Individual health insurance?

[El Chupacabra]

I agree that HSA are just another way to give tax breaks to rich people and don't do si
hit for most people. Imagine that, one of the big parts of the GOP health plan favors the rich. I'm shocked, shocked I tell you.

Eh, I'm far from rich, and I make good use of an HSA. My employer offers a PPO or an HDHP that's much cheaper, so I went the HDHP route and put the premium savings (and some extra) into the HSA every month.

I realize that you have to have some money to use one, but it's a huge stretch to say you need to be rich.

You don't have to be a 1 %er to benefit from a HSA, but it (and the accompanying required HDHP) are not things that working class or poor people will use. If you're barely making it paycheck-to-paycheck, you don't have an additional $6750 per year to allocate to a HSA.

It's like the mortgage interest deduction. Only those with large amounts of mortgage interest to deduct can actually benefit (much) from it. You have to have enough interest payments to deduct to exceed the standard deduction and make it worthwhile to itemize (well, that, along with the presumably high property tax that goes along with the expensive house + large mortgage).

All that said, if you have access to a HSA, it is a fantastic tax break and should be maxed out. Contributions are completely tax free (no payroll or income tax), can invest within it, earnings are tax-free if used for qualified reimbursement. After age 65, use it like an IRA (subject to income tax) or use it for medical expenses. If you can afford it, max out your HSA, and do not withdraw from it for medical reimbursements -- pay those costs separately. Let those HSA contributions sit and let your contributions grow. If you ever need it for a medical emergency, you've got that $ to withdraw then.

Don't confuse it with a "use it or lose it" FSA.

[El Chupacabra]

Old Goat beat me to it....

[stuckathuntermtn]

Couple of reasons for that. Chances are that while the new plan has a higher deductible your current plan covers a lot more stuff--that's regulation, whether you think it's good or bad is another issue. Part of it is that there is now a woman of child-bearing age on the plan. A big part is that Congress hasn't made the necessary adjustments to the subsidies the insurance companies get to keep rates low. A big part of it is that Obamacare introduced community rating--everyone pays the same whether healthy or sick, and no one is excluded for pre-existing conditons, so you're paying a big part of the premiums for those sick people. It's the same as the FICA tax you pay for SS and Medicare. You're supporting the elderly for health care and a modest pension even though you're too young to retire and healthy. The problem is that the penalties for not being insured aren't high enough to induce enough healthy people to buy insurance to pay for the sick people, so the healthy people who do buy pay a lot more.

Part of the problem with Obamacare is that a lot of people saw it as a takeaway--we're taking away your choice of what kind of insurance to buy or no insurance at all. People don't like takeaways. Now that Congress is threatening to take away health care from a lot of people, people like that even less.

Obamacare is a structurally flawed plan that could be tinkered with if Congress were willing, but it will always be plagued with problems. The big thing it does is that it has gotten people to start seeing health care as a right and that will some day open the door for single payer.

Sums it up pretty well.

[Danno]

I didn't say rich. I said people with money.

You didn't say rich, but hutash did.

You don't have to be a 1 %er to benefit from a HSA, but it (and the accompanying required HDHP) are not things that working class or poor people will use. If you're barely making it paycheck-to-paycheck, you don't have an additional $6750 per year to allocate to a HSA.

It's like the mortgage interest deduction. Only those with large amounts of mortgage interest to deduct can actually benefit (much) from it. You have to have enough interest payments to deduct to exceed the standard deduction and make it worthwhile to itemize (well, that, along with the presumably high property tax that goes along with the expensive house + large mortgage).

All that said, if you have access to a HSA, it is a fantastic tax break and should be maxed out. Contributions are completely tax free (no payroll or income tax), can invest within it, earnings are tax-free if used for qualified reimbursement. After age 65, use it like an IRA (subject to income tax) or use it for medical expenses. If you can afford it, max out your HSA, and do not withdraw from it for medical reimbursements -- pay those costs separately. Let those HSA contributions sit and let your contributions grow. If you ever need it for a medical emergency, you've got that $ to withdraw then.

As noted, my employer had a PPO option that I used to use, and the HDHP is a lot cheaper, so it was a no-brainer to take the money I save from not paying for the PPO and put it in to the HSA. Granted, it takes some financial wherewithal/knowledge, but it's not complicated.

One thing: money in an HSA is not inherently free from payroll taxes, that is only the case if your employer offers the ability to deposit directly into your HSA. Mine doesn't, so I pay the payroll taxes and don't get the income tax break until I do my tax returns. And I am not sure I agree that you should pay for medical expenses out of pocket and not with the HSA; that is its whole benefit to me, that our health care expenses are essentially tax free.

[El Chupacabra]

One thing: money in an HSA is not inherently free from payroll taxes, that is only the case if your employer offers the ability to deposit directly into your HSA. Mine doesn't, so I pay the payroll taxes and don't get the income tax break until I do my tax returns.

Good point. I overlooked that. Some employers even contribute to their employee's HSA -- mine doesn't, but I can do direct-from-paycheck deductions.

And I am not sure I agree that you should pay for medical expenses out of pocket and not with the HSA; that is its whole benefit to me, that our health care expenses are essentially tax free.

If you can afford to do it that way (pay med expenses out of pocket, let the HSA grow), it's using the HSA loophole as a sort of IRA. It's another $6750 (per couple) you can sock away, on top of whatever other 401k/ IRA/ etc plans you have. It's not like you lose the money -- if you ever want to cash it out, you can get reimbursed for your medical expenses at any point in the future, so save your receipts.

[Danno]

Good point. I overlooked that. Some employers even contribute to their employee's HSA -- mine doesn't, but I can do direct-from-paycheck deductions.



If you can afford to do it that way (pay med expenses out of pocket, let the HSA grow), it's using the HSA loophole as a sort of IRA. It's another $6750 (per couple) you can sock away, on top of whatever other 401k/ IRA/ etc plans you have. It's not like you lose the money -- if you ever want to cash it out, you can get reimbursed for your medical expenses at any point in the future, so save your receipts.

My employer contributes $60/mo to the HSA, yet still doesn't allow pre-tax deductions. Annoying.

And fair point re using it as a savings vehicle, it's just that I prefer to use it as a vehicle for tax free medical care.

One HSA oddity: if you have a family HDHP, you can use the HSA money for anyone in your family, even if they are not on your HDHP. My wife has her own employer insurance (they pay for it, so it makes sense for her to use it), and my daughter and I are on my HDHP. But all 3 of us can use the HSA money.

[hutash]

I about lost my cool when I saw this commercial not too long ago showing these people dancing cause they're stoked about their super awesome health care plans. I wish I could get those sorts of rates! Instead, I'm literally days away from losing my coverage because I can't afford my crappy plan any more.

Move to a state that doesn't have a bunch of politicians intentionally ally trying to fuck you. While not perfect ACA is working in many states, ones that made the effort to make it work.

[phongkhamdkhoancau]

I was in a similar situation a couple of years ago when I left my job and had to figure out health insurance on my own. COBRA was too expensive for me, so I looked into short-term insurance and travel insurance since I was planning to move around. Short-term plans were affordable but had a lot of gaps in coverage, which made me nervous. Travel insurance could help for emergencies, but it wouldn’t cover things like regular doctor visits or ongoing prescriptions.

In the UK, private health insurance can be a great backup for those worried about waiting times with the NHS. I came across this https://premierpmi.co.uk/wpa-health-insurance-review/ review which explained how some plans offer good flexibility and tailored coverage, which might be useful if you're self-employed or between jobs.