New to HDHP and HSA, please give some advice

[retiredncolorado]

My wife and I decided to change our health insurance from a traditional plan to an HDHP with an HSA. In my situation the tax advantages and reduction in premiums will more than offset the risk. I can get an HSA from my local credit union, but the interest rate is very low. I can get an account from the HDHP but there are fees and low interest rates. We will be making the maximum contributions, but our account will start off with a zero dollar balance. I would appreciate knowing how other people have approached starting their HSA.

 

[travelover]

I have a HSA through Patelco which has a $2 a month fee. I just run enough money in and out of it to offset my medical expenses for the year. If I was going to contribute more, I'd look for HSA offering with better investment options.

 

[kaneohe]

Not really great but not too bad for these days.......
Alliant Credit Union........no fees, fair interest rate
Health Savings (HSA) | Deposits & Investments | Alliant Credit Union

 

[DblDoc]

I use HSA Administrators (Welcome to Health Savings Administrators - HSA Administrators) and the Vanguard Total Bond Fund (Health Savings Accounts Vanguard no-load mutual funds - HSA Administrators) they have.

DD

 

[Gotadimple]

Search HSA's here on ER.org and you'll find a full discussion about these products and the different choices for setting up the account. When you buy a high deductible health plan you aren't obligated to use the bank that the health insurer recommends.

In addition to the others here, you might want to consider HSA Bank --very easy to set up . Low fees, somewhat decent interest rates.

Navigate to a Health Savings Account - Accountholders - HSA Bank

 

[ziggy29]

Search HSA's here on ER.org and you'll find a full discussion about these products and the different choices for setting up the account. When you buy a high deductible health plan you aren't obligated to use the bank that the health insurer recommends.

Especially true when you are not using an employer-sponsored HDHP/HSA. If you are, you may have reasons to use that one.

I am in an employer-sponsored HDHP/HSA, so if I want to be able to get the full tax benefits of HSA contributions (no SS/Medicare taxes in a qualified Section 125 cafeteria plan), I have to contribute to my HSA with payroll deductions and that means using the default employer HSA (Chase). At least my employer pays the monthly fees (unless you want to invest in mutual funds and not just cash, in which case it's an extra $2.50 a month). Plus the employer match into our HSA ($1000 for us this year) goes straight to the Chase account. It's a decent plan as long as Megacorp is paying the fee.

My HDHP has a family maximum out of pocket of $4K per year, so I've decided to keep three years of potential maximums ($12K total) in cash and put the rest into a roughly 50/50 stock fund/bond fund mix (they use some JP Morgan funds which are decent but not great, especially since the usual sales load is waived in this account). That should prevent me from needing to "sell low" for a while if we have to suddenly tap the HSA for expenses. The cash account is currently yielding an eye-popping 0.14%.

 

[retiredncolorado]

Everyone, Thanks for the information. I retired last year stayed with what I knew, which is a traditional plan. This upcoming year we feel better about changing our health insurance to a HDHP, but the plan has a maximum out of pocket of $11,000 for my wife and me. So, I want to invest the difference of the premium cost into an HSA for as long as we can before it makes sense to move to a move to a higher premium/less risk plan. We are both 51 and healthy, and if this year is any indication of our future health care consumption we will do well with this plan. I plan on saving about $5,000 each year in the HSA. So, I will start out small but should have a decent balance in a couple of years. I will do some research on the links you have provided.
Thanks a lot.

This first year has been a real learning experience on how to live without the employer benefits for health care and other tax related benefits (401K). Like everyone else, I am trying to find ways to reduce my tax burden.

 

[fisherman]

This upcoming year we feel better about changing our health insurance to a HDHP, but the plan has a maximum out of pocket of $11,000 for my wife and me. So, I want to invest the difference of the premium cost into an HSA for as long as we can before it makes sense to move to a move to a higher premium/less risk plan.

Be careful with planning to move to a higher premium/less risk plan as you will have to go through underwriting again under current law unless this is an employer group plan with open enrollment periods. This might change in 2014 if the new healthcare law holds.

The previous statement is not a political statement but just factual information so no rants about the HC law are necessary.

 

[retiredncolorado]

fisherman, I used to work in healthcare and something has to change. In my opinion the political process will modify the plan, but I doubt if it will be totally repealed. We will see, but I am going to bet that eligibility for coverage will not be changed. Meaning pre-existing conditions will not be a condition of insurability. At this time we are going to take the chance on the HDHP and see how things develop.

Thanks for the help and advice.

 

[MichaelB]

We have had HSA accounts for 5 years. The only think I would add to the discussion is to choose your administrator carefully. We chose Shawnee, administered by Canopy Financial. The two Canopy execs are now in jail and their trial is imminent - for confusing depositors funds with their own - and the funds are probably unrecoverable.

We now use HSA Bank, which is a division of Webster Bank.