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HSAs Have Really Come a Long Way...

November 15th, 2007 at 09:09 pm

Well, today is the day I dread every year. Got our new insurance premiums for 2008.

Um yeah, surprise surprise, up 12%. You know part of me was really wishing for a dull year. Could we have ONE freaking year of like a 5% increase? 2%? Is that too much to ask? Instead it was same old, same old...

Holy Hell.

Our old plan went up to $1k/month (the one we dropped last year. YIKES!!!!!

Ours went from $673 to $744 and is set to go up some ungodly amount when we turn 35 in 4 years. This will top our mortgage in no time. & I always thought housing was all we had to worry about out here. (Of course interestingly I have been perusing the ORegon plans and they aren't any cheaper. So much for moving to cut costs...).

Yeah, we can swing it. We've had much worse years. But forward thinking, it scares the crap out of me.

So I started looking at all the HSA/HDHP plans and such.

They actually have good options for once. I am wary if I am missing something. I researched those in 2006 and it was like our annual max would be $10k, but we could only put $3k in the HSA even though we would save FAR more in premiums. It just left us way over exposed and unable to save the difference and get any real tax advantage. The odds were very high we would pay more with the HDHP/HSA than with the insane premiums. So we stuck with the insane premiums.

Last year was about the same, though they made it a lot easier to contribute more to a HSA. But the plan really sucked.

They totally changed it this year. If we switch to a $1500 HSHP that qualifies for HSA, then all of our expenses will be down. Slam dunk.

Premiums go down just over $3k/year.

Our out of pocket goes down too. We didn't have deductibles before, but our out of pocket was something like $10k for the fam. All routine stuff covered with small copays, but emergency and hospital stays were astronomical (thank you emergency fund).

They seem to be saying on the other hand, that if we take the deductible, which is $3k for the fam, we will never pay a dime for anything else. We also get prescription coverage back. The most we would ever have to pay is the $3k deductible which they just skimmed off the premium.

Well, okay, then I am sold.

The HSA is just PERFECT. We can put in $5800 in 2008. $3k saved premiums. Around $1k for dental. & $600 I had budgeted for copays anyway. So, um, yeah, we'll just max it out. Pay all our dental and vision & drugs out of there too.

We really won't save much in the way of taxes. We already pay so much in insurance premiums that we get a tax deduction of around $4k - $5k anyway. So it won't make a huge difference. But a little one, for sure. Any wage increase lowers the tax deductiblity of our regular medical expenses anyway. So with higher wages there is probably a slight tax benefit. (Before we took it as an itemized deduction - portion over 7.5% income - which yes was around $5k last year).

Which pretty much means it is all a wash for us except that we will get to put away $3k every year that *if* we don't use, can grow tax deferred. I mean if we have ONE year where we don't use our deductible, we should come out ahead. Right?

So I have been pretty down on HSAs. I thought they REALLY sucked. But if you have a little money in the bank, and you get a deal like this... It's good. Sure as hell beats forking $750/month to the insurance company. Eeks. With 4 of us I wouldn't be surprised if we hit that deductible every year (broken arm? Car accident? Sick kid? Lord knows...). But, yeah. This is the first time the odds have been for the HSA. {This particular insurance company is obviously phasing out it's co-pay plans. They offer less and they cost more every year}.

Oh yeah, these premiums do not go up at 35 either. For now anyway. Which gives us some breathing room.

I have to figure out how/where I want to invest. Decision, Decisions. Starting with cash though eventually I Would like to put some in a balanced fund at Vanguard (if we build up any). I am not sure what the rules are, if we can have 2 accounts or what. More to look up. & I am trying to decide if I should divert a little of the efund to prefund it a bit Jan. 1. I don't know. LEt the money grow tax free and replenish the efund quickly. ??? IT's an idea. In case we end up using our deductible Jan. 1 or something. ANything can happen.

Well, much more to research.

ETA: Well, um the investment selections REALLY suck. I am thinking of just starting with State Farm since I already have some accounts with them. Looks like the best option thus far. $25 annual fee & 2%-3% interest. Yikes! Will do for now I guess. Not so enthused any longer. But if we start to build up some balances over the years I'd switch to one that offers mutual funds. I don't see much better in the way of interest rates except crappier banks and higher fees. lose-lose. Hopefully more banks will start to jump on the HSA bandwagon.

Seems some of them have you submit reimbursement forms for every expense (that is horrid since we would have them OFTEN). But State Farm at least gives you checks. Many give you debit cards but I wouldn't use. Not my thing. I'd probably put it on my card for the rebate and see if I could pay the card then directly from the HSA. Or if I have to write a check and use a stamp. Pricey all around... Yeah, not so happy now. I just don't want it to be a huge PITA to pay my medical bills. So no matter how you slice it, this really complicates things... Much research to do...

2nd Edit: Oh yeah and I forgot the stupid HSAa are NOT tax deductible in Cali. It really leaves us with little tax benefit here. I mean my 2% earnings will be tax free (Federal), but the fees will take a chunk. I am getting more annoyed by the minute. *sigh* I guess that means my earnings will be taxable in Cali as well. Not that Cali has huge taxes, but the bookkeeping for the difference is atrocious..







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