Wednesday, November 20, 2013

Open enrollment time...

This is the time of the year when I am trying to finish up my flexible savings account money.  Also, it is time to renew or make changes in my benefits for the next year. At my current company, there is a lot of pressure to join a HSA plan. It is tempting: Funds roll over year after year and you do not have to spend them before December 31 like I am scrambling to do right now. Plus my employer contributes a nice amount per year.

Another selling point is that you may add more tax free money to it, you can even have it invested in something similar to an IRA account, and eventually when you retire you will have some nice savings to count on if you never needed them.

But you know what? That is what  401Ks and IRAs are for. Health insurance is something you pay for so that when you do get sick, you do not have to break the bank. And with a HSA you get to pay very high deductibles when you actually get sick.

Let us assume that I end up in the hospital with kidney stones in January of 2014, just like I did in January of 2011. My brand new HSA account would have no funds yet to cover the extremely high deductible. I know I could set up a reasonable payment plan until my HSA contributions caught up. But there is the catch:  the amount of money my employer would contribute to the HSA each year is less than the deductible.

Bottomline? HSA accounts work better for people who join when healthy, and manage to stay healthy for a few years before any major medical emergency. And while I consider myself to be reasonably healthy, I have seen an ER bill up close. Getting away with a $50 dollar co-pay was the only good thing about it.

The spouse wants me to really explore all possibilities before making a decision. And here it comes: One possibility is getting laid off. I survived the initial witch hunt but I am not confident I will still be working here a year from now. And, like I said, HSA accounts work best when you've accumulated a nice cushion over a few years.

While all this needs to be decided, I still have to go on a shopping spree and spend the last of my tax-free FSA dollars. On my shopping list: prescription steroid creams, disposable contact lenses and maybe another pair of prescription eyeglasses. Too bad over-the-counter drugs don't qualify anymore.

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