Is a Health Savings Account a Good Idea?

Q. I read some of your investment advice regarding indexed annuities and I am so glad that I did not choose to invest in them.

I do want to ask your opinion regarding Health Savings Accounts. On April 1st, the company I work for is changing our current Blue Cross health insurance to Guardian Insurance set up as a HRA. I am single and currently have a $500 deductible. Under the HRA, the deductible will be $2,000.

Currently, the premium is split 50/50 between employer and employee. I pay $205.00 per month. Under the HRA it will still be split 50/50, but the employer is going to fund each employee's Personal Medical Fund up to $900. As I understand it, my responsibility will be $1,100 of deductible before any insurance coverage kicks in. We have not been given any rates for the HRA insurance, but I imagine it will lower than the monthly $205.00 amount.

I am trying to decide if this is a "good" thing to change to or if I should obtain an individual policy of my own. I contacted my insurance agent and was quoted a price of $213.20 per month for similar insurance ($500 deductible) that I currently have.

I assume a portion of the amounts I pay in to the "fund" would be tax deductible, but I am still not sure that a HRA is the right thing for me to do.

A. A lot will depend on your health status and how much you use your insurance. If you are healthy and don't take many medications then the HRA could benefit you because the amount the company contributes to your account is yours and can grow from year to year.

On the other hand, if your health means there is a good chance of using your coverage, then the HRA might be more expensive because the amount of deductible you will have to pay. Whether your monthly premium is lower than the $205 currently will also be a factor.

With private insurance, they most likely will not cover any existing conditions and it is very likely that you will see those premiums continue to rise. Of course, so will the HRA premiums but hopefully not as much.

It's a tough decision and there aren't any easy answers. The days of company paid health plans are quickly coming to an end and employees will have to bear much more of the cost. This may help the overall situation in the long run because people may not seek medical care as often if they have to cover a portion of the cost. When it's free, people use it when they don't really need to.

Your posted comments on this and other questions are welcome.
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