Monday, December 31, 2007

The end of my HSA


Three days into a four-day break, my brain is finally starting to work again. Changing jobs without a day off in between was not one of my cleverest moves; I ended up leaving with an article still owed to old job (finally filed, yay!), scary amounts of information to absorb at new job, and all sorts of errands needing do be done in my scant free time. Like getting my first personal cell phone -- all my previous ones have been work cell phones. (That is a whole grumpy post unto itself.)

I'm now in the fun process of trying to wind up all my old work benefits accounts and start my new-job ones. It's amazing how much ends up being linked to a job: I've got to sort out my 401k, health care and mental health care coverage (separate providers from standard health care, at both old and new company), WageWorks commuter cash account (THANK GOD I will be free of WageWorks), ShareSave cash account, and my Health Savings Account.

Ah, my HSA.

My new company has amazing health care options. The cost is a flat percentage of my salary. To cover both me and David is 2% of my gross (just me would be a mere 1%)-- which ends up being only a bit more than I was paying at my old job to insure just me, and will save us more than $1,000 a year by letting us cancel his (more expensive) insurance. It also appears to be better coverage, even though it's the same provider I had before, Empire Blue Cross. Seems the new plan coughs up for more comprehensive coverage. Yay!

The new job also offers an HSA, but the cost is such a small fraction less than the traditional coverage that it isn't worth it. So, after one year of experimentation, I'm ending my voyage into these minimally charted health-care waters.

So how did it work out?

I opted for the HSA last year because its premiums were less than one-third what the premiums would have been for traditional insurance. My company's strange plan made it so that it was less expensive to do the HSA and go through the entire deductible than it would be to pay for regular premiums.

On that front, it was a success. My usual doctor is out of network (in fact, she's trying to quit taking insurance entirely), and I used HSA money to pay the bill for an annual checkup. Though I was technically paying "out of pocket," it was cash that would otherwise have gone toward higher premiums, so it was cheaper. In the end, I paid around $500 less for health care last year than I would have with the traditional plan. I also had no emergencies, though. That number would look different if I'd required anything beyond the usual routine stuff.

While the HSA saved me money, the politics of the thing (it's a tax shelter masquerading as a health-care policy) drive me nuts, so I'm quite happy to be saying goodbye to it and heading back to a traditional plan.

Which prompted the question: Uh oh, what do I do with the HSA balance? The entire idea of HSAs is that unlike FSAs, the balance doesn't "expire" at the end of the year -- you're supposed to accumulate funds, as you would in a 401k or other savings plan. An HSA also is intended to be portable. If you change jobs, you can keep it.

But since I'm not going to be funding the HSA any longer, I don't really want to drag around the $230 or so I have left in it and keep it long-term. I was procrastinating in figuring out how to kill the balance when Amex solved the problem for me: it's also ditching its HSA plan.

Seems the HealthPayPlus HSA business isn't working out for American Express, the provider of my plan, and it's sold its accounts on to ACS/Mellon. Amex sent me a packet of papers to fill out to transfer my account to Mellon, but at the bottom was some fine print noting that if I don't take action by Jan. 18, Amex will simply close my HSA and send a check for the balance.

Score one for procrastination! I love it when ignoring problems actually does make them go away.

This distribution has tax implications. Because HSA funds come out of paychecks pre-tax, I'll presumably have to pay taxes on the money I get in the check from Amex. The paperwork they sent goes into no detail on how that will work -- it simply says "contact your tax advisor for more information regarding the tax implications of this option."

I am my tax advisor, and I have no clue, so I'm going to rely on the tactic that has been working so well for me: ignoring it. Whatever happens, the dollar amount is so small I'm not particularly worried about getting hit with a tax bill.