In Friday’s post, I sang the praises of the medical coverage I enrolled my family in for 2015. It’s a high deductible preferred provider organization (PPO) with a health savings account. I wasn’t sure if I had made the right decision when I enrolled in it, but so far it seems to be working out just as I had hoped. As I typed the sentences heaping love upon my HSA I became curious as to just well it was working out.
I decided to run some numbers, and find out once and for all how much I was benefiting from having a Health Savings Account.
Health Insurance Cost
I originally reported that the high deductible health plan was $300 a month cheaper.ย When I looked at the final numbers, the high deductible PPO actually came in closer to $375 less than it’s low deductible counterpart. Had we stayed with the same health plan we’ve been using for the last decade, our health insurance cost would have went up $125 a month. Instead, it dropped by $250.
Health Savings Account Contributions
I set my HSA contributions to be $250 a month. Which means that our monthly medical insurance costs stayed exactly the same as last year, except that $250 a month is accumulating in our health savings account.
Health Savings Account Balance
As of last Friday, we had contributed $500 to our HSA. Additionally employer had contributed $500 of seed money to the account resulting in a total balance of $1000.
Out Of Pocket Health Expenses
Remember Vonnie’s yearly physical that turned into an office visit because she said she sometimes felt dizzy? Here’s the latest news: Checking the status of our claims online, I can see that the office visit was indeed accepted as preventative care, but the blood work was not. Good news, that visit will only cost us the $316 for the blood work.
Here’s our total medical expenses for the first two months of 2015 with our new plan:
- Blood work for Vonnie’s doctor visit: $316
- Optometrist Exam and eye wear for kids: $224
- Strep Test for Vonnie: $ 55
Total: $595
Here’s what those same medical expenses would have been under our old plan:
- Optometrist Exam and eye wear for kids: $224
Which means we’ve paid $371 more our pocket with our new plan. Except, it didn’t come out of our pocket. I just paid for all these bills with funds from our Health Savings account.
Final Analysis:
Here’s the formula for how much our new plan has benefited us:
HSA balance โ delta out of pocket expenses = Savings for us
OR
$1000 – $371 = $629
So far our HSA has left us $629 ahead of where we would have been had we stuck with the previous plan.
Admittedly these numbers are not quite accurate since the money contributed to the HSA is pre-tax, and the money we paid out of pocket last year would have been after taxes.ย But, that would actually give MORE of an advantage to the health savings account scenario.
My relationship with my Health Savings Account could get even better. With the cold and flu season ramping down, the chances of a family member getting sick decreases dramatically. In addition to my $250 monthly contribution, my employer will be offering ways to earn an additional $600 in HSA funds that they will deposit into my Health Savings Account.
As long as our medical costs follow our yearly average, we’ll end 2015 with a healthy chunk of coin sitting in our HSA. The next question is, what options are offered by my employer to help our HSA funds grow? But, that is a subject for another blog post. ๐
Do you have a health savings account? How’s it working out for you so far this year?
I have an HSA and love it. Mainly because I am fairly healthy. Aside from my annual checkups, I really don’t see the doctor/dentist/etc. When I do, I just use out of pocket money and let my HSA continue to grow. I am going to use the money in the future, allowing it to grow tax free.
I’ve heard of people doing that…..but I got an HSA to help ensure we had funds available when we had health related expenses. Now, I certainly do hope that my contributions are more than my expenses! Thanks for stopping by, Jon!
Good news, Travis! We don’t contribute to an HSA, but Rick’s employer does for us, to the tune of $1200 a year if we add nothing. We generally don’t ever get sick so doc appts are minimal, and the health plan covers preventative both at the primary care doc and at the eye doc, plus some money for contacts/glasses, so we get by pretty cheap unless we have some unexpected something, which doesn’t happen too often.
It’s good that you do have something stashed away in an HSA for those times people do get sick….it will happen eventually, right?
I Love my HSA! Unfortunately, we can no longer contribute to it because we joined a healthcare sharing ministry. The good news is, we have a lot of money built up in there! Hopefully it will continue growing over time if we don’t use it.
I’ve heard of those…and I think I remember reading a post on it…maybe on your site? In any case, I’d be interesting in hearing how that works out for you at the end of the year! Thanks for reading, Holly!
We have an HSA and absolutely love it! We’ve been contributing to it for several years so it’s built up a hefty balance to the point we could increase our deductible. Had to to offset the increase in our health insurance premiums this year.
I hear you, Brian…last year our insurance went up very little. This year it would have been a pretty big chunk. You’d think we would be used to it by now… ๐
That’s awesome! I don’t have one but I’m glad to hear it’s saving you money! It seems that everyone who does have one thinks it’s a benefit. I haven’t even looked to see if my HI has it that option.
You should check it out…instead of paying a higher premium you get to put money away in an account for if you have medical expenses. It works well for people with lower medical expenses….but not so good for people who have some health challenges.
Very nice Travis! I love our HSA, especially when you start to look at the tax benefits which is huge since we’re self-employed. I always loved getting the free money from the employer as well throughout the year. Many times it was from something simple like filling out a health survey or something like that. If I can get $100+ for filling out a 10 minute survey then I’m all over it!
I like our employer incentives too…some of them are watching videos – others are activity related (working out 4 times a week for 10 weeks sort of thing). I’m not leaving any money laying on the table!
That’s awesome that your employer gives you HSA money. I invested our HSA in Vanguard funds last year, and we don’t intend to touch it unless something major happens. Because of the tax advantages, I would max out my HSA before any other investments. I love my HSA and I’ve never heard anyone say negative things about them. I hope the laws don’t change because it’s probably the best deal I have going right now.
Kudos to you for maxing it out, Kim…..my contributions don’t quite get us to the max….maybe next year!
One of the problems of working for yourself: no HSA. Granted, I find the whole concept dizzying anyway. But it’d be nice to at least have the option.
We have a ton of medical expenses, especially this year, so it would be nice to get that tax-free.
That is a bummer for sure, Abigail……although I’m surprised there aren’t any private medical insurance programs with an HSA….