I Love My HSA, So Far.

When I decided to work as a contractor at the beginning of this year, I faced the daunting task of buying an individual health insurance policy. Since I am relatively young and healthy and need only to insure myself, I opted for a high deductible health plan (HDHP) with a health savings account (HSA). My individual plan has a $2500 annual deductible, 10% coinsurance for in-network care, and a lifetime maximum of $5 million for the bargain price of $145 per month—not too shabby a deal with continuously escalating healthcare costs. The downside is, of course, that I must pay out-of-pocket costs upfront until I meet the deductible, and there is no out-of-pocket yearly maximum for my policy. Also, preventative care is subject to the deductible on my individual plan, whereas employer-sponsored HDHPs with associated HSAs often cover these services at 100% to encourage their employees not to forgo crucial screening check-ups. I don’t have mental health or maternity coverage, and the former, I could certainly use!

My prescription medications are subject to the deductible before tier level co-pays kick in, which means I’ve done a lot of shopping around at online pharmacies and large retail chains to find the best price on the generic medication that I take regularly. I just scored an awesome three-month supply deal for only $12 at Walgreens. It entails purchasing a yearly membership for $20, but the savings alone slashes my annual drug bill by 75%. I probably won’t even bother submitting these claims to the insurance company. Unless I face a serious illness or injury, I don’t anticipate ever meeting my annual deductible.

Why am I in love with my HSA so far? I enjoy a relatively low monthly premium in exchange for paying my medical costs upfront, which are few and far between and hopefully will remain that way. Given my genetic luck and consistent lifestyle habits (e.g., healthy diet, regular and strenuous exercise, and multiple stress-relieving activities—yoga, psychotherapy, journaling) thus far, I stand to gain financially by investing my HSA money for the long-term while budgeting for generally predictable healthcare costs on a yearly basis. Should I incur any medical expenses that I can’t pay without going into debt, I can always access the tax-free money in my HSA account by submitting my meticulously-kept receipts. I contributed the 2008 yearly maximum of $2900 to my HSA account earlier this year, which reduces my taxable income, and I plan to continue contributing the yearly maximum in the future. My HSA is currently invested in Vanguard’s Total Stock Market Index Fund. My goal is to use this fund as another retirement planning vehicle. With approximately 30 years to go until I reach full retirement age, I could amass a pretty substantial kitty that would cover healthcare costs on a tax-free basis.

Do I recommend HDHPs/HSAs for everyone? Of course, not. They are terrible for the working poor, which includes many so-called “middle-class” people and certainly for people with chronic medical conditions that require expensive treatment regimens. I’m also concerned that this model of healthcare coverage disincentivizes wellness screenings and routine care among people who desperately need it, but cannot afford it. If these plans become the norm, and they are being aggressively marketed by the big insurance companies (I should know since I worked for one), I worry that we’ll see a marked decrease in public health over the long-term. Who do HDHPs/HSAs benefit? The healthy and wealthy. I’m by no means wealthy, but I’m privileged socioeconomically in that I wouldn’t be destroyed financially if I had a health-related setback. For the record, I fully support universal, single-payer healthcare. Until then, I have chosen the most beneficial coverage option for my individual situation.