Bailing on the Risk Pool: Health Savings Account

[Cacia]

I have had growing frustration lately with liability issues and insurance premiums, etc. Although it is all indirectly related, I will try and stay on topic.

I am dropping my health insurance and changing to a more individualized plan where I will have the autonomy to decide what is covered and where I go. HSA, or "Health Savings Accounts are a bit like IRA's. I will have catastrophic coverage (over 5,000 dollar deductable) and can go anywhere in the USA for any treatment at 100% coverage. All other expense will come from a tax free fund I pay into. I will pay all my own expenses out of this fund. Any moneys not spent get rolled over to the next year. Any health care cost qualifies...over the counter drugs, etc. You decide, it's your money! The hope is that this will provide incentive to shop costs and mitigate the "third party payer" problems associated with little cost containment. Also, cash prices for medical services are easily negotiated with private physicians because their cost of service is so much less without having to deal with all the red tape of insurance claims.

I am just learning about this, so I don't want to misspeak on the specifics just yet. I am curious if anyone else is considering this change. My x-husband of 15 years (MD) says that many physicians are changing over and that if you don't smoke, not obese, etc, it is very attractive. Being in (and paying in) pooled risk is not so financially attractive anymore---too many loopholes, things not covered, high cost, etc.)

It seems we know lawyers, accountants, etc jumping on this bandwagon. I am nervous about it, and still getting questions answered but it may be worth a look for those of you without chronic health problems getting fed up with herd mentalty in the insurance industry.

 

[do it easy]

I have an HSA plan through work. This is my second year in it, and I think that it's generally a good bet for people who are relatively healthy and have predictable costs. My company also has an HSA plan for families, so it's not just for single people.

I don't pay any premiums, my elective contributions to my account are tax-free(!), and my employer also contributes $500(ish) to my account each year. I do have to pay all my medical expenses until I hit my deductible- $1250, but I can pay for these out of my account.

If I switch back to a regular health plan, the money stays in my account until I reach a certain age, at which point I can withdraw it. There might be more conditions about withdrawing it, but I haven't gotten that far yet. I can also take it with me if I switch employers, but I can only use it if I'm in a "qualified high deductible" plan, according to the IRS.

This is my second year, and I would have come out ahead the first year, but I had a freak swimming pool accident. Depsite that, I still stayed in the plan, since my health costs are generally predictable. My plan also has an annual check up visit for $20. After a few years of contributions, I should have enough $$$ in my account to cover my yearly maximum out of pocket- at that point it will be a great deal if my employer continues to contribute to my account- since they will be effectively paying for my yearly health care costs.

 

[Cacia]

oh, great. I shoulda known you would know something about this..I am a little confused still. It seems a have a choice of a list of national underwriters. I am going to study up tonight, I have some web sites. I was struck by the fact that some very savy people are doing it...I am sort of following the leader.

so freak acident BESIDES the OOA?

 

[do it easy]

so freak acident BESIDES the OOA?

The OOA wasn't an accident- my "buddy" did that intentionally.

The pool thing was a wild ride. I was doing the swim test for the DM rating- the 400M timed swim. I did half a lap and streched my arm out to touch the pool wall and turn around. I must have lined it up just right since it dislocated on impact. It didn't hurt in the first few seconds, but I felt a jolt. I tried to swim it off, but as soon as I tried to move it, it just wasn't working right. Luckily I was in the shallow end and simply stood up. My right shoulder looked like it had dropped into my armpit. After a short ride in the ambulance, I found myself in the emergency room, experiencing the most intense pain ever. The doctor held my elbow and started to pull it away from me. I watched my arm and I could actually see the muscles and flesh move as they jumped back into place. The relief was so amazing that I actually smiled.

 

[Cacia]

yes, I know...

yea, I did the same thing swinging over a creek on a rope and hitting the tree. Looks funny, eh?

so, how did you choose the company for the health insurance list? or did your employer? And can they drop you if you have several years of catastophies?
And...what type of employer do you have as an actuarial? Did you read any good articles on HSA's?

 

[do it easy]

My employer offers a plan, so I didn't have any choice in HSAs. I don't think that they can drop me, although they can drop the plan for everyone, although I don't think that they will since it's much cheaper for them as well.

I did read some articles about healthcare capitation, but as far as HSAs go, I simply compared the HSA choice with the other plan choices I had. It sounds like you're going through a broker or insurance agent, so you have more choices about the actual carrier. I have no experience with that, although higher ratings (for example, A.M. Best) and bigger companies tend to be more stable. You'll probably also have a choice between deductible and co-pay options, depending on the carrier. To make that decision, you need to have a good idea about how much you expect to spend on healthcare for yourself (and your family?). If your deductible is too high, then you are essentially without coverage since you won't get any relief from the excess coverage. If your deductible is too low, then you will overpay for the excess coverage.

It gets a little more complicated with the tax advantages, though. Since the contributions to the HSA are pretax, you can save more $$$ with larger contributions, in which case, you might be fine with a higher deductible.

 

[Cacia]

lol.... regarding tax advantages. My x was trying to have one, keep his coverage with his job and plunk money in the tax free fund. (can't do it of course). My kids are covered by him so it's just me. Think of the earning potential on these unused funds over the years! For someone young, I would say this is the ticket from what I can see. Hey...did you by any chance ask about chamber coverage and transport? the x keeps swearing to me DAN is overkill for me because I am already covered under my current policy. My goal this year financially is to optimize all my insurance coverage in every category because these agents are like realators---not really "your" advocate, they only get paid by closing deals. So you cannot trust what they say. Many areas I have overlapped coverage and maybe gaping holes in other places. His practice has just gone "self insured" they are a group of 11 surgeons, so they can. More and more, people in the know seem to be bailing on traditional insurance coverage of all types. One huge problem, is that they have seeked to minimize their payouts by creating many complicated loopholes. They have loaded the deck so much in their favor. people pay and pay, think they are covered, and then there is some tiny little fine print that is a BFD to the person needing their coverage. This is what is happening with many Katrina homeowners.
My goal is to shake them off as much as possible this year. Of course you have to have plan B or an alternative.

The HSA option for me is not involving an employer. Just the feds, me, and the insurance company for the catastrophic part. under 5,ooo K is manageable because you just set those funds aside (they earn!) and rolling it over year to year is a big plus, versus kissing unused coverage goodbye.

Yeah, I agree, if more people knew about it and more employers offered it, I think that health care would change a lot, since it puts people back in the loop, rather than doctors dealing with insurance companies.

from a smart person... this point is important because Physician's offices (and hospitals!) have been offering cash prices for years. I know from x's practice....it is common practice and many people do not realize what a big part you pay to cover the cost of insurance collections, filing,...all those people that work for medical practices and hospitals collecting and claiming the insurance! cash is king....I want my power back.

does anyone out there know what the down side is? I am not seeing it. There must be one. What is the worst case scenario?



someone provided these:


This first one is a FAQ published by the US Treasury dept.
http://www.ustreas.gov/offices/publi...aq_using.shtml

Here is another FAQ. This one is published by a commercial website that provides insurance consumer info and a provider search - Note that this is a commercial website, but has some good information about choosing insurance.
http://www.healthinsurance.com/hi/we.../hsa/faqs.aspx


thanks, all.... very reassuring to get someone to look over my shoulder trying to make all these big girl decisions.

 

[stevenq99]

As long as you can roll over the money if unused and can swing the deductible if needed it should work as long as you remain healthy.

is the deductible $5000 per year or per incident? If it is per incident the downside as I see it is a chronic illness that never gets you to your deductible but requires multiple visits and maintenance drugs.