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Remember earlier when I said I was down with the flu? Boy, it really kicked my butt! I was down a solid week. For a few of those days, I was just sleeping almost 24/7.
I was watching Good Morning, America this morning, and the ticker at the bottom of the screen said this year’s flu vaccine was only 23% effective. Scientists hadn’t been this off on the flu vaccine for over a decade! I think a decade ago was when I last had the flu (give or take a few years), so that makes sense to me.
Anyway, the good news is I’m better and I had gotten the flu vaccine, which my doctor told me probably kept me from being even sicker. And yes, I’ll still get a flu vaccine next winter too. Crossing my fingers next year’s vaccine will be a bit more on target!
So why am I grateful for my HSA? Because of Tamiflu! Now, whether or not I should have taken (or been prescribed) Tamiflu is debatable, but at the time, I really just wanted the flu to be over as fast as possible. However, wanting the flu over faster came at a cost: a whopping $120 for a 5 day dosage of Tamiflu.
My HDHP (High Deductible Health Plan) didn’t cover any of it, but I’m okay with that. While my former plan, a Preferred Provider Organization (PPO) probably would have covered the majority of it, I just didn’t find paying more for a PPO plan was worth it compared to a Health Savings Account (HSA) with a HDHP.
What Are HDHPs and HSAs?
With all these acronyms, from PPOs to HMOs, HDHPs combined with HSAs, you’re probably thinking, OMG – enough! Puns aside, basically, Preferred Provider Organizations (PPOs), Health Maintenance Organizations (HMOs), and, indirectly, Health Savings Accounts (HSAs) are all parts of a health insurance package. You likely have one through your work, the Affordable Care Act, your school/university, or your parents.
Choosing between a PPO and HMO plan really comes down to doctor preference, but HSAs and HDHPs are a little bit different. HSAs are actually part of High Deductible Health Plans, or HDHPs.
Other than the high deductible, you still have the same plan as a PPO: you can visit any doctor, and he or she doesn’t have to be “in network.” I liked this because my primary physician isn’t “in network” for my employer’s HMO plan, and I’m not going to switch doctors just because some insurance company says I have to. This is America! 😉
The downside of an HSA and HDHP is the high deductible. An individual deductible can range from $1,250 to $6,350, which means your out-of-pocket costs are capped at either $1,250 or $6,350, depending on your plan. Out-of-pocket costs include your deductible, any copays from doctors or specialists you see, prescriptions, and hospital stays.
Benefits of an HSA
I love my HSA for a lot of reasons, but here are some major reasons people are choosing HSAs with HDHPs:
- Don’t get sick very often, want a less expensive plan: this is a big one. If you get sick often, or have large medical expenses, an HDHP might not be for you. Don’t forget, your deductible can range from $1,250 to $6,350 for an individual, so if you can’t pay out that money up-front, you’re probably better off going with a PPO or HMO. If you can pay that deductible, or just don’t get sick or visit the doctor often, this plan will be less costly than going with an HMO or PPO.
- Invest your money: This is key! You’re able to invest the money you put into your HSA and the value rolls over year to year. There is no “use it or lose it” penalty with other accounts (like Flexible Spending Accounts), which means if you switch jobs and forget about your HSA, your money will continue to grow based on your investments.
- The money is yours forever: Speaking of switching jobs, if you switch jobs, that HSA money is yours. Spend on it on health-related things or keep it invested: it’s yours to use and take with you, not your employer’s.
- Reduces your tax liability: personally, I’m all about reducing my tax liability, so I love this part. You contribute to your HSA with pre-tax dollars and, as long as you spend it on health-related things, you’re not taxed on that money when you take it out. Win-win!
My employer gives us a few hundred dollars as an incentive to sign up for the HDHP policy, and while I did use all of that money last year, it was “free” money to me. I got prescription eyeglasses and contacts, plus one or two medications, using the money my employer put into my HSA. This year, I’m increasing the contribution I make to my HSA to further reduce my tax liability and hopefully have some left over to invest. Can’t really invest the $15 I had leftover in December 2014, you know? 😉
So this year, I dipped into my HSA for that $120 Tamiflu, but I’m okay with it. First of all, it’s my employer’s money (yes, it’s my money, but it’s a perk I get for working there), so that makes me feel good. Plus, I did get better faster than I may have otherwise – and when you’ve got a busy life, even half a day feeling better is worth it!
Do you have a High Deductible Health Plan or Health Savings Account, and do you like it? Why did you sign up for an HDHP over other plans, like PPOs or HMOs?