anxiousmom

Hello all. Do any of you know what effect it would have on financial aid if one has a HSA? My school district is offering a HSA as an option to the traditional HMO and PPO. I'm not sure what the benefits would be to switch to the HSA, especially if it would negatively impact financial aid. How are HSA's considered?

calmom

So far its been good for me -- I can deduct the payments to the HSA each year to reduce my AGI, but FAFSA does not add that money back in -- and the money accumulated in the HSA account is not counted either.

But in general, an HSA is only good for people who typically have low medical expenses each year, because of the high deductibles. In my case, I'm self employed and pay 100% of my own premiums, no group plan available. I probably couldn't afford insurance premiums other than opting for an HSA. But I think in general PPO's with reasonable deductibles make more sense for most people. I don't like HMO's as much because of the restrictions on seeing a doctor of your choice.

ucsd_ucla_dad

I don't understand - you're impying 'switching' from a health insurance plan (HMO/PPO) to a health savings account. They're two different things and a HSA shouldn't normally be substituted for a health insurance program. The HSA just lets you pay for medical care with pre-tax dollars but doesn't povide the 'insurance' of paying for expensive or catastrophic medical care that an HMO, PPO, or normal health insurance plan would. An HSA is normally used to pay for things not covered by health insurance.

Did I misread the post?

northeastmom

I understand it as ucsd_ucla_dad. HSA, I would think but am not certain, should be good for dental care if you don't have coverage, or eyeglasses/contacts (proabably designer frames are not allowed, but do not know). My H had one medical test (out patient, and he is fine) that without insurance would have cost us 16,000! Our insurance covered the cost at a prenegotiated hospital rate of 10% of that amount (1600). That is some difference in cost. Can HSA be used for copays and deductibles?

somemom

HSA is the large deductible plus you or your employer deposits that large chunk of money into an account. PLus there is a major deductible plan with a very high deductible.

If you have few needs to run to the doctor, you can use the HSA funds for co-pay, deductible amounts, plus non-covered items like vision and dental. Theoretically you would build up a large chunk of change that can be used in future years for bigger medical bills. That big chunk has not materialised for me after all the dental/ortho needs of teens

anxiousmom

UCSD dad: I will actually go to the presentation next week when offered, and ask all these questions - but mostly from you knowledgeable people I was hoping to find out how the HSA account is handled by Profile schools. (I guess I could just email the financial aid office and find out! Silly me!) In the case of this possible switch, offered by BlueCrossblueshield, one has a high deductible health policy, and the school district pays a contribution to your HSA account, and pays the premium for the HDHP. I think the policy limit is 2,000,000, and there is an out-of-pocket max for the individual. So, I'll find out more next week. Just putting this out there to see if anyone has experience with this, or knows how Profile schools treat this.

ucsd_ucla_dad

anxiousmom: That makes sense. That's interesting that the district pays into your HSA account - my company doesn't - it's strictly up to the individual. I guess the overriding concern is to make sure you're still covered adequately and the second concern is - does it end up costing you less or more.

Sorry, but I don't know how it'd affect the finaid.

somemom

In FAFSA the HSA account is viewed like an IRA or retirement account, the account value does not count against you as an asset. Once question to ask the company, does the HSA contribution get 1099ed to you, thus counting as income? If you are self-employed you actually can deduct that and FAFSA does not add it back in (years of verifications and no one ever has) but if your employer 1099s you, that would be an issue. I am thinking they should not, as it is one more way for them to use their health benefit budget- it can be great if you have few medical issues and many incovered items- dental is so darn expensive these days, a large family can blow through that HSA budget in no time witih a few cleanings, cavities, perhaps some ortho or wisdom extractions. But then as a school employee you may have dental.

Also ask them how it works when you have a balance at the end of the year, I believe the rules have changed and it is no longer use it or lose it, but make sure as rules vary depending on being self-employed v corporation.

Then ask them, if you can carry over the balance and you build it up each year, what happens at retirement?

I have not done a Profile for many years, but I would think it would still not be counted, but you'd better ask to be sure

calmom

An HSA is an alternative health insurance plan -- to be eligible to open an HSA with a financial institution you also need a qualifying high-deductible plan to go along with it. The insurance companies will specify which of their offerings are HSA qualifying.

So ordinarily you could not have both an HMO and an HSA-eligible plan; a PPO can be set up to be qualifying with the high deductible. The idea is that you get lower premiums and more control over your own spending with the account. One advantage, for example, is that you can use the HSA account to pay for medical expenses that may not be covered by your plan, such as elective medical procedures -- or dental & eye care on a medical plan that does not cover it.

As to the FAFSA/Profile thing ... I specifically asked my college financial aid people, and no, the money in the account is not counted. One perk for me is that an HSA can be used to pay for dependent medical expenses even if the dependent is not on the plan-- so when my d. needed to visit a travel clinic and get a bunch of vaccinations before heading off to India this year, I used money from my HSA to pay those costs.

However, there is a downside -- for me I think the whole thing discourages me from going to the doctor for minor ailments or getting preventive care that I would take advantage of if it were covered by my insurance. As a self-employed person I took advantage of the cost savings it afforded me -- but overall I don't think the health plans that go along with HSA's are a good deal. They are a way of shifting low-end costs away from the insurance companies directly to the patient, except most patients don't view a an $800 or $1500 medical procedure as being "low cost". Do I really want to pay for that colostomy? Nope.....