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Old 12-15-2019, 07:27 PM   #1 (permalink)
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Are health savings accounts better?

Do you ever feel like you are stuck in a box with a cat, just waiting for someone to look inside and decide your fate? Somehow I am both simultaneous eligible and ineligible for VA coverage. They earned a bad reputation, but Banner bought the local urgent care clinics, so in a couple of days the choices will be Banner and the VA.

I always understood that I would have full coverage for five years after leaving Active Duty, but almost a year ago I received a letter saying that I had health coverage all year.

Really? I could have used that!

I waited for December First to sign up, but when I looked into it before, supposedly I could sign up for crazy low prices. December First I had two choices that cost nearly $200 each and they just went up from there. Okay, a bit under $200:

At the time I calculated: "Even if I needed to see a doctor five times every six months, I would still lose money compared to going to urgent care."

That is before Banner bought the urgent care in question. My first visit they asked if I wanted to pay $50 to join their club. That club discount paid for itself that first visit and I returned five times in twelve months.

Banner doesn't have a club. Full price for you!

One bronze plan is an HSA and the other is...

Ah dang it.

I have until midnight to enroll, but I need to call, leave my name and number, and wait for someone to call me.

I think the other one was an HMO. This page just says to talk to an independent insurance agent: Health Savings Account 101: Everything You Need to Know About HSAs

The first important thing that I read is that they are great if you are in good health. Um... I have had lots of trips to urgent care, but I only needed urgent care.

This seems to indicate that HSAs are only worthwhile if they offer a substantial savings over an HMO and you actually put the difference into savings [and leave it there]: HSA accounts: The good news and bad news

If I end up having VA coverage, I will lose my civilian coverage, but I won't want it. Well, time to call a robot!

I put off signing up when I saw when I would actually have coverage, but then I had strep, never really got better, and now I have a virus, allergies, or something.

Urgent Care just assures me that I do not have strep.

Am I safe to go to work tomorrow? I don't know!

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Old 12-15-2019, 08:05 PM   #2 (permalink)
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Old 12-16-2019, 12:05 AM   #3 (permalink)
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HSA is only half the equation; it's a savings account that can only be drawn against tax free for qualified medical expenses. You pair it with a high deductible health plan and pay out of pocket for the minor medical expenses, and are protected against major medical expenses with the high deductible plan, which is exactly the way insurance is meant to be utilized (to protect against unlikely events that would cause financial ruin).

My first choice is HSA by far, because I am not likely to have unusually high medical expenses. Between a PPO or HMO, I'd probably lean towards an HMO if they are nearby, and primarily because they tend to have a little lower premium. I've got no experience with HMOs except I've got something similar for dental coverage, and I chose that because it was something like $2 less per month and had an office nearby. Kaiser Permanente pays their people towards the top end of the salary and have top end equipment, so it seems they put a good deal of the premium into patient treatment.
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Old 12-16-2019, 12:36 AM   #4 (permalink)
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The HSA is actually an HMO, but you can invest more. I would rather cash in on my HSA than retirement. This option was 5% more, but just about every cost was cheaper. It had a lower deductible and maximum. The non-HSA HMO had flat fees for two things and 45% coinsurance for everything else. The HSA version had 10% coinsurance for everything. Maybe the 10% coinsurance could cost more than the flat rate in some circumstances, but the HSA version looked better.

I also signed up for dental insurance for the first time in a long time. I honestly do not know if I had it in Page, but I had a couple cleanings when I was visiting Phoenix. My old dentist charged the same whether or not you had insurance, so why pay extra?

However, I doubt that I can find anyone like that up here, so it probably makes sense to pay protection money so that I do not pay inflated rates. Of the first three plans on the list, only one covered major dental, so I chose that one. Make sure that your provider or facility is on the list!

I really hope that Blue Cross Blue Shield covers the only hospital in the area. The only other hospitals that Google shows are for animals.

Is that cheaper?

"Xist, you have a bad case of ringworm!"
"I knew it!"

I have not been to any dentists up here. I am sure there will be a reckoning. The dental insurance that I chose showed eight dentists in my town.
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Old 01-22-2020, 01:16 AM   #5 (permalink)
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I like high deductible plans with an HSA. Like redpoint I see insurance as something used to cover unexpected events that I can't pay out of pocket. Things like my $135,000 bill for a broken leg. I'll gladly take a cheaper premium and pay for my infrequent medical bills out of pocket. However, my wife and I are healthy. High deductible plans don't work for people with chronic conditions

My work offers us the choice of a high deductible plan with HSA or a regular PPO. They are both BCBS with the same network. The high deductible plan has no employee month premiums but a $2,500 deductible per person and a $2,500 max-out-of pocket for medical. The PPO is $268 a month with a $500 deductible and $1500 max-out-of-pocket per person. So if I have no medical bills I save $3216 a year with the high deductible and worst case I still save $1216. However, even showing co-workers the math most still go with the PPO because they don't want to pay medical bills out of pocket. That is even before you pair it with an HSA.

HSA's are the most tax advantage savings plan in the USA. You pay no taxes on the money going in or when you take it out. No Federal or state income tax, no Social Security, no Medicare. A family can put $7,000 a year in so that is $7,000 that we pay no taxes on. So we contribute the max every year and don't touch the money. It is invested in index funds and it growing nicely to be used as tax free retirement money. The money is only tax free if used for medical expenses but the law doesn't say you have to withdraw the money the same year the expense is billed. So I keep keep a running total and receipts of all my medical expenses so I know how much can be taken out tax free.

Unfortunately with medical insurance in the USA what is good for me might not work for you. Even buying on the ACA exchange the prices change for every state and even county in that state.

And YES I realize my company is more generous than most. Best company I have worked for by far. (I've worked for 9 to date)
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Old 01-22-2020, 02:49 AM   #6 (permalink)
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Quote:
Originally Posted by JSH View Post
It is invested in index funds and it growing nicely to be used as tax free retirement money.
Who services your HSA? I would like to invest mine in index funds too, but haven't looked into it yet. Mine is earning little interest at Advantis CU.
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Old 01-22-2020, 01:44 PM   #7 (permalink)
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Quote:
Originally Posted by redpoint5 View Post
Who services your HSA? I would like to invest mine in index funds too, but haven't looked into it yet. Mine is earning little interest at Advantis CU.

Per my app:
HealthEquity, Inc is an independent company supporting Blue Cross Blue Shield of Michigan by providing health car spending account administration. An independent FDIC insured bank holds the health savings account dollars.

I'm invested in Vanguard index funds -

30% return for 2019
-9% return for 2018
20% return for 2017
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Old 01-22-2020, 02:01 PM   #8 (permalink)
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My 401k contributions are in a Vangaurd index fund. I'd like to start contributing to 401k/Roth in the same, and move my HSA to an index fund as well. Seems like the best strategy is to max the HSA first, since that can be withdrawn tax free for medical expenses whereas a 401k cannot.
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Old 01-22-2020, 02:43 PM   #9 (permalink)
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Quote:
Originally Posted by redpoint5 View Post
My 401k contributions are in a Vangaurd index fund. I'd like to start contributing to 401k/Roth in the same, and move my HSA to an index fund as well. Seems like the best strategy is to max the HSA first, since that can be withdrawn tax free for medical expenses whereas a 401k cannot.
My investment strategy:
  1. 401K to employer match
  2. Max HSA
  3. Max 401K
  4. Max Roth IRA
  5. Rental homes
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Old 01-22-2020, 03:26 PM   #10 (permalink)
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That's roughly what my strategy has been, minus maxing #2-4. I keep thinking liquid money allows the freedom to invest in an opportunity when it presents itself, such as expanding rental properties, or creating a wedding venue, or some related thing.

I sometimes contemplate pursuing #5 as my regular job.

So 401k is more tax advantaged than IRA?

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