Health Insurance (HSA, Health Spending Account)?????

My Company wants all employees to switch over to a HSA (health spending account). does anyone know if these are better than a PPO, and how does this work? Any other information on them would be great also.
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I would like to thank all of you for your answers. they have been very helpful.

An HSA spending account is usually attached to a qualified high deductible plan. Ideally your employer deposits a sum of money into your account for your use on medical bills. (the bank gives you a debit card to use for medical expenses) If you don't have any medical expenses then the money just accumulates. It is not a use it or lose it account.
If you are healthy you will LOVE this plan. As after a year you should have enough money in your account to cover any expenses that might come up. However if you have an unhealthy year, you will hate the plan as you will have to pay a lot of expenses out of your own pocket.
My own opinion is that if a person can get through 2 years on an HSA being healthy, they shouldn't ever have to pay from their own pocket again as the money in the account will cover those expenses, provided their employer is depositing money into their account.
The idea behind an HSA is that the consumer would price procedures before having them done. Hardly anyone ever asks what the price of a procedure is before having it done, because that isn't how we learned to do things. If you are buying a vehicle you check around to get the best price/value. an HSA account is supposed to put you more in control of your medical care.

The company should have given you a paper as to what the difference is and why one is better than the other.

You can find info here:
http://www.treas.gov/offices/public-affairs/hsa/faq.shtml

An HSA can have a PPO or other option--when you browse the above link you'll see what it means. Of course, depends on who your employer contracts with as well.

Greetings queen560w,

I have a HSA with a high deductible. I also read Brian A’s answer and I have to respectfully disagree with him strongly.

One point of disagreement is the statement that you only fund up to the deductible level. This is not completely true. For the 2007 year and beyond, you are not stuck at the deductible level; you can fill the account to the yearly limit of $2,900 or $5,800 for a family amount. Last year I maxed out the family amount preparing for future issues and retirement.

Brian also said that it would not be worth having an HSA if you have “a couple snotty nosed kids.” Well, today (Feb 20, 2008) I had three “snotty nosed kids” and a wife who is way under the weather. I’ve taken several sick days this week and I’ve gone to the walk in clinic locally here in the Seattle area several times in the last two weeks.

Let me say to you unequivocally, I absolutely love our HSA! This is based on use and not just the idea behind HSA’s.

My personal story is long but I’ve give you the bullet points of why I love my HSA:

1) Buying my HSA insurance plan and funding the $5,800 this year, costs me less money than the traditional insurance that I had in 2004, 2005, and 2006. My employer gives me the money that he used to spend on the insurance and with my previous contribution, these two things add put to more money that the HSA insurance and $5,800 contribution. Plus the $5,800 at the end of the year is Tax Free! (If your employer doesn’t do this – is it possible that they have gone cheap on you??)

2) My HSA allows me to get stuff done that I couldn’t do before. I can now pay for glasses and dental work! I didn’t have that before.

3) There is really no out of pocket expense for me now. Two years ago when my daughter went to the hospital for an overnight observation, it cost me over $900. That was money that I didn’t have – I didn’t have enough money saved and it was very difficult to pay for. Now, I have a bunch of money already saved to just such a case as this! I don’t have to kill myself to come up with the money – I’m already saving it.

4) The HD insurance plan provides discounts for many things – drugs, clinic visits and pays outright for yearly checkups (that’s zero out of pocket)! For all of 2007, I spent just over $800 for all of our treatments, the remaining $4,700 rolled into this year and I’m adding to it – to the tune of $5,800. For Brian’s example – that is a whole lot of doctor visits! :-)

Pointer for you: Check to see what amount of money the company will contribute. Make sure you don’t get a “Flex Spending” plan or something link that. Also, look at a HSA as a retirement plan also. Think of the type of money you can put in there over the next 35 years! You can invest it, earn interest, spend all of it tax free on health related things or withdraw it at 65 as normal income.

Hope that helps…

Jeff,
Seattle, WA

HSAs usually are used with a high deductible insurance plan, which may be a PPO. Typically you are allowed to deposit pre-tax money into the HSA up to the amount of the deductible per year. They are good if you are a healthy adult without kids and only have to go to the doctor a coupe times a year, because those trips are typically not very expensive and the insurance is cheaper. If you have a couple snotty nosed kids, it will suck because you will be paying for all those trips to the doctor (out of your HSA) until you hit your deductible, which is usually at least $1000.

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