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Ask it Early: Health Savings Account

September 25, 2009 6:03 AM

Ray Martin gives advice on Health Savings Accounts vs. Flexible Spending Accounts

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by sjc_1 September 26, 2009 2:15 PM EDT
We have had enough of band aids and partial solutions. 15 years ago HMOs were suppose to make things better. 15 years later, we find out that is not true, but we are 15 years down the road in time and they have 15 years of huge profits in their accounts.
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by NW citizen September 25, 2009 7:51 PM EDT
Finally (I promise), as I am 57 and my husband is 60, and Ray recommends an HSA policy only for those under 60, what does he suggest for those 60 to 65? We can barely afford the HSA policy premiums. How can we possibly afford a lower-deductible policy? (Assuming any insurer would accept us for a "step up" in benefits, no matter how healthy we are.)
My solution? Universal health care (Medicare for all). Stop this insane fragmenting of people into age groups and health groups and wealth groups and regional groups and risk groups. Put us all into one pool and spread the risk and cost.
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by NW citizen September 25, 2009 7:42 PM EDT
Ray Martin claims you can use your HSA funds to pay your high-deductible policy premiums. I believe this is not true! Please respond. Boy, if this were true, I'd run all my premium dollars through the HSA to get that small tax break. This is a serious misrepresentation that should be corrected.
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by NW citizen September 25, 2009 7:31 PM EDT
Ah, the HSA as panacea for the health care crisis.
Myth: HSA-qualifying high-deductible accounts charge such low premiums, you'll have money to spare to meet your deductible!
Reality: My premiums now total over 10% of my annual net income. They go up over 20% annually. It's really tough to pay your own way when all this money is siphoned off by the private insurance industry.
Myth: Your HSA balance will grow and grow, rolling over from year to year!
Reality: HSA money, needed for health care expenses, must be kept in a liquid investment (read: low, low interest). I struggle to keep enough money in the HSA to avoid monthly service fees that would negate that paltry interest. Basically, I contribute whatever I'll need for health care expenses as they come up; I pass the $ through the HSA and spend it, which amounts to a 15% discount from the tax deduction.
Myth: An HSA policy means you're covered in the event of catastrophic illness.
Reality: After paying out of pocket for dental care (surprise: teeth are part of the body!) and vision care (surprise: eyes are too!) and so much else not covered by the "health care" policy, I've barely made a dent in the deductible. On top of the annual premiums, I'd need to spend another 10%+ of my income to meet the deductible. 20%+ of my annual income before getting actual coverage (beyond a flu shot and a restricted preventive care visit). And come January, start all over again.
Don't get me wrong: I'm thankful for the HSA option that accompanies the only policy I can possibly afford. It helps, a little. But I'm not *covered*. I'm not secure. I live in fear of being wiped out financially in the event of a serious illness. I am UNDERINSURED. Let's not pretend the HSA is a solution.
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