Last October, I was excited to learn that Mr. ThreeYear’s employer was offering, for the first time ever, a high deductible health care plan, coupled with a Health Savings Account (HSA).
In the past, we’d only had the option of a Flexible Savings Account (FSA). Flexible Savings Accounts offer some tax advantages, such as allowing you to deduct up to $2700 of your paycheck, tax free, to use with qualified medical expenses. But you only have one calendar year to use the funds or you lose them. $500 of the funds carry over to the next calendar year, which you have to use by March 31st.
With an HSA, however, you can deduct up to $7000 of your paycheck, tax-free, and there’s no deadline for using the funds. You can invest the money in your HSA, and take it with you if you leave your employer. Your money will grow, tax free, for as long as it’s kept in your account, and you can access the money whenever you like to pay for qualified medical expenses. If you haven’t read the MadFientist’s excellent primer on HSAs, you should. It’s one of the reasons I was so excited to get an HSA option this year.
Last year, we opted for the company’s normal health care insurance option. Each paycheck, $280.99 was taken out of Mr. ThreeYear’s paycheck for his cost of the health insurance, and $57.75 was taken out of each paycheck to fund the FSA.
When we went to the doctor, we paid a normal copay of $20-$40 and medications cost us $10 each.Continue reading “Our Switch to an HSA: The Good, the Bad, and the Ugly”