What You Need to Know About a Health Savings Account (HSA)

Everywhere on the Internet, you will easily find the basics on health savings accounts (HSAs) about who is eligible, what the rules are, etc. However, as they say, “the devil is in the details,” both good and bad.

Is an HSA right for you?

Using an HSA is, in fact, a big pain in the ass. It’s not easy to manage and use it efficiently and a certain amount of administration is required. While financially beneficial, I have to view it as getting paid a decent amount of money to do some low-level administrative work. 

Opening an HSA

Below are the things I “wish I knew before” I got started with the HSA:

#1 Start Saving in an HSA as Early as You Can

If you’re going to set up an HSA, the younger you are, the more money you can “make” with it! If you are eligible, see how your HSA with high-deductible plan compares with your other health insurance options in my other post, “Health Insurance Plan Comparison Spreadsheets.”

It’s one of the best retirement account options out there, without actually being limited to retirement. It’s pre-tax money going into an investment account and tax-free withdrawals (for qualified medical expenses). There’s no other investment account like that. It’s essentially tax-free income that you can use before retirement. As much as I hate the administrative side of the HSA, I think it’s the financially savvy thing to do, and I’m going to teach my kids to set up an HSA (and a Roth IRA) account as soon as they can. 

#2 Watch Out for Employer Contributions and Contribution Limits to the HSA

If your employer contributes to your HSA, make sure that you account for that in your overall contribution limit and set up your contributions accordingly. We didn’t pay attention to that and over-contributed last year. You may pay a penalty for excess contributions. Fortunately, you can typically rectify it online and with the IRS before the tax filing deadline, but it’s more admin work for you!

#3 Set Up a Stable HSA Provider Outside of Your Employer’s Provider

HSA providers can change even if you don’t change jobs. Set up an HSA provider account that is separate from your employer. Even if you don’t change employers, your employer may often change the HSA provider from year to year or even mid-year. It gets complicated to manage funds in multiple accounts. Ideally, we would have kept it to two.  Additionally, some of the employer’s HSA providers charge fees for the investment portion of the account. 

I followed the Finance Buff’s recommendations and opened an account at Fidelity which is fee-free. (Seriously, the Finance Buff author is like the financially savvy uncle I always wish I had!) It seemed like a no brainer when compared to HSA providers that do charge a fee to invest your HSA funds.  

#4 Avoid Investing With the HSA Provider That Your Company Uses 

Why? Because when your company decides to change providers, you have usually have to liquidate all investments or roll over to another provider. When you are forced to rollover your investments, you have to liquidate your investments and find equivalents in the new account, regardless of market timing. To keep it simple, keep cash funds in the employer account and only make investments with your own provider. Many employer HSA providers also charge fees for investment accounts – all the more reason to choose your own provider that doesn’t charge fees.

#5 Create a Physical and/or Virtual Home for Medical Expense Receipts

Create a physical home (a file folder, envelope, box, sock, whatever!) for the expense receipts as well as a file folder on your computer. Separate that into two piles –  reimbursed and not yet reimbursed. Creating the structure before you begin accruing medical expenses increases the likelihood of your staying organized and getting the most or anything out of your HSA! This sounds so basic, yet you would be surprised how critical it is to not hating your HSA. Just ask my husband for which paperwork is the all-time enemy of mankind. Even if you only reimburse yourself once a year or every 5 years (theoretically, there is no time limit), having the organization structure is what makes this manageable.

#6 Avoid Using the HSA Debit Card

I’ve found that reimbursing myself later gives me much more flexibility and time to think about which HSA I want to draw from and when I want to withdraw it. It also potentially allows your money to grow in the meantime. The flexibility offsets the inconvenience of having to manually reimburse.

Another reason to avoid using your debit card is that some people have the debit cards that draw from both your HSA and your LPFSA (the FSA account that you are allowed to have in conjunction with an HSA).  Watch the debits carefully because a technical error may draw from the HSA instead of the LPFSA (it happened to me!) Why is this a problem? Your LPFSA is “use it or lose it” for vision and dental expenses in the calendar year, while your HSA is not. You should always use up your LPFSA first, so you have to monitor the debits carefully to make sure there are no technical errors (which sadly, are quite likely) and time-consuming to fix.

#7 Plan How You Want to Use Your HSA Funds

It’s no use for you if you never use the money in the account, so have a plan for what medical expense you would like to use the money on. The longer you wait, the “less” the medical purchase will cost, assuming growth in your savings. A prudent way to manage the funds is to leave a portion uninvested so you can access it immediately if needed, and invest the remainder. Ideally, you should not draw from the invested funds when the market is particularly down. 

#8 Review the Complete HSA Eligibility List

Make sure you know what is considered an HSA-eligible expense to get the most out of your HSA. Medical bills and services with conventional medical providers are usually obvious HSA-eligible expenses. However, depending on what the balance of your medical and financial needs are, you should know that there are a lot of day to day items that are HSA-eligible items now, particularly after the CARES Act of 2020. (This post calls the items out about half-way down the page.) 

The website, HSA store, seems to have the most current and comprehensive eligibility list. Familiarize yourself with the list, so you can save those receipts to reimburse yourself as needed. Some of the less obvious, but commonly purchased items that I found useful here are many items of common use: OTC pain relief, allergy meds, face masks, Covid tests, sunscreen, orthotic insoles (OTC or custom), sports wraps and bandages, and first aid products. 

#9 Watch Out for State Taxes on HSA Investment Income If You Live in CA or NJ!

HSA investment income is currently federal and state tax-free everywhere except California and New Jersey. It doesn’t mean that HSA is not beneficial in those states. It just means that if you live in either CA or NJ, your HSA investment earnings are subject to state tax (they are still federal tax-free). Again, my “uncle” at the Finance Buff has a very helpful post on this called, “California and New Jersey HSA Tax Return Special Considerations.” 

Using an HSA can be a lot of work – think about whether you can do the job. It can save and earn you a lot of money, but you have to use it correctly to maximize the financial benefits.

Do you have extra tips? I’m still learning, so would love to hear more ideas! Email me at wishiknewbefore20@gmail.com

Resources

Best HSA provider:

Over contributing:

CA and NY state tax considerations

Comprehensive list of HSA eligible expenses

Changing Jobs? Check the Impact to Your Medical Benefits

changing jobs, HSA, FSA, health benefits, job benefits
Image credit: events.ibx.com

Updated as of 2/22/22

If you’re changing jobs, don’t forget to think about how to coordinate your benefits between the two jobs, so that:

  1. you’re not without coverage between the two 
  2. you maximize your benefits
  3. you minimize any forfeits in FSAs
  4. you coordinate your HSA contributions and providers

(If you’re wanting to compare plans at your new job, check this post on health insurance plan comparison spreadsheets.)

Below are the main things that I’ve learned to check during job changes:

Fill the insurance gap between jobs

  • If you and your partner are each insured through different employers, then whoever is losing insurance is considered to be having a qualifying event – which means the remaining insured partner will be able to enroll you into their insurance plan regardless of the time of year.
  • When leaving your job, make sure you know how long your benefits will last. Check if all benefits will extend through the end of the month or if they cease immediately on resignation. Apparently, this can vary by employer. 
  • If you are ending a job and starting another job in the same month, you may not have any gap in coverage. Confirm with the benefits providers in each job about the termination date of the coverage in the current job with the effective date of your benefits coverage in your new job.
  • If there is a coverage gap of any amount of days, it’s always safest to buy some sort of coverage for those days. You will have to do a cost risk analysis on your own situation. You have 3 main options:
    • COBRA insurance, which is pretty much an extension of your current coverage except that your employer no long pays for any of it, so it is usually very expensive. 
    • Short term insurance – which can vary in cost but is usually the cheapest option, because it is essentially catastrophic insurance, to minimize the financial impact if you were to unexpectedly have any major medical costs during your gap days. Remember to always review the insurance terms in detail as these plans all have different levels of coverage, too.
    • Standard health insurance, including Affordable Care Act (ACA) plans – the cost of these plans are usually less than COBRA costs, but more than short term plans. However, you should always check all the costs before selecting. 

Your age, your family size, your medical needs, your risk threshold, and expected duration of time between jobs will determine the best choice for you. 

Maximize Your Benefits

Timing of routine, preventative services 

If you will have any sort of gap between coverage, it’s always safest to take advantage of any preventative doctor or dental visits before your coverage ends. This minimizes the likelihood of your needing to pay out of pocket for routine checks. 

Timing of non-covered benefits 

Conversely, if you are close to changing plans and haven’t met your deductible, then you may be better off delaying (if possible) costs that could contribute to your new deductible rather than your old one which you most likely won’t meet at the end of your current coverage. 

Timing of benefits that are capped

If you have any benefits where only a certain amount is covered per plan or plan year, then you may want to use them before switching. For example, vision plans often cover $150 per year in contact lenses or glasses. Even if you don’t need the contact/glasses yet, you should stock up or you would just be losing $150. In your new job, you may have a new plan that provides another $150 to use – essentially giving you a $300 contacts/glasses benefit for that one year. 

Check the latest FSA and HSA rules

Finally, doublecheck the rules on your FSA and HSA – there are often updates to these rules. It’s no wonder that the FSA and HSA are often under-utilized by people because they can be such a pain to track. Always recheck the rules each time you change jobs to make sure you know the latest. In 2022, here are some things to know about the FSA and HSA when changing jobs.

Regular FSA during job change

Your FSA must be used up – they don’t transfer to the next employer, so you should spend it all before you leave. However, the medical FSA plan limit is per employer and not per year, so even if you maxed out with your first employer, you are eligible for the maximum amount again with your new employer ($2850 in 2022). 

HSA during job change

Your HSA funds are not impacted by changing jobs. Whatever you have is yours to keep and use as needed for qualified medical expenses. You can roll it over to another HSA provider or continue to use it through your existing provider. 

However, you do have to be careful about how much you contribute. The annual maximum amount per individual or family has to be pro-rated for each month that you are eligible to contribute (e.g. that you are enrolled in a high-deductible, HSA eligible plan). Therefore, if your new job provides HSA eligibility or no longer provides it, you will have to adjust your monthly contributions accordingly. This PDF from Benefit Strategies, LLC and this post on the Finance Buff provide helpful information on mid-year changes and HSA eligibility and contributions.

Also note that some employers contribute towards your HSA – these amounts count towards your annual HSA limits. Don’t forget to account for employer contributions when calculating how much you will contribute while still not exceeding the limit.

Limited-purpose FSA (LPFSA) during job change

This is the FSA that you’re allowed to have if you also elect the HSA and is only usable towards vision and dental expenses. Like the regular FSA, it must be used up when changing jobs – they don’t transfer to the next employer, so you should spend it all before you leave unless you feel like gifting your employer. However, again as with the medical FSA, your plan limit is per employer and not per year, so even if you maxed out with your first employer, you are eligible for the maximum amount again with your new employer ($2850 in 2022).

Dependent Care FSA during job change

Dependent care FSA – I found some conflicting answers on this one and basically, it is up to your employer. Some employers allow you to use your funds through the end of the plan year. Others will require that you use it up or forfeit it upon departure. You will have to check with your employer. In 2020-21, there were COVID-related changes to the dependent care FSA that you should definitely check on with your employer. In fact, after doing this research, I’ve decided to check these specific terms with any new employers, so I know what I’m getting into when I sign up for the dependent care FSA. By the way, don’t forget that dependent care FSA expenses can include after school care, summer camps, as well as family members who babysit for you!

Do you have other tips to share? Email me at wishiknewbefore20@gmail.com or add them to the comments below!

Resources

Filling in the gap

Maximizing benefits in all categories

HSA and mid-year changes

LPFSA

Dependent care FSA

Lowest Price for EpiPens

Updated as of 11/4/22

We have food allergies and we need to carry around EpiPens. But we also have a high-deductible HSA-eligible health insurance that doesn’t cover very much, so below is a rundown of the options I went through to find the best price for EpiPens. My takeaway is that if you can’t get an EpiPen or EpiPen alternative for free, you should only pay up to the low $100s in the U.S. See the rundown of options below.

(This fall of 2022, I had to fill our EpiPen RX at Walgreens for $109 with a GoodRX coupon. The GoodRX price is only if you don’t use insurance. In prior years, I bought Auvi-Q which was available at $25 for those with poor insurance coverage, but that Auvi-Q price went up to $125 in October 2022. All of this is ridiculous, isn’t it?)

EpiPen size comparison
In case you’re curious, an EpiPen size comparison: (L to R) Auvi-Q, Adrenaclick, Mylan/generic EpiPen

#1 Health Insurance EpiPen Cost

When we had excellent health insurance, I was able to buy a pack of two generic EpiPens for as little as $30. I’ve also seen online that some people have health insurance that can bring the cost down to $0-$5. 

Unfortunately, now that we have health insurance with a very high deductible, those generic Epipens would cost me $476. I detest anything associated with health insurance these days, so even if I could afford $476 for epipens, I would do my best to avoid this option.

#2 EpiPen Manufacturer Discount

On the Mylan brand name EpiPen website, you can get a savings card for up to $300 on brand name Epipen, and a savings card of $25 on generic EpiPens. However, you’re only eligible for these savings cards if you also have commercial health insurance:  

“The Epipen Savings Card® helps eligible patients who have commercial health insurance save on out-of-pocket costs.”  

– Mylan website

And in fine, fine print, Massachusetts or California residents are not eligible. At any rate, if I were eligible for the savings card of $25, my generic EpiPens would now cost $451 instead of $476. The search continues. . .

(FYI, the brand name Mylan EpiPen and the generic EpiPen look and work exactly the same. The EpiPen alternatives operate a little differently.) 

#3 EpiPen Alternatives

There are a few other EpiPen alternatives. You would need to get your doctor to write you an RX specifically for one of these alternatives. 

  • Adrenaclick – about 6 years ago, this was the wonderboy of EpiPen alternatives because CVS offered them for as little as $10 (I don’t remember the fine print of this offer). However, without insurance, it’s now offered at a retail price of ~$110 at Target/CVS pharmacies. You can also print out a $10 savings card that should bring you to ~$100. 
  • Auvi-Q – our allergist suggested trying Auvi-Q. This is the EpiPen alternative that talks you through the process. It has a retail price of $4500 that nobody actually pays. I called the Auvi-Q customer service number and learned that they have contracted with a direct delivery pharmacy called ASPN Pharmacies. To start the process for direct delivery service, call them or complete this direct delivery enrollment form. The pharmacy itself has mixed reviews. (My personal experience was that it took me about 2.5 weeks and two followup phone calls to get the EpiPens.) However, the ASPN representative told me the following:
    • If you have commercial health insurance AND YOUR INSURANCE COVERS the Auvi-Q, then the cost will be $0, even if you have a high insurance deductible.
    • If you have commercial health insurance AND YOUR INSURANCE DOES NOT COVER the Auvi-Q, then the cost will be $125. (In October 2022, this cost increased from $25 in prior years to $125 this fall!)
    • If you need more than one pack of 2, you can order a second one for the same price after a 30 day waiting period.
    • For those without insurance, they offer a patient assistance option if you complete this patient assistance form. If you don’t qualify for financial assistance, they say that the most anyone should have to pay for Auvi-Q is capped at $360. At that price, you would be better off with a Adrenaclick or the generic EpiPen options through GoodRx and the like (see #4 below).
  • Symjepi – I’m not familiar at all with this option, but I saw it listed on the GoodRX website as an Epipen alternative. Pricewise, I didn’t see any quotes that made it a better deal than the Adrenaclick or Auvi-q. I’m not sure there is any point to considering this option seriously.

#4 Prescription Cost Saving Websites for EpiPen

There are a lot of prescription cost saving websites out there now that can offer prices in the low $100s. To get these discounts, you search the name of the drug and the website returns an out of pocket cost comparison of the Rx’s cost at local pharmacies, along with a coupon that you can use at the pharmacy. These are the costs of the EpiPen if you pay without using insurance.

Here are a few of the sites I looked at. The costs below are based on my local zip code, so may be different for you. This is what I found for 1 pack of 2 generic epinephrine auto-injectors: 

#5 Your Allergic Friend with Good Health Insurance 

It also crossed my mind to ask if any of my allergic buddies with good health insurance wouldn’t mind just calling in a refill for me to pick up. I figure that would be about $30 and without the kids in school, I really don’t need an RX in their names. Just throwing this idea out there. . .

#6 Expired Epipens

You either already have expired Epipens or you have friends that do. I think I’ve never felt that comfortable with expired Epipens, knowing that I carry them around in all sort of temperatures that could lead to its degradation in performance. However, if they’ve been stored safely, they could very well be perfectly useful, so you may keep that in consideration in terms of how many new Epipens you may want to buy. A study in 2019 showed that even Epipens that were 30 months past their expiration date were still effective. (See here if you’re trying to figure out how to dispose of them.)

Resources

Articles summarizing EpiPen costs:

Auvi-Q

Epipen

Adrenaclick

5 Tips for Dealing with Health Insurance

I’m still on my health insurance rant. How many ways can the health insurance system screw you? If you’re a health insurance user, chances are you’ve been scammed, duped, or basically not given the coverage that you paid for because the health insurance system in this country has been intentionally/unintentionally designed to make sure that you won’t know how to use it and getting enough reliable information to avoid costly errors is practically impossible. (Help fight this by choosing the most cost-effective health insurance for you with some of these comparison spreadsheets.)

Here are five things I’ve learned about when dealing with health insurance:

#1 Health insurance representatives and provider office personnel often give wrong, different, or incomplete information

How are you supposed to know what information is correct if you get different information depending on who you talk to? What’s worse is that, you then usually make financial or health decisions based on this incorrect information.

Health insurance explanation of benefits (EOB) – did it really cost $1259.75?

If you ask about coverage benefits, the health insurance representative may forget to tell you that your deductible applies. I have been told over the phone that services from an out-of-network provider are covered 100% (no deductible mentioned). Only to find out after the claim has been denied and 15 phone calls later, that our deductible needed to apply first. Perhaps someone could have told me when I asked the first time? Get a summary of the plan benefits sent to you. Better yet, make them send you the long detailed version and look up the answer to your question. Don’t rely on over the phone answers. 

The provider’s office has also on occasion told me that they are out of network, even when I was able to find them in the online in-network provider directory and then confirmed it with a health insurance representative. In those cases, you can now get a confirmation number of the phone call along with a record of the call content. However, you have to ask for it. 

# 2 Services performed by in-network providers may need coverage by different types of insurances or may not be covered

Well, I didn’t know this was possible, but after being billed for the refraction portion of a visit to the ophthalmologist office, I discovered that you may need to break down claims to submit different portions of it to medical insurance and vision insurance. However, you have to figure this out in ADVANCE so that YOU can tell the eye care provider’s office which doctor will be allowed to perform which service on you.

These days, many eye care offices house ophthalmologist, optometrists and eye care shops in the same location. We needed to check on the sudden onset of myopia (therefore the need for an ophthalmologist), but checking the eye problem also involved the need to check vision, a refraction service which could be performed by either the ophthalmologist or the optometrist, both of which performed services on my son at the same visit. 

However, it turned out that we were only covered if we had the optometrist perform the refraction. So although the optometrist was seeing my son at the visit, the ophthalmologist happened to perform the refraction. Therefore, we had to pay for the refraction out of pocket. Make any sense? Somehow, you really need to do your research before you go to any doctor. I’m sure this happens in many doctors’ offices.  However, I bet you the doctor’s office won’t be able or willing to help you much when you ask questions BEFORE a visit. Who’s screwed? You’re screwed.

# 3 Surprise billing

They’re finally doing something about this “surprise billing.” I have an Explanation of Benefits (EOB) that now actually states what to do if you receive a “surprise” bill – they’ll try to help you fight it. In fact, there was even a recent article in the Atlantic about this, stating, “A fifth of U.S. patients get surprise bills from surgery—even if their surgeon and hospital are in-network.” 

Surprise billing occurs when you are receiving a medical service from an in-network provider  and, unbeknownst to you, part of your service is performed by an out-of-network provider. You will receive a “surprise” bill for that portion of the service. This could be $150 or lots of $$$ depending on the service. 

Two examples of situations where this might happen: 1) you’re getting lab work done at your in-network provider, but without notifying you, they send the lab to an out-of-network lab to perform some of the tests. This happened to me. 2) You’re getting surgery and the work has been pre-authorized by your insurance as in-network covered services. However, maybe the anesthesiologist or another doctor who does a little work on you (while you’re out cold) happens to be out-of-network. You get the bill for the out-of-network services. 

#4 FSA or HSA – not both

Maybe a lot of you knew this already, but not me. You can only have an FSA or HSA – not both. (However, you can have a limited purpose FSA that’s for vision and dental expenses only and HSA together.) We signed up for an FSA at the beginning of the year. Mid-way through the year, we had a job change and had to change insurance plans. We looked at the HSA and discovered that was a good option for us. BUT guess what, since we already had an FSA for the calendar year, we were not allowed to enroll in the FSA plan. And we were not allowed to cancel the FSA, in order to enroll in the HSA. No double-dipping, but you gotta read to figure this out because no one will point this out to you.

#5 Administrative labyrinth

I’m not sure if NOT getting to enroll in the HSA was actually a blessing in disguise. HSAs (and to some degree FSAs) are for those who are extremely good at keeping receipts, completing paperwork, reading the fine print, following up when claims get denied, resubmitting receipts, making phone calls that last 30 minutes each (at least), and a plethora of time to do these things. The administrative labyrinth also applies any of the problems mentioned above. You know yourself. Are you going to have the time to follow up on all of this (because you will inevitably have to)? Otherwise, it’s $$ to Uncle Sam or cash you can never use. 

Or if you don’t care about getting screwed – you can just save yourself time, and know you’re probably getting a bad deal with your insurance. But I say, keep calling them, keep irritating them, send your horror stories to the media, or we’re all going to have to deal with this miserable system forever. 

Do you have more to add to my list? Send them over!

Health Insurance Plan Comparison Spreadsheets

Updated September 27, 2021

Changing jobs? Open enrollment? Recently, we were choosing between a variety of health insurance plans, including ones with HSA options. Before I thought to look online, I had already made my own comparison spreadsheet, but I guess that’s all well and good because it was a nice, eye-opening experience to think through the ridiculous rules of each of the health insurance plans myself. Even the plan representatives barely understand the rules. 

Later on, I found a few different health plans spreadsheets online that I thought were helpful and collected the links below. There are also various calculators and comparison widgets on health websites, but they hide the logic and calculations they’re using to compare, so it’s not as useful. In the end, it’s a bit like picking stocks because of the assumptions and guesses you have to make about your future needs, but I still found it more useful than not thinking about it at all. Hope some of these are helpful to you too.

#1 Mr. Money Moustache and Reddit Health Comparison Spreadsheets

These two spreadsheets that I found on the forums of Mr. Money Moustache and Reddit are quite similar and straightforward to use. They compare a PPO plan to an HDHP w/HSA. They graph out the costs of the plans based on medical costs which is helpful to see around what cost point that the plans are most cost-effective. It comes down to what you think your costs are likely to be:

#2 Business Insider Picking Healthcare Plan Spreadsheet

This one posted by Anisha Sekar on businessinsider.com had a thoughtful, step by step post accompanying the spreadsheet:

#3 Healthcare Plan Worksheet on spreadsheetsolving.com

I also liked this spreadsheet on spreadsheetsolving.com (interesting site and worth further review for those of us who like spreadsheets!). The poster did a nice job of talking through the logic behind the calculations:

#4 Simple Worksheet at The Finance Buff

Recently (9/27/21), I came across this post at thefinancebuff.com called “Do The Math: HMO/PPO vs High Deductible Plan With HSA.” The post helps you to think about how to choose a healthcare plan and includes an abbreviated worksheet to work through a simple comparison, especially if you’re not in the mood to slog it through with a detailed spreadsheet. The Finance Buff website itself is a great resource for personal finance, btw!

#5 My Detailed Health Plan Comparison Spreadsheet(s)

To use any of the spreadsheet versions below, log in to your Google account while you are accessing the spreadsheet, then you will be able to select “make a copy” and modify it however you want in your Google Drive.

In each of the versions below, there’s a tab to estimate usage costs, and then another tab to see how the different deductible amounts for the plans actually played out based on the estimated costs. Don’t forget to adapt the spreadsheet logic to your own plans’ rules. Also, If you catch some obvious errors, I would love to be notified!

Health Insurance Plan Comparison V1 – February 2020

Health Insurance Plan Comparison V2 – May 2020

Health Insurance Plan Comparison – Reader-modified 2021