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35 thoughts on “All About a Health Savings Account”

  1. Moneycone

    Very nice writeup Crystal! This and FSA are two things I haven’t given much thought. Your post is a good reminder!

  2. Ravi Gupta

    Great post! I’ve read about HSAs but have never looked into them until now. Luckily I’m still a student and can bum off my dads HSA, but once I get a job I’ll be looking for a high deductible plan to save on premiums. Once again great article, and thanks for the all the information.

    -Ravi Gupta

  3. Kevin @ Thousandaire.com

    I love my HSA. Sure I have a high deductible ($2,300), but I have close to $5,000 in my HSA, and it is growing every month. As a pretty healthy young person, this is the best thing in my mind. Plus, my employer contributes $500 a year to it, which is even more awesome!

  4. Sunil from The Extra Money Blog

    when i was employed i took maximum advantage of the HSA, and my employer contributed 1,500 each year. given that we are both very healthy by the grace of God, the card still has a lot of money in it and we still use it. in fact, i am getting my first filling done next week and plan on paying for it with the HSA

  5. MikeS

    My company just started offering HSA’s this year. I looked into it and ran some numbers. For me, it wasn’t going to be a good deal. Main reason was that I anticipated hefty medical expenses (pregnancy) this year.

    I think they are a fantastic idea if you can have a few years to build a balance up before needing to tap it.

    I upped my FSA contributions for the year to at least get some tax benefits.

  6. retirebyforty

    My plan offers FSA. It’s not as good because we can’t carry it over to next year so I only put in $300. If I can contribute to HSA, I would put quite a bit more to help with tax deduction.

  7. Romeo

    Crystal,

    Conveniently for me, I was just talking to my sister the other day about the HSA that her new job offers. Having never had an HSA myself, I wasn’t too sure about how the doctors were paid before (or after) their services. Thanks to this post, 1) I don’t have to do the research and post an article about it myself, and 2) I’m now armed with the information to educate my sister on how HSAs work. Before I do, however, am I correct in assuming that in general, as long as someone is contributing to an HSA, they would use this money to pay any deductibles? Thanks.

    Romeo

  8. jim

    My wife and I have an HSA. Its the most affordable plan offered by our employer altogether. We like it a lot.

    One more benefit of an HSA is that you can use the money for any qualified medical expense. That includes stuff like Dental care, contact lenses, and any medical expenses your health insurance might not cover. As long as the IRS calls it a qualified medical expense then you can use HSA money for it.

    You can also even use HSA funds to pay COBRA premiums.

  9. Ashley @ Money Talks

    I LOVE the concept of the HSA. When shoppers are spending their own money (via your HSA savings account) they will become more informed buyers which is, in my opinion, the best way to get health care costs down.

    However in practice they aren’t necessarily that great, as you discovered. The savings on the high deductible insurance plan aren’t enough to take the risk.

  10. kh

    I have an HSA which I opened this year (blogged about it here: https://frugalforties.wordpress.com/2011/03/08/health-savings-account-hsa-details/) and so far it’s working really well for me. I keep track of all my eligible expenses (which includes things like solution for my contact lenses, sunscreen, etc.) and at the end of the month I’ll write myself a check against the HSA for the amount I’ve spent.

  11. Justin @ MoneyIsTheRoot

    I personally think we dont see enough about HSAs these days. More employers should offer plans and matching contributions for them. I wrote an article about this myself recently. Too many people still opt for FSAs given the choice… HSA is basically a 401k for your healthcare!

  12. Linda

    I considered the HSA option during my open enrollment period last fall, but instead I stayed with the PPO and FSA combination I’ve been using for years.

    I thought that more than $3k could be added to an HSA for a single person. If it is capped at $3k then I made the right choice; I elected to contribute $5k to my FSA this year and I’ll burn through that easily this year due to co-pays, out-of-network charges, and periodontia. (My dental insurance has a lifetime limit of $2k for periodontia and I’m nearly there this year, even though I have two more procedures coming up.)

    Next year I’ll be paying for orthodontia on myself, too, so I’ll spend at least another $5k in out of pocket fees for healthcare. I don’t consider myself an un-healthy person, but fees for stuff like dentistry/periodontia/orthodontia and therapy/mental health care can really add up every year. I typically spend at least $2,500 a year on that stuff in addition to my insurance premiums.

  13. kh

    @Linda – you can only contribute $3k a year to the HSA, but the big benefit to an HSA (in my book, anyway) is that you don’t lose that money at the end of the year. Your balance rolls over. So while I can only contribute $3k this year, I can continue to build the account over the course of the next few years to meet any out of pocket maximum from my insurance. My health insurance has an out of pocket max of $5900, so that’s where I’m aiming to keep the balance.

    With an FSA, you don’t have the option of saving over the long term – you have to contribute everything you’re going to spend over the course of the year, and if you over estimate, then you lose it all.

  14. Purgex Purging

    Very nice post, even better with pics and all. Well worth the wait and I’ll be looking forward to your next piece.
    Purging compounds

  15. Teisha

    I am a bit new to the health insurance thing. So I am finding it difficult understanding why would I need a HSA if I already have health insurance. If that isn’t enough, why offer this as an option instead of improved health plans? Go figure…

  16. LeeR

    I’ve only briefly ever looked at HSAs. My question is, is there a definition of a “high deductible” health insurance plan? $3000, $5000, etc? It’s always nice to have a low deductible, but some of those plans are so expensive. Having a higher deductible plan & an HSA could be a better option for me. Thanks! Lee from Massage Therapy Tests

  17. Jane

    Very useful information but I am still confused about which medical expenses are HSA eligible for reimbursement? I thought over-the-counter meds were no longer eligible? Anybody know?

  18. Fred L. Lewis

    I am sure to get HSA when I get my job after I get my degree. But for the meantime, I will just use my dad’s insurance as I find it very convenient for me and family.

    Regards,
    Fred

  19. Jimbo

    My new health insurance policy is coming with a HSA. I’m excited about it (well, as excited as you can get about something related to health insurance, lol). Seems like a great way to save money, and I’m all about that! Thanks for the info on it!

  20. Paulina

    This is a good post with some helpful info. It seems that many people are wanting to go for the HSA plans. I just hope the benefits out weigh any draw backs.

  21. Vince

    Completely agree with Justin, quote “HSA is basically a 401k for your healthcare!” I really like the whole idea of HSA’s. As someone else pointed out, folks spending there own money on their HSA account will be more savvy buyers which should, in time, reduce health care costs. Biggest worry whatever you do is the endless spiralling cost of healthcare, I fear there is little incentive to bring it under control!

  22. Bob Harvey

    Has there been any discussion of making HSA’s available to all persons,or people on social security, and also with insurance, but without prescription coverage, which can get pretty expensive at that age?

  23. Raihan

    Cost of everything is increasing everyday. As usual the cost of medical services also increasing. It is good to have a Health Saving account for all of us because, who knows about future?

  24. Josheph Tylor

    As i already have a health insurance for me then what will be beneficial for me to stick with it or go for HSA ? I am lil bit confused.

    JoshT @ men made easy

  25. Robert

    I never really got into HSAs with my company’s health insurance. The plan didn’t have a rollover option so any money you didn’t use was forfeited at the end of the year. You had to prepay into it, so you never knew if you were going to use it all or not. The benefit of saving a few bucks on taxes never seemed to outweigh the risk of loss of the HSA principle.

  26. Krespin

    The beautiful thing about an Health Savings Account as compared to a Flexible Spending Account is that while Flex Spending Accounts require you to use up the money in the account every year all of the money that you contribute to an HSA rolls over from year to year.

  27. Angela

    Health Savings Account is better!

  28. Kaitlyn

    We had one once, but then when we overestimated and didn’t spend all of it we lost big bucks. Plus, it was complicated to use.

  29. Stig

    I love my HSA. Particularly the benefit of using the savings on dental and eye care, two services which normally screw you on other policies. I opted for the highest possible deductible, and enjoyed the lowest premiums for years.

  30. dolor de espalda

    Has there been any discussion of making HSA’s available to all persons,or people on social security, and also with insurance, but without prescription coverage, which can get pretty expensive at that age?

  31. Martin Ludgeweg

    Hi Crystal,

    When do you think is the right time to start our own health savings account?

    Martin Ludgeweg

  32. Jane Forrington

    I think HSA is a fantastic choice, it literally saves you thousands of dollar…everyone should opt for it!

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