HSA, FSA, and the Cost of Being Healthy

There are a lot of different versions of health benefits available these days. Even when you are fortunate enough to have insurance through a company plan, it seems basic healthcare costs have skyrocketed over the last decade. For instance, my co-pay to visit any sort of specialist is $50 a visit. Assuming I ever need to go to a specialist for more than one visit, which is often the case if you need to see a specialist, that adds up fast.

My last company offered an HSA plan, where instead of paying for a more expensive plan, they’d put $100 per month into your account. The deductible was high, like with all HSA plans, requiring a $3000 spend per year before additional fees would be covered at all. So it was basically a high-risk plan, with an HSA savings account that, theoretically, would be beneficial as a separate retirement account if you were healthy and didn’t need to touch the money. You could either leave the funds inside it to gain basic money market interest, or you could open an investment account where you could put the money in a handful of mutual funds available.

The good news is with HSAs, even when you no longer have the insurance plan open with them, you can still use any money put inside there for medical costs in the future. Plus, the money that goes in is tax free and as long as you use it for a qualified medical expense the money that gets spent is tax free too. But there’s a catch…

I had one full year on that plan and, in addition to the $100 per month paid by my company, I managed to max out the $3k, expecting to use this for a retirement account if I didn’t spend the entire amount. Over the year I spent about $2000 on medical costs, not high enough to hit the deductible, and leaving about $1000 in my account.

The problem is that each month the account stays open, I’m charged $2. That seems like a tiny fee, but quickly the amount it costs to have the account ends up being more that the money saved by being tax-free, even with any small interest the account may earn. The longer I wait to spend the $1k, the longer I lose $12 a year. As I spend more and more of the money in the account, down to a few hundred dollars, $12 per year to keep the account open ends up being extremely expensive.

Meanwhile, FSAs, which are more common, are rather ridiculous because you can only put $1000 into them, and if you have a bad health year that is nothing, but if you have a good health year you lose all the money you put into the account — so at the end of the year you’re out spending too much money on fancy glasses or trying to through money at some health-related expense so you don’t lose what you put in, and lose any tax benefit that the account was supposed to offer in the first place.

Still, health costs remain extremely expensive, so getting through the HSA or FSA funds really shouldn’t be an issue.

I’ve been thinking lately about — if I were rich — what health-related expenses I would opt to spend some of my savings on… (in addition to the expenses of going to the doctor, there is also the expense of taking time off from work to actually go to the doctor, but I’m focusing on the expense just to see the doctor here…)

1.¬†Endocrinologist. $50 co-pay for each visit, plus the cost of any tests required to diagnose any problems I have, and medicine to treat it, which could quickly add up to the thousands. In the next 3-4 years I will need to spend on this if I want to have children…

2. Fertility Clinic. Will cost a lot. Thousands. Tens of thousands. I’m not ready to have kids today, but my boyfriend and I plan to get married in 2013 and to try to have our first kid in 2014. I would like three kids, but I know I’ll be lucky if I can have one. With PCOS, I don’t ovulate, and while it’s possible doctor’s can make me fertile, every visit, diagnostic test, and treatment is going to cost hundreds, if not thousands of dollars. I’m budgeting $40k per kid right now, in terms of going through the process to have one. So my three kids will cost $120k (if the treatments even work), and that’s about all the money I have in savings and investments right now.

3. Dermatologist. ¬†$50 co-pay per visit. To get the remaining cysts removed from my head, and to figure out how to handle the cystic acne that pops up when I’m stressed. I already got two cysts removed from my head this year and, with insurance, that cost me about $700. $50 per visit (it required two visits), $550 to remove both of the cysts, and $20 for the test to see if they happened to be cancerous (they weren’t, thank goodness.) $200 per month on average.

4. Exercise Classes. While this isn’t a legit health expense, it’s probably the most important. Yes, I can get healthy going for a run and doing sit ups in my bedroom, but in order to stay healthy over the long term, knowing myself and my hatred of all things that involve getting my heart rate up, I’m only going to get healthy if I can take a few dance classes per week. Even though I’m a terrible dancer, I love getting a cardio workout when I take dance classes, and feel great afterwards. In any case, this is a list of health-related expenses I’d have if I were rich. I’d like to join a dance studio and take 2-3 classes per month, which would be about $180 per month.

5. Nutritionist. I’d like to see a nutritionist who focuses on how to manage one’s diet when you are addicted to carbs and carbs are everywhere. In order to actually follow through on any recommendations the nutritionist might offer, I need… assuming this would be $200 per month.

6. Podiatrist. I have a lot of problem with my feet, with a bone that sticks out on the side, and any reasonable good-looking work or dress shoe causes me great pain. I’d like to see a podiatrist about this, and possibly have the same surgery my mother had to remove part of the bone so shoes fit and she wasn’t in pain all the time! Cost? A few hundred? Thousand?

7. Mental Healthcare. Psychiatrists and psychologists are extremely expensive. Those trained to treat Borderline disorder (which I’m pretty convinced I have at this point) cost $250 / hour or more ($1000 per month). I’ve gone to therapy on and off throughout my life, and spent a lot of money on it — insurance only covers a small amount of the bill, and in the long run it’s not worth letting your insurance company know you’ve sought out treatment for mental health issues. Maybe Obamacare makes this a moot point, but in the past I’ve been denied insurance due to pre-existing conditions, namely, having depression on my health record.

I’m sure there are other health-related costs I could spend money on, but those would be the 6 that I’d focus on if I were rich. But I’m not rich. So what do I choose to spend my money on when it comes to my health? Do I just give up on having children¬†because it will be too expensive to have them? Do I sacrifice my mental health because good, relevant psychological health is, realistically, $1000 per month? Or, do I treat all of my problems, from mental health to my ovaries, and go into debt because of it?

I wish that healthcare spending was taught in high school… I’m pretty good at figuring out when I shouldn’t spend money on items that I don’t need (ie, buying a used car versus buying a new car) but I don’t know how frugal I should be when it comes to my health.

 

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2 comments

  1. Nick says:

    Where are you getting that you can only put $1000 into an FSA? Currently you can put any amount into an FSA that your company allows, I've seen them as high at $10,000. In 2013 it gets capped at $2500, which is still a good chunk of money. If I maxed out my FSA at that amount I save $750 on my medical expenses. At any rate the full pledge is available day one and you don't have to pay that back to your employer. It's dual risk. If you don't use it you loose it but if you pledge $1500 for the year and you use it in the first 3 months of said year your employer gets stuck wtih the balance. They are not allowed to charge you for that.

    HSAs are limited to HDHPs and have a monthly max for contributions also (Between 4 and $500, I think).

    HRAs are employer funds only. They're a great way for employer

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