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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: FenderStrat on February 20, 2015, 11:30:21 AM

Title: HSA with higher premiums?
Post by: FenderStrat on February 20, 2015, 11:30:21 AM
My company's health insurance is offering a new option that includes a health savings account. I'm very interested in getting into an HSA, but I can't decide if this is a good deal. My understanding is that HSAs are available with cheaper health insurance plans that have higher deductibles. However, this plan is the more expensive option... not by much, $20 more per month ($204.61 bi-weekly vs. $194.58 bi-weekly). Both plans have the same $2000 deductible for an individual. The more expensive HSA option has a lower out of pocket limit ($5500 vs. $6350), and lower copays ($10 less). I don't get sick much, so the lower copays don't quite justify the extra $20/month. So should I pay $20/month just to have an HSA?

Bonus question: Would you include an HSA in overall asset allocation?
Title: Re: HSA with higher premiums?
Post by: seattlecyclone on February 20, 2015, 11:46:13 AM
Does the company kick in any money to the HSA? Many employers will put a bit of money in there to seed the account and provide further incentive to go on the HSA plan.

Even if not, the payroll tax you'll save by making a full contribution to the HSA adds up to about $250 (for yourself) or $500 (for a family plan), provided you don't earn more than the social security tax cap. That will make up for the $20/month premium difference, without even considering the income tax savings.
Title: Re: HSA with higher premiums?
Post by: FenderStrat on February 20, 2015, 12:02:25 PM
The company does not kick into the HSA. But I like the sound of the payroll tax savings. I would be using mandatory withdrawals from my Inherited IRA to max out the HSA, so the income tax savings would cancel out the IRA withdrawal taxes.
Title: Re: HSA with higher premiums?
Post by: terran on February 20, 2015, 12:34:49 PM
I'm a little confused, are you saying the HSA eligible plan actually has a lower deductible? I'm pretty sure having a high deductible plan is the primary qualification, so you may be able to open an HSA on your own already. You might find http://www.irs.gov/publications/p969/ar02.html#en_US_2013_publink1000204020 helpful.
Title: Re: HSA with higher premiums?
Post by: FenderStrat on February 20, 2015, 12:41:30 PM
I'm a little confused, are you saying the HSA eligible plan actually has a lower deductible? I'm pretty sure having a high deductible plan is the primary qualification, so you may be able to open an HSA on your own already. You might find http://www.irs.gov/publications/p969/ar02.html#en_US_2013_publink1000204020 helpful.

The deductibles are the same! I know. It doesn't really make sense.