HSA's... I'm not sure what to think

HSA's - Health Savings Accounts. They're tax deductible savings accounts for use with medical expenses. It sounds like a great idea to me. After all, I rarely get sick and haven't been to the hospital since I was a toddler. Why should I have to pay a high insurance premium each month when I hardly ever have medical expenses?

The best option that exists that I know of is a high deductible insurance policy. That way, monthly premiums are low, but in the event of an emergency I'd have some protection against outrageous medical bills. Still, I'd be paying money to a company a monthly fee that I would never see again even if I never have a severe illness or hospital stay.

Recently, I've been looking into HSA's that allow you to contribute to a special savings account if you qualify. From what I understand if you have a high deductible insurance policy, aren't claimed as a dependent, and meet a few other requirements you're eligible to have an HSA. You can deposit the lesser of two amounts each year (either the amount of your deductible, or some standard amount... like a standard tax deduction, I believe) and can also deduct this amount from your taxes each year. The money in the account can only be used for medical expenses, and will be taxed upon withdrawal as far as I can tell.

The reason I'm looking around for this is because I've been without any kind of health insurance for over a year now because of money issues with blue cross last year. I let my coverage expire and in order to be covered again (after a 6 month lapse in coverage) they expected me to pay them the last 6 months premiums in addition to the upcoming month. I asked them why I'd be expected to pay them for a time when I was healthy and wasn't covered. I doubt that if I had a medical bill in those six months and HAD paid the 6 months previous premiums that they would've reimbursed me, so why should I be expected to do the opposite?

That was about 6 months ago, and since then I've been looking around (slowly:)) at my options. This HSA business seems to be the best option I've found so far. It makes more sense to me than paying a company a large amount of money each month, having my premiums rise every few months (yes, I'm talking about you blue cross!). I hope I don't find any problems with it, but I'll post again if I do in the interest of helping others who may come across this post.

Here's a good site I've been looking through for info. It's a government site, so it has to be trustworthy... I feel dumber having just thought that, but it's true enough to leave I suppose.

Posted by Jordan at February 28, 2005 07:49 PM | TrackBack