On January 1, 2015, I was worried.
This was the year I decided to try out a health savings account (HSA) instead of traditional health insurance.
After years of moaning about increasing premiums and high copays, I decided to switch to one of these high-deductible plans. I’m fortunate that my company offers a range of insurance options, so I can pick what works best for me.
The hope was that I’d stop wasting money and only pay for the care I received, while also feeling confident I’d be covered in case of a serious health issue.
Here’s what happened during my first year on an HSA — and how I’m deciding which plan I’ll choose for 2016.
How Does Your HSA Work?
“Health savings accounts (HSAs) are like personal savings accounts, but the money in them is used to pay for health care expenses,” according to Mayo Clinic.
“You — not your employer or insurance company — own and control the money in your health savings account.”
My employer contributes a set amount ($76) to my HSA each paycheck to cover my husband and me. This is instead of my employer covering a portion of a traditional insurance premium.
I don’t put any money into my HSA, although I have that option. If we expect we’ll need more, I can have a set amount deducted from my paycheck or I can put in a lump sum.
Money going into an HSA is not taxed and goes into a saving account, which we access with a debit card.
When we go to the doctor, we pay for everything with the debit card. Our insurance doesn’t kick in until we meet our $5,200 deductible.
But each HSA works differently, so check the specifics of your plan when making a decision.
Why Did You Choose an HSA?
There was a good chance an HSA would save me money.
My husband and I are relatively healthy and go to the doctor only a few times a year. It didn’t make a lot of sense to pay high premiums just in case of a major medical expense.
Last year, we went with a more traditional insurance plan. We had decent coverage and paid $220 each month to participate. We still had pretty hefty copays ($20-$40 each visit). Under that plan, we spent $2,640 just on premiums (not including copays).
We were willing to bet that we could save money under an HSA, so we decided to risk paying the $5,200 deductible if a serious health issue arose.
Would paying that be fun? No.
But considering our overall good health, it’s also unlikely we’ll have to.
I feel privileged to be able to choose my coverage and to have any health insurance. So, I wanted to be sure I was making smart choices about my money and health.
How Much Did You Pay?
The money in my HSA has lasted me almost the entire year.
As of mid November, I still had $597 left over.
I was lucky that my medical expenses were evenly spaced throughout the year and I didn’t have any significant bills in the first few months, so I was able to build up a cushion before I tapped into my account.
What Did You Spend Your Money On?
We didn’t go to the doctor much this year.
Fortunately, that was because we didn’t get sick — not because we didn’t want to use HSA money.
I went to my primary care physician once ($100). My husband got an eye exam and new glasses ($310). I also went to a specialist, who ordered a round of bloodwork ($762).
We also had physicals, but preventive care is 100% covered under our plan, so the HSA balance wasn’t affected.
What Happens to the Money You Didn’t Spend?
Luckily, I get to keep any money we don’t spend during the year.
My 2015 surplus rolls over to 2016 — the upside of an HSA.
However, I can’t just withdraw the cash and head to the mall.
If you withdraw HSA funds rather than spending them on approved purchases, you have to pay the taxes you didn’t pay when you put the money into the account.
A better bet is to let the money roll over and save it for future health care expenses. You can also choose how to invest your HSA funds to make the most of your money.
What If You’d Had a Serious Health Issue in 2015?
My insurance would have paid nothing until I reached my $5,200 deductible.
After that, insurance would cover 100% of my costs so long as I used in-network physicians.
Will You Do an HSA Again Next Year?
For 2015, the HSA was a good deal. Choosing on HSA saved us money upfront by reducing the amount deducted from my paycheck each month.
Instead of paying $2,640 in premiums like we did in 2014 under a traditional insurance plan, we paid nothing. Instead, we will likely finish the year with $597 in our HSA (providing we don’t have any major expenses before the end of the year).
Plus, whatever we don’t use rolls over. For reasons other than my HSA balance, I hope our health care consumption in 2016 is similar to this year.
I’ll reconsider our options if either of us develops a chronic condition, requires long-term medication, or if we predict a big health event on the horizon.
But for now, an HSA works well for us.
Your Turn: Have you been covered by an HSA? How did it go? Would you do it again?
Lyndsee Simpson is a writer and editor living in Washington, D.C. She should have switched to an HSA years ago.