Is an HSA plan the right choice for me?
5 QUESTIONS CONSUMERS SHOULD ASK THEMSELVES
1. Do I want to save money for current and future health expenses?
HSA plans have two primary components – health insurance coverage and an actual tax-advantaged savings account. You can use the money in the savings account to pay for your current health expenses, but you also own the money in the account regardless of whether your health coverage changes or you move to another city. So, HSAs offer an opportunity to build tax-advantaged savings for current and future health expenses.
2. Which type of health plan gives me a better financial value?
Do you prefer to save money on your monthly premiums in exchange for paying some of the initial costs of your health-care services out of your own pocket (known as the “deductible”)? Or would you rather pay higher monthly premiums in exchange for your insurer covering a portion of your costs from day one? With HSA plans you can put the money you save on your premiums into your tax-advantaged savings account to build interest, whereas with a traditional plan, more money is spent on premiums regardless of how much health care you actually use.
3. Have I considered all the relevant costs for each plan?
To make sure you’re not comparing apples to oranges, you should consider all of the cost elements associated with each plan option. Traditional plans may include: higher monthly premiums, a smaller deductible, as well as copays and/or coinsurance. HSA plans may include: lower monthly premiums and a higher deductible. So depending on your health needs, a high-deductible plan may very well cost less overall than repeatedly paying a traditional plan’s copays and coinsurance.
4. Will I lose unused money in the HSA?
HSAs don’t have a “use it or lose it” provision. Just as some cell phone providers now let you roll over unused minutes, HSAs let you rollover your unused dollars from one year to the next, so you don’t have to worry about ever forfeiting your money.
5. Is it difficult to connect the HSA plan with the bank account?
Since you need to select a financial institution to administrate your savings account, and the health insurer offering the HSA plan also has a financial institution available, it can make the process of setting up and using an HSA much easier and more convenient. Some insurers have their own bank and offer a single enrollment process so you can sign up for both the health insurance plan and the bank account at the same time, eliminating the need to go through two separate enrollment processes. Also, one way to turn HSA funds into long-term health-care savings is to invest that money in mutual funds or other opportunities. So make sure that the bank you choose has investment options available.