This morning at work we had a presentation on health care plan options. With rate increases, our company is making us switch plans or pay out-of-pocket for the deductible on the existing plans. One of the options we are looking at is a high-deductible plan in combination with an HSA (Health Savings Account).
If you have not heard of a Health Savings Account, you will soon, as they are becoming increasingly popular. The concept for an HSA plan is two fold: a high-deductible health insurance plan is combined with a special tax-deductible savings account, called an HSA, or Health Savings Account. First, a high-deductible insurance plan means that the first $1000-$3000 (depending on the plan) of any medical service, often with the exception of annual physicals and other preventative care (which are covered with a small co-payment), is paid for entirely by the individual. The insurer does not begin paying until the deductible has been met, after which the insured individual is not required to pay anything.
But from where is an employee supposed to get this $1000-$3000 to meet deductible payments?
Enter the HSA. The IRS has set up these special accounts as such that all contributions are completely tax-free (as a "top-line" deduction, itemizing not required) and the money in the account can be used to fund any health-related expenses, including eyewear, vision, dental, acupuncture and other services typically not covered by your primary health provider. Because high-deductible health plans offer significant savings compared to traditional plans, your employer will possibly use part of the difference to fund your HSA, essentially putting money in your pocket!
Back to my company, the presentation on our health insurance options resulted in an interesting discussion. The company will be paying the premium on a high-deductible health plan and contributing $500 annually to my Health Savings Account. I'm young, healthy, and rarely see the Doctor, so this will essentially be $500 in my pocket to use on future medical expenses. Something particularly appealing about the HSA plan is that I could use my Health Savings Account to buy glasses online! This is a huge step away from the paradigm of the insurer paying ridiculous prices to the eye doctor for glasses. Because my employer has agreed to contribute $500/year into my HSA, for the first time ever, my glasses will cost me nothing out of pocket and the cost of eyeglasses will go towards my deductible! But I'll still have the incentive to go with the most cost-effective route (thereby using less from my account), so I'll buy my glasses online with the HSA debit card.
For the budget-conscious do-it-yourself type, the HSA really works out great. So, if you have a health savings account, use it to buy glasses online! It is a qualifying expense , so just save the receipt in your health expense file. Tax-free eyewear for under $100.
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