Smart Reasons to Save, Use and Invest Money

Reasons For Having A HSA

The main reason that I wanted to have a HSA was the fact that I hated to pay all of that money to the health insurance company every year! 

 

Hundreds of dollar each month was taken out of my paycheck and never seen or ever used.  It was very disheartening for me.   

Then in 2005, the company I work at announced that for year 2006, they were going to included a HSA plan in their medical options!  That when I started reading about it.  The first year it was offered, I didn’t bite, but it was very tempted and I really regretted that I didn’t join!  Then in 2007, I finally mustered up enough courage to take the plunge.  Nobody else around me was switching like I was, so I was second guessing myself alot, but the numbers made sense to me, so I switch to the HSA plan.   

My company had a yearly max of out of pocket expenses of almost $5,500 for family coverage, and $2,500 for individual max expenses.  Luckily, I had a Roth and other monies set aside that if the need truly arose, I could tap those funds to cover such emergencies.    

Reasons and logic as to why I went with a HSA:

  • I hate that I never, (NEVER), saw the money under the non-HSA plan.  It’s like renting…
  • We hardly used any money for health needs anyway.  Everybody is pretty healthy and young.
  • I thought the money would come in handy if for some reason I got laid off.  Taxes on it would suck though!!!
  • The tax benefits are phenomenal!  The contributions are tax deductible!  Up to the following top limits:  (for 2010) $3,050 for individual coverage, $6,150 for family coverage (and if you are 55 or older, you get an additional $1,000 amount tacked on to the above limits).
  • My company kicked in a free monthly contribution in addition to the one I was making!!!  Yeah Baby!

There were negatives too with the HSA plan such as:

  • You have to pay the money for all the visits to the doctor’s office, etc (although certain things were still covered with the company plan, like a physical and the kid’s checkups).  We got a credit card option with our HSA provider for HSA charges…
  • If we had a serious medical emergency the first year, then this would have costs us more than it would have benefited us.

As you can imagine, the positive aspect outweighed the negative aspects for my family.    

Here is the real kicker!  We have enough of a money basis in our HSA that we can now invest the money in a dividend stock of some sort and the dividend would pay for our yearly medical expenses (which currently come in less that $250.00)!  Not all plans let you do this though, but many will let you invest in mutual funds though.   

So far my small not-too-risky gamble has paid off with the HSA I am in.  Most of my work peers, don’t share my enthusiasm for the HSA plan, but for me, it’s a win-win!   

Readers, what do you have an HSA, and do you realize what a great money saving device it potentially is?

12 Responses to Reasons For Having A HSA

  1. @Ted
    Sad to hear that happened to you and your family!

    Even though we did have the money for the first year, it still had me sweating…

    I think the HSA would be best to jump into if you have a decent size emergency fund, or money from some other kind of liquid investments to cover the potential costs associated with the 1st year.

    Hope you are doing better now.

  2. I’m one of the lucky people whose work covers my health insurance (and my spouse’s) without any out of pocket expense to me. I think they offer something like an HSA plan, but it’s more of a flexible spending plan. For now, I’ll take what my employer is willing to pay! 🙂
    .-= Little House´s last blog ..Tuesday Tips =-.

    • Ah, that’s the best health insurance 🙂

      I cost me about $200, each month. I like the HSA because I don’t feel like I’m losing as much.

  3. That’s a highly thought provoking article. I never really thought much about our employer’s health benefits before – they were just ‘there’. Touch wood, none of us have any serious medical ailments and, especially with the tax deduction, I am thinking that a HSA might be the way to go for us in the future. Compared to what our medical benefits USED to be like (as in, we never ever saw a bill), these days we receive bills every time we visit the doc’s office. At least this way, it would seem that we would have complete control over the use of our income as it pertains to health care expenses as opposed to the non-transparent way we seem to be doing things now.
    .-= RMoM´s last blog ..Vehicle Replacement =-.

    • My company has a great plan, some of the expenses (kid’s checkup and annual exams) are provided by the company, so we don’t have to use our HSA money!

      It’s the first year that’s the roughest!

      If you go that route, good luck and be careful!!!

  4. I think the irony is a lot of people can’t keep up with rising traditional coverage rates so they opt for the HSA. If a health issue arises those are the same people who probably are not as disciplined to save up money in the HSA account.
    I think I would pick the HSA if I had the option, mainly because I’ve already had 3 healthy kids (no allergies, specialists…) and I plan on no more.

  5. @Stay at Home MOM CFO
    I can see your point there! I was afraid of one of my kids getting a broken arm or something the first year. I really didn’t want to pay the cap on the amount that they covered.

  6. I had an HSA. I maxed it out for a year and a half then left the company. I am lucky my wife has great insurance. I had planned to build it up for a retirement plan but today and a few crowns and other things later the money is all spent. That’s ok because the government ended up paying 40 percent of the dental bills.
    .-= Daddy Paul´s last blog ..The American Opportunity Tax Credit =-.

    • @Daddy Paul
      Sounds like a pretty good use of the HSA to me!
      Having a spouse with a great insurance plan would be great! 🙂

  7. I really want to open an HSA and I would have taken it the first year. I think its a great way to save money for health expenditures and I would that it functions like a Roth later on down the road.

    I tried to see if my university health insurance could be considered a high deductible insurance so I could open an HSA but they wouldn’t consider it to he high deductible so I couldn’t open an HSA. When I become eligible for one I am opening an HSA pronto.
    .-= SeeJaneGetRich´s last blog ..Liar, Liar, Pants on Fire =-.

  8. @Jane
    I think that doing so would be great! It’s definitely a program that would greatly benefit younger workers!

    Although, I’m not sure what changes will happen to HSAs if the new health care plans gets passed (which at this point looks likely)…