R.M. is a local government employee in her forties who uses her health savings account to save on qualified medical expenses.
She felt over-insured on her medium deductible health plan and decided to try out a High Deductible Health Plan with an HSA. Now, she enjoys the tax benefits of an HSA and just the right amount of health coverage.
SO: How did you find out about health savings accounts (HSAs)? How have HSAs benefited you?
I found out about HSAs through my work. I never really heard about them before. I knew about FSAs. My previous employer offered them, and it didn’t sound too good to me. It didn’t sound very easy. The HSA sounded really enticing with my current employer because they gave us seed money to start us off. It’s benefited me because it’s great to have that seed money plus the money I put in every month. It’s also a great tax advantage. Plus, it’s convenient to know that I have this money if I go to the doctor or buy something medically related. That’s always good.
SO: Did you do any research or learning on your own?
My current employer sent a lot of information out during open enrollment. They also did roadshows at all the different sites and talked about this plan.
From what I gather, they wanted to steer us into the Consumer Driven Plan, which the HSA is associated with. I think it’s a money saver for them too.
SO: How long have you been using an HSA?
From 2013 through 2016, I was on their medium deductible plan. Then, I joined the HSA in 2016. I’m not sure if they always offered the seed money, but there was a point where I remember them talking about it more. I thought–that’s a good idea!
I felt I was overinsured at the time. This was a good sweet spot for me. Now, I have just enough insurance. Most of it is out-of-pocket. But, thankfully, I don’t need it too much.
SO: You mentioned being over insured? How did you come to that conclusion?
I looked at my premiums and started working backward. I did my research. I had some medical stuff happen when I had that middle-of-the-road insurance, and I was glad I had it then.
But I didn’t see a lot on the horizon, and I thought, you know, I think I’m going to try this other one because the premiums were cheaper. It was maybe a little bit of a risk to say I won’t have any major medical things going on.
SO: You had a medical incident, but still you decided to with a High Deductible Health Plan. What was your thought process around it?
There was a bit of risk, of course. I was really looking to save money at that point. I still had a lot of out-of-pocket expenses with the medium deductible plan I was on.
Open enrollment was around the same time where my employer really advocated for the HDHP/HSA plan. Those two things really enticed me–the money savings plus the employer saying how great it was. I thought, let me try it. It’s a year. I can re-enroll in the medium deductible plan the following year if it doesn’t work out. But I’ve kept with it.
SO: How do you use your HSA? Do you see it as part of your retirement strategy?
I use it now for co-insurance and incidentals–pharmacy stuff, vitamins, doctors visits. I contribute every month, but not a lot. I tend to run out because there is usually something that comes up, and it ends up going to that.
I don’t really look at it as part of my retirement strategy. I know it rolls over year to year, and I can take it with me. I have seen some things that tell me that I can use it that way. But up until now, I haven’t used it like that.
SO: What advice would you give someone who is just starting on their HSA journey?
Research! Research! Find out if it’s the right situation for you. I don’t think it works for everybody. But it seems like a good thing. I haven’t had any issues with mine. It’s pretty easy to use. And if it is the right thing for you–start as early as you can.
SO: Was there something you wish someone had told you when you were just starting out on retirement planning?
I wish that I had gotten more information at the beginning. I would have liked to have gone to a planner. I did a lot of it myself. I would have started younger and contributed more.
I started investing in my mid-20s. I kept thinking I shouldn’t put too much in because I won’t have enough money to spend on my day-to-day expenses. At the time, my employer offered a 401(k) plan with a match, and I went with it. Looking back now, I should have put in more and taken the right advantage.
SO: What advice do you have for people who may be in your shoes right now to get in the proper mindset of investing long term?
It’s never too late. I’m in my late forties now. The money adds up. Every little bit counts. I’ve talked to different people–some started early, some started later. Some invested a little, and some invested a lot. Everyone is in different places. But I recommend that you do something even if it’s just a savings account. Anything that puts that money away. Because one day you’ll really need it and it will be there.
NOTE: These are edited excerpts from the conversation with an HSA participant. In some cases, stock photos and only first names or initials have been used to protect identity.