Are HSAs as good as they sound?

Question

My company is forcing us to choose between a traditional HMO or a PPO HSA now. I had a traditional PPO that I loved, but they are 'doing away with it'. So now I'm left to make a decision by Monday. The HSA sounds too good to be true, so I'm thinking about going for the HMO. What do you think?

(HMO has $15 copays and a $500 deducatable, with a $210 a month premium) (PPO HSA with all preventative tests/exams covered 100% and a $3,000 deductable, with no premium - but you have to pay for all other medical expenses out of pocket up to the $3,000 deductable)

Answer 1

HSAs are not for just the rich or healthy.  that is a false misconception that many people make.  the reality is, when you pay a $15 copay how much do you think that visit really costs?  not $15.  an HSA will make you aware of the cost of healthcare and make you think twice about unneccessary services.  many americans are over insured.

this also encourages you to go for all of your preventive services.  get check ups before you have to start going for manintenance checkups for a disease or condition.

regardless of the above.  with your traditional PPO or HMO, those copays you are responsible for never go away.  with the HSA you have a cap out of pocket of $3000.  calculate what you would pay in premium for the HMO.  the $210 premiums is over $2500 per year.  that is almost your HSA ded.  the HSA helps you to save money.  is your employer funding any portion of your savings account?  you can make payroll deductions into your HSA TAX FREE.  take the amount of money that you pay now in insurance premium and deposit that into your account.  the money collects interest.  you will roll it over every year that you have unused funds.  once you reach $3000 you have stock options.

most inportantly, think about the future.  do not think about this moment.  prepare for the future when the medical coverage is more expensive and you may have limited income.

Answer 2

If you are healthy, I'd say the HSA is tailor-made for you. Anything that is preventive is covered 100%-anything otherwise is covered except the deductible which you can put that money in an interest earning account and take it as a deduction at the end of the year!

If you are not healthy or have kids, take the HMO.