5,150 for families. And you can add an extra $500 if you were born before 1950 to help with health care costs in retirement.

The biggest health insurance comparison site is eHealthInsurance.com.

School’s keeping me pretty busy, but Open Enrollment ends October 31st, so I need to get going if I’m going to look for alternative health insurance. I’m no expert, but I’m learning – a big website on Health Savings Accounts (HSAs) is HSAInsider.com, and the best rate quote comparison site seemed to be eHealthInsurance.

Going on eHealthInsurance, I typed in my info (male, 27, non-smoker, full-time college student) and actually found a lot of good big-name options. For some reason I thought I’d only find smaller companies. Both Kaiser Permanente and Blue Cross/Blue Shield came with an HSA compatible option for just under $100/month.
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