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[Prytania]

Could someone please tell me what a health savings account is and would it be an appropriate plan for a future adjunct.

Thank you.

[almostnew]

A Health Savings Account is a way for you to pay for medical expenses (and in some cases, dependent care) on a pre-tax basis.  You must declare at the beginning of the year how much you want to put in over the year (I forget the cap, but the IRS has one), and your institution will deduct that amount divided by the number of paychecks over the year.  Now why is this good?  Your taxable income is reduced by that amount you set aside.

So, when you incur a medical expense, you can get reimbursed from this account, up to the amount you set aside for the whole year.  Reimbursable expenses include co-pays, amount not covered by your deductible, over the counter medications, prescription shoe lifts, prescriptions, eyeglasses, even many alternative/complementary therapies (I got acupuncture for a bum knee - and they coughed up).  Not sure if you can get a reimbursement on monthly premiums.

Other things:
1) This is a use it or lose it plan (although there was talk that this was being revisited by the IRS).  So if you don't use up the money, it's gone.  My univ. deals with this by allowing us to get paid on expenses through March instead of December 31.  So you have to know, roughly, what your medical expenses will be.  Be conservative.  I track all expenses, so I was able to figure out about how much to deduct.
2) If you have a big medical expense up front, before all of the money has been deducted, you can get paid back at once anyway.
3) If you have a lot of medical expenses, you may be eligible to deduct them from your taxes anyway (if you pay 7% or more of your annual salary on medical expenses).  
4) Different institutions implement the plan differently.  Mine gives us a kind of debit card, or you can submit receipts afterwards.

As for whether it makes sense in your situation, I think it depends more on your medical situation and your salary than your adjunct-ness.  Talk to the HR drones.

[Prytania]

Thanks!

[Flanders]

I think what almostnew describes is actually more like a cafeteria/flexible spending plan, which works in conjunction with health insurance.  A health savings account can also work that way, I believe, but more often it is a substitution for health insurance.  This is also, I might add, the current administration's favored health care plan.  Rather than pay monthly premiums to an insurance company, you put that money instead into an interest-bearing, tax-free savings account.  Then you simply pay full price for prescriptions or doctor visits out of that account.  So instead of you and your employer shelling out thousands of dollars a year for care you may or may not use, all that money goes into your account and carries over until you need to access it.  The strength of the idea is that it encourages more efficient use of health care.  The down-side is that it discourages preventive medical care, which is altogether a bad thing.  I don't know if this would be a good plan for an adjunct or not - not sure how people who only adjunct can afford health insurance at all.

[%sig%]

[almostnew]

I should add to Flanders' good summary that I'm at a university that offers both health insurance and the health savings account.  But my health insurance has an $1800 deductible for a couple.  So even though each time I see the doc, get tests, etc, I pay out of pocket - even though I pay the insurance company negotiated rate.  So I can get reimbursed for those expenses with my health savings account.

[Retain the Null]

Last year my school went to a health savings account plan. At first there was a large uproar over switching. The "insurance" has a super high deductable (5,550 per year). The worker is responsible for all expenses up to this point. A  HSA was put into place in which I contribute 210 bucks a month. The school in turn matches this 210 contribution. Thus, each month I have 420 toward health care. If you can go a few months without getting sick, things are ok. However, many of the families burn through the funds early on. As a result, they are out of pocket until the following payday. I still prefer this to our HMO which had crept up to almost 500 per month!

[ollie]

Yes, almostnew's first post is not referring to a Health Savings Account, which in fact has no "use it or lose it" provision.  The HSA is a new provision (Bush administration) that has to accompany a "high deductible" health insurance plan (whether individually purchased or through an employer).  It's ideal for a young person in good health who can put in every year, on a pre-tax basis, the amount of money equal to her deductible.  A good decade or so of doing that without having to draw much on it, and you'll have a nice little nest egg.

If an employer wants to, the employer can make it virtually "revenue neutral" to the employee:  offset the higher deductible with lower premiums and/ or employer contributions to the HSA.  And if the insurance plan comes with a wellness benefit so that you can get free physical exams without meeting a deductible, then a healthy person could actually see her doctor annually without tapping into the HSA until later.

The rationale behind it is, by raising deductibles, to get health care users to think like consumers.  The idea is that people who aren't paying their own health care costs aren't careful consumers as they are in other areas of their life.  I.e., if things are set up so that when we go to the doctor for pink-eye or the flu, WE pay the cost of the visit rather than just a co-pay, then we will spend more judiciously, doctors will be forced to respond to the market, and health care costs will be controlled.

In other words, it's based on the premise that what is driving health care cost increases is that they're sheltered from the market; introduce personal responsibility and consumerism and costs go down.

In other words, like it or hate it, it's exactly the sort of legislation you would expect from the Bush Administration-- markets and individual responsibility.

[AF]

I think it's more likely that Prytania's college offers the kind of account that almostnew describes, rather than the sort Bush has proposed.


>>>>
The idea is that people who aren't paying their own health care costs aren't careful consumers as they are in other areas of their life. I.e., if things are set up so that when we go to the doctor for pink-eye or the flu, WE pay the cost of the visit rather than just a co-pay, then we will spend more judiciously, doctors will be forced to respond to the market, and health care costs will be controlled.
>>>>

Can I just say that this is kind of crazy?  Not the point of the thread, I know.  But still.  Most of us do not go to the doctor for fun.  We may go unnecessarily, but usually we do not have the knowledge to assess that before we go. (As in:  I go to get my moles checked.  Unnecessary, as it turns out: no cancer.  But if I'd known that before I went, I wouldn't have gone.)  And there is empirical evidence to back me up on this.

[ollie]

Just to make it clear:  AF's argument against the "consumer" model of health care "reform" is an argument with the Bushies, not with me.  I'm simply 'splaining, not endorsing.

But on the other matter, unless the information I've read is incorrect, which is possible but I don't think so in this case, a "Health Savings Account" is a new legally-defined entity with certain tax provisions-- something that now EXISTS, not something Bush "has proposed".  It is a very specific thing, and it does not involve a "use it or lose it" provision.  If you have an account that is "use it or lose it" then I believe it is NOT a Health Savings Account.  Most likely it is a Flexible Spending Account.  Since the thread was begun with the question "What is a Health Savings Account?" and not "What is a Flexible Spending Account?" I tailored my earlier post in that direction.