Thursday, October 17, 2013

Four Reasons You Might Not Want an HSA

You've looked at the amount of money you can save in premium. You like the idea of paying yourself instead of the insurance company. You consider yourself, or are ready to become, a savvy healthcare consumer. So, why wouldn't you want a high deductible plan with an HSA? As attractive as the model is, it's not for everyone. Here are four groups of people that might want to take a pass for now. 
  1. People entitled to medicare. You can't contribute to an HSA if you're entitled to medicare according to IRS rules. See Can I Have a Health Savings Account as Well as Medicare?
  2. People with young adult, non-tax dependent children on their health plan. Unfortunately, when benefits were extended to children through age 25 in the ACA, no one coordinated with the IRS. The IRS rule is you can only use your HSA to pay for expenses for your tax dependents. Therefore, if your young adult child needs services, you'll have to pay for those separately. You can set up a separate HSA for your child, but the money you contribute would be deductible on your child's taxes, not yours. So, that's probably not too attractive to most of us. (I have my 23 year-old son on ASHA's plan.) 
  3. People who currently have a FSA who will not have a $0.00 balance on December 31, 2013 if your FSA has a grace period (which ASHA's does.) This prohibition by the IRS is inclusive of a plan your spouse might have at his/her place of employment. So, if you're interested in establishing an HSA in 2014, spend your FSA money now!
  4. People who use a lot of out-of-network services. Unfortunately, in and out-of-network deductibles will not cross accumulate in ASHA's coverage for 2014. Therefore you would have to pay the in-network deductible on the services you obtain in-network ($2,000 individual and $4,000 family.) Then, you'll have to pay the out-of-network deductible ($4,000 and $8,000) on the services you receive out of network. Raising your exposure to $6,000 if you have individual coverage and $12,000 if you have family coverage. We hope to be able to structure this differently in 2015, so stay tuned for more info. If you're reading this and you don't work for ASHA, be sure to inquire about how your plan works. 
If you don't fall into any of these groups, seize this opportunity to learn all you can about HSAs and make an informed decision about what's best for you and your family in 2014. 

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