Health Insurance Values » HealthLog with Dave Keller

Consider the HSA

November’s arrival triggers a couple of health insurance-related events. Many companies hold their open enrollment for health insurance, which means many people attempt to determine their flexible savings account contributions for the new year — and realize that they still have FSA funds they must use in the current year.

While FSAs offer individuals and families a way to set aside tax-free funds for qualified medical expenses, they can also be a bit of a guessing game.

Anticipating what those qualified medical expenses for the upcoming year will be is not easy. Some years you have few health care expenses, while other years may bring the unexpected. If you fall short, the consequence is not unbearable; you end up spending taxed income. However, placing too much money in your FSA means you may end up hoarding over-the-counter medications and contact lens solution at the year’s end—or risk losing remaining funds.

The accumulation of tax-free funds from year to year is one attractive feature of a health savings account paired with a high-deductible health plan. Plus, you may save more on your health insurance expenses overall with lower monthly premiums.

Whether you are self-insured or receive insurance through your employer, if you have been intimidated by the prospect of taking this route for insurance coverage you may want to reconsider. The low monthly premium and deductible of an HDHP may be more cost-effective in the long run.

Sit down and calculate your monthly premium, deductible and standard out-of-pocket expenses. Research HSAs at the United States Department of the Treasury. And, if you are still unsure, talk to your human resources representative or insurance agent to determine if an HSA combined with an HDHP is the right fit.