Anyone have any experience with Health Savings Acct.'s (HSA)?
 

Our company's health insurance policy is coming up for renewal and we're looking at a 20% increase if we stick with the same plan and coverage. For us, the dollar amount is equivalent to hiring another employee. Thankfully, we had a couple employees move onto Medicare or the increase would have been even greater.

The HSA plans offer some sizeable savings ($30K-40K/year less than what our new renewal would be) and sound like a viable option in theory but I'd like to know how well they work in reality. I do have some concerns about some of my employees understanding the concept of their own separate checking account/debit card and what's covered and what's not. I'd imagine if we went that route, there would be a "How-To" manual and a presentation by our benefits specialist that would cover all of that.

Who the heck knows what's going to happen in the next couple years with Affordable Care Act/Obamacare? It's very likely we'll have to change again next year regardless.

This will be the third time in three years that we will either change health insurance carriers or face a 20-30% increase. We might just have to leave it up to the employees via a vote. Give them the option to take on some more risk but lower their contribution or keep the same plan (with very little risk) but take on a larger percentage of the premium. We currently pay 75% but would have to shift that burden to 65/35 (which would be another $1900/yr. personally which isn't a pleasant prospect) if we wanted to keep our contribution the same, which isn't necessarily our goal but we are trying to control costs where we can.

I've got an HSA and it works well for my needs. I have very low medical costs and have used almost none of it...basically I have the HSA to cover my high deductible and then a bit more. It depends on the demographic of your employees...for young relatively healthy (i.e. low bills) it is worth having a low cost, high deductible HSA which keeps the cost low all around. Its also really nice being able to go to a walk-in, visit, or get an Rx and just pay with the debit card with no worries. Unlike a FSA, the HSA funds carry over year to year. Also, HSA deductions and contributions are tax-free which is nice.

Key issues with HSAs:
- typically higher deductible
- not great for people who use their HI a whole lot (deductible + lower coverage)
- learning curve...and sometimes ambiguous as to what is covered and what is not
- steep tax (10-20%? I can't remember off the top of my head) for "unauthorized" use of those funds for non-related expenses
- depending on administrator, might be difficult to coordinate between the account holder (bank) and HI company. I don't have this problem but have heard it before.

Swamp I'm sending a PM

Thank you!

A HSA is not a replacement for health insurance. At least in my experience, its a fund to call on for paying out-of-pocket medical expenses--like deductibles, eye glasses and other medical expenses.
The way our company set it up ( Maryland) the employee determines how much he wants in the account, and 1/26 of that amount is deducted for every pay ( bi weekly). The deduction is pre tax, so you get a benefit. The entire amount is available from day one. The only downside is that any money left unspent at the end of the year is lost.

You're thinking of FSA. HSA rolls over every year, and it is typically rolled up into a health insurance plan. They're both tax free, but with an fsa you have to sort of guess how much youre going to spend that year in eligible expenses and you lose whatever you have left at the end. Typically you can say how much youd like to contribute to your hsa but I can see how an employer might be able to set that up through negotiation.

As an employer, the fact that the employee "owns" that account is definitely something to keep in mind and negotiating that contribution will be important. If they leave, the HSA money goes with them. We're pretty lucky in that our average length of employment is nearly 12 years. I do like the fact that the unused funds carry over to the next year.

I hate it. Hate dealing with the company that's been hired to administer it. They reject every "claim" I make on my money, I send more documentation, then they pay. Hate it. PITA.

Insurance is getting to be a PITA, I think mine is going up another 15% this year I just got there BS letter warning about it in the next 60 days or whatever.


Pretty soon its going to get so expensive its not going to be worth having it. Just go to the hospital with no ID when your sick and let them take care of you like a lot of people do. Who are you? I don't know but my legs broke and needs fixing, they can't turn away people who need care.

Coincidence? Where's my tinfoil? :P

Thanks for your input! That's certainly annoying. They're probably banking on folks giving up after the first rejection of a claim.

And believe me, we really do want to take care of our employees. The things you've run into are high on my worry list. But, damn, it's getting harder and harder.

:D

Well, I suppose the time has come to make the leap to the HSA plan. Another 15% premium increase (current plan as well as shopping around) or more come renewal time. We'll save $75K/yr if we switch so, thanks to the easy math, we'll likely do a one-time $3000 funding of everyone's HSA and let them determine how much more they want to contribute weekly.

On the surface it doesn't seem too bad. 10% In-Network copay, $5K Individual/$10K Family max out-of-pocket which includes deductible and copay plus some out Out of Network coverage $10K max Individual/$20K max Family, we currently have none. Sloan Kettering or Boston Children's would certainly surpass that for treatment if someone is unfortunate enough to need their services. Plus there is some experimental drug coverage which hopefully no one would need. Prescription drug coverage remains the same as our current plan.

We'll give them the option to "buy up" to their current plan if they want to pay for the difference, which is a couple grand a month in some cases.

One potential disadvantage for employers is that any money put into an employee's HSA fund is theirs to keep and take with them should they leave. That's likely not a problem for us since we have little to no turnover and average 14 years of employment (skewed downward by two new hires, one new position).

I guess we'll remain in a holding pattern after switching until we really see what the ACA brings us, which side of fear mongering is correct. We might get to the point where we offer our employees a raise in the amount of our monthly premium for them, get out of the health insurance provider business and let them take care of it on their own.

Swamp,

Have you factored in the IRS S/B employer HI premium tax credit? Or are you too big for it?

The PPACA was all about broader coverage. The talk of the bill "bending the cost curve" went out the window four years ago.:o