Question:
Does anyone out there use Health Savings Accounts (HSAs) to help defer the costs of employee health insurance benefits? From what I understand, you can raise your health insurance deductibles and fund an HSA to help cover the cost. Does anyone have this system in place who can let us know if it works? Our health insurance provider is trying to steer us down this path.
Answers:
We have an HRA (health reimbursement account). We place a set amount of money in each employee’s account, and the insurance company pulls from that and applies it to their deductible. Once that account is empty, the employees are then responsible for covering their deductible out of pocket.
This is our second year with an HRA. It was the most economical for us and our employees and has worked out pretty well. It works best for those employees who do not go to the doctor much, because we are paying the first part of the deductible. They end up not paying anything out of pocket.
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I have an HSA. My deductible is high, and payments are under $100. I am so glad that I set it up that way. I had a total hip replacement, and they paid 100 percent after the deductible. You also get the insurance rates on doctor visits and prescriptions. One of my medications used to cost me $27, and now I pay $7.40.
I like the fact that you can add funds to the HSA and once the deductible is built up, you can use a card like a credit card to pay medical expenses through your HSA account. With the HSA I have, you don’t need a doctor to refer you to another doctor. That’s your call – just make sure the doctor you pick accepts the HSA. Most do. Thumbs up on this type of insurance coverage.
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The only problem I have with this is to get my technicians to understand how the high deductible is a benefit to them. Until they pay the monthly rate on other insurance programs, plus the 20 percent co-pay, you have nearly paid the high deductible and will still owe the 20 percent of all medical bills. They hear the $5,000 deductible amount, and they freak. Go figure.
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I’ve had an HSA through a different employer, as an employee. The great thing for me is that even the mileage to the doctor, pharmacy or hospital, counts at 27 cents per mile. Everything comes tax-free with each payroll deduction.
My account had two bad parts though. First, paperwork. Every time I used it, a copy of the receipt, mileage log and submission form had to be mailed to the account manager (or faxed). Second, my account didn’t roll over, so if I didn’t use it all in a year, the extra money was lost. I urge you to find an HSA with debit cards. It saves a ton of paperwork for the user.
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I have an HSA to back my $10,000 deductible. My insurance cost was cut by 50 percent when I changed from a $5,000 to $10,000 deductible. I wish Uncle Sam would let me put more than $3,000 per year into an HSA.
