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HSAs are Dumb
At my day job they’re always trying to push health savings accounts like it’s their job. Do they get a commission or something? It’s a good idea in theory, you put aside pre-tax earnings to pay for health related expenses. The only problem is that this plan is geared entirely to the unhealthy.
You may use your HSA for a weight loss program to treat obesity. You may not use your HSA for your gym membership dues. So if I get super fat, then I can use my pre-tax cash to slim down, but until then health club going isn’t a health related expense.
You may use your HSA for birth control pills. So my girl can enjoy blood clots, stroke or heart attack, but no using the HSA for condoms, which help us all avoid STDs.
You may use your HSA to go to the doctor to get your scurvy treated, you may not use your HSA to buy some vitamin C.
You may use your HSA for a root canal. You may not use your HSA to buy some toothpaste and toothbrush to prevent said root canal.
It’s like these rules were written with the intention of discouraging any preventative measures. I am sure it’s a mass conspiracy to get me to neglect my health and spend more with the drug companies or something.
hmmm.. that’s a bit random. We have the NHS here so I don’t have private health insurance, since everyone has national health insurance…
You can get free condoms and birth control on the NHS, but similar, you buy your own vitamin C, but they’ll treat your scurvy. I think because they believe keeping yourself healthy is up to you, and if you let yourself get unhealthy, they’ll help you out. What they need is more education, to teach people how to keep themselves healthy. Cos just assuming isn’t working anymore…
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Comment by SSG — December 18, 2008 @ 4:39 pm
If doctor visits and birth control were all being handed out for free I might not quibble over toothpaste and vitamins, but we have to pay for all health related expenses here. The whole point of the health savings account is that we don’t have to pay income tax on top of money we are spending for health related expenses. My complaint is that it’s more like an unhealthy savings account, since I only get to spend my OWN hard earned (but not taxed) cash on things once I get unhealthy. It would make more sense to encourage people to do things to keep themselves healthy in the first place. But I guess that makes less cash for the medical industrial complex.
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Comment by ex-boyfriend — December 18, 2008 @ 4:45 pm
When I first started reading this, I was gonna really disagree with you. Because financially, the HSAs have only made sense to me if the person using it is a “healthy” person to begin with. Really in my case the maintenance drugs me and the wife take make them a tough sell (that was until my company’s insurance plan raised Rx co-pays through the roof and also instituted a Rx deductible, separate from the regular PPO deductible). But anyway, I found this page trying to figure out if things like toothpaste are allowed as a qualified HSA expense. I still don’t really know. You say they are not, but some of the IRS pubs can be interpreted otherwise.
But anyway, regardless of whether I can get toothpaste or not with an HSA, the real savings with HSAs is that you can essentially deduct every expense from your income. The rules (see IRS pub 902) on what constitutes a qualified expense are based on what you can normally use as a tax deduction if you itemize deductions on your income taxes. I think the intent there was that people could easily lie about how much toothpaste and condoms they buy just to get their medical expenses past the 7.5% of adjusted gross income that is needed to take the deduction in the first place. The advantage of the HSA is that the 7.5% rule doesn’t really apply and you get the deduction automatically. I guess you could still lie about it, but with the HSA debit/credit card maybe some day the IRS will get with the times and realize it is much harder for us to lie about things. And, since the intent is to use the pre-tax money to be healthy, I agree that they need to change the rules a bit.
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Comment by Allen — February 23, 2009 @ 9:55 pm
An HSA is directed towards those with health problems, you are correct. The portion that you are missing is that HSA’s go along with High Deductible Health plans. This means that for those who are healthy, in other words go to the doctor for their regular check ups, preventative care, etc. Their services are generally free under a high deductible plan, if the person goes in network.
As for the HSA not covering things like gym memberships and vitamins, you have to take that into context, yes that can help people be fit…as long as they use it. Since there isn’t a way to track that then they just do away with it. I know that for medical prescriptions that are covered it could fall under the “who knows if they are taking it.” But that is a little more obvious situation to monitor than said vitamins or gym memberships.
As for tooth paste…it is tooth paste, that is an almost infintessimally small cost over the course of a year. We have to take responsibility for some things and the government, like it or not, needs money in order to operate, especially our current one.
I also think that it helps people be financially aware of the cost of health care and being healthy. If everything was covered then we wouldn’t care or have any idea what charges were being put on certain things.
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Comment by Chris — August 15, 2009 @ 1:12 am
It does really promote bad health. I get it, its an account to pay those deductibles. But it would make a whole lot more sense to allow gym memberships (which some health plans will contribute if you work out at least 12 days a month). If insurance companies address so should this.
Instead this promotes seeing a md for weight loss help and possible trying medications (if I’m understanding this correctly) that would be covered by this. Just seems backwards.
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Comment by jace — March 19, 2010 @ 7:00 am