HDHP / HSA experiment 2011 - Nothing to See Here
Feb. 15th, 2011
01:27 am - HDHP / HSA experiment 2011
This year, for various reasons, I opted for the HDHP (High Deductible Health Plan) health insurance, which is to say a plan which pays nothing until you've satisfied a hefty deductible but (1) I pay no employee contribution for, (2) makes me eligible to have and make contributions to an HSA (Health Savings Account) and (3) in addition to my being able to make pre-tax contributions to my HSA, gives me an additional monthly contribution from my employer. What this means is that I trade the expense of premiums and benefit of low costs (copays, etc.) for care ... for no (employee-funding of) premiums and an account which allows me up to a certain point to pay for medical expenses tax-free (Federal, anyhow). If you end up spending the rather large deductible, the plan then cuts in and pays even better than a regular PPO, but if you hit just the wrong spot (enough bills to hit around the deductible amount but not enough to start saving you money due to the better pay-out rate) it could work out worse, financially. An additional down-side is that there's more stuff to keep track of and manage for tax purposes.
My experiment in which I am both scientist and subject (uhoh) has got off to a somewhat rocky start.
I elected an additional employee contribution, and both employer and employee contributions show up on my twice-monthly pay slips, but until today (yes, 45 days into the year) not a single dollar of that actually arrived in my HSA bank account, so no funds were yet available from which to pay expenses. So, now, finally there's funds in there and I could start to pay bills.
Now I have additional stuff to figure out -- which is to say: What can I pay from my HSA? I know what kind of expenses, but what about when they are incurred? The IRS publication I read makes it sound like I can have a qualifying distribution from the account for expenses incurred since the date the HSA was established, which I read as meaning the funds didn't have to be in the HSA when I went to the doctor in order for me to be allowed to use them to pay the doctor's bill. There's a catch, however. Due to frustrating delays related to ... I'm not sure what ... I wasn't able to open my HSA until late January, and it sure reads to me like the date the account was established is what matters, not the date I was eligible to contribute to an HSA (i.e. January 1st, the first day of coverage under the HDHP). This would be unfortunate, since we did have some expenses in early January. :/ I'm not much looking forward to trying to get straight answers from either our finance people at my company (this is more specialized detail than I honestly think they can be expected to know), the benefits people my company uses, or the HSA bank.
So far this experiment has not been a terrible failure, but it's not been by any stretch of the imagination a resounding success.