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How HSAs Can Save You Money

January 10, 2017

Today's blog was written by any amazing physician and human being out of Boise, Idaho as she shares her experience with being self-employed, fighting breast cancer, and her financial woes. She is the owner of sparkMD (www.sparkmd.com) and is very active in fighting to change our healthcare landscape.  Currently IRS tax code needs to be clarified so you can without a doubt use your HSA to pay for a Direct Primary Care membership (i.e., Paradigm Family Health).  While I personally am a big proponent of HSAs, HSAs paired with a high-deductible plan should not be the ONLY healthcare solution.  Someone who is going to hit their deductible year after year will most likely struggle if it is a high deductible - regardless of how it is paid.  But, this is a great option and safety net for many when your health takes an unexpected turn.  Ask your legislators to co-sponsor and vote for S.B. 1989, H.R. 365, H.R. 6015. #DPCsavesHealthcare

 

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I'd like to make an interesting (at least I think it is interesting) point about HSAs.  I am a small business owner. I have worked 4 jobs in the last 2 years to get our DPC clinic off the ground. 2016 was going to be Ah-MAZING from a money standpoint. I was working Saturday Urgent cares, 6 one-week LTAC gigs, ongoing 10 hour a week hospice commitment and spark. spark hadn't paid me but was going to (that was the plan). 

 

My husband works and we have insurance through his work. We have always had the lowest premium, highest deductible health plan and have an HSA-eligible plan. Which I NEVER, ever use. I pay cash at the dentist. I pay Costco for vision exams. I balked year after year at the 'stupid' wellness online stuff that would credit us $200 or $400 towards our HSA. Waste of my time. But my husband is risk-averse and so because of him we were plunking $190/month into this HSA. And because of him I had long-term disability insurance (which I almost cancelled).

 

In April, April fools day, actually, I had my 'welcome to 40' mammo. There was a R breast spiculated lesion. Breast cancer. Thus begins our health care adventure. 

I know I'm a doctor. And many people would assume we are financially better off than most. Paying $6350 this year towards health care bills would not have "ruined" us. But $6350 PLUS NO source of income for 8 months when we had planned on me making about $80,000 PLUS being away from my business for illness was a BIG financial hit. I very reasonably could have had to close the clinic. In doing so, I would have quit being a doctor, as well.

 

 At the onset of all of this I thought, "holy crap. how are we going to pay for my healthcare?" "what's our deductible?" "how much of this is going to be covered?" "do we have some money somewhere to pay our deductible?"  Thank goodness we had almost $5000 saved into our HSA.

 

We suspended some debt, turned 'down' my government loan, got a HELOC on our house, reduced expenses, had help from family and a lot of very nice friends who made us food, took care of our kids, cleaned our clinic. Patients were... patient. My physician partner worked at our practice, full-time, for less than $3000/month. We're still looking at month-to-month financial survival. I'm getting back to work... slowly. I won't return to all 4 jobs. Thank GOODNESS we have a long-term disability policy. It is the only way I have been able to take care of myself in a small way and keep our practice open. Our HSA is at $200 in 2017 and there's more healthcare ahead. I wish we'd had more put away in our HSA. 

 

There's a lot of politics around healthcare. And I know this political party or that political party prefers HSAs. But seriously- if you do your taxes and make ANY effort to NOT pay a tax on something, if you donate things to a thrift store and report that as a donation, if you document your medical expenses to get a tax deduction... regardless of your economics, if you want to pay LESS taxes, to have more money in your pocket for healthcare (or for anything else, for that matter), that is what an HSA is. It's a savings account. A pre-tax savings account. Do the wealthy benefit 'more' from HSA's? Maybe...in that they are potentially taxed at a higher rate so putting money into an HSA is more 'valuable'. But the notion that HSA's don't benefit people who struggle financially is absurd.  If you are going to have ANY health expenses and you are going to pay ANYTHING towards healthcare, doing so pre-taxed saves money.

 

The objections to HSAs comes in part because they are associated with HDHP's. HDHP's are "high deductible health plans". High deductible health plans often (but not always) put more of the cost of insurance and health care to the individual instead of the employer. THIS potentially does dramatically increase a person's individual out of pocket health care spend. BUT HDHP's are NOT HSA's. HDHP's are PLANS. HSA's are savings accounts. While they can work together, they are totally different things.

 

Here is why HSA's actually help people have MORE money in their pocket for healthcare: Say a doctors visit costs $100. You make money, get a pay check. Say you are in the 25% tax bracket. To TAKE home $100 you have to earn $133. So you work, make $133, take home $100, pay your doctor. $0 in your pocket after all of that. Same scenario, say you have $10 of that $133 put in an HSA. You are then taxed on 'making' $123. Taxed the same, you take home $92. AND you have $10 to put towards health care/savings. So you use the $10 in your HSA to pay your doctor, use $90 of your money to pay the rest and you keep $2. On a larger financial scale this means more money in your pocket for the same work and the same healthcare expenses.

I know this is complex and a bigger 'financial' model would be more illustrative but, having NOTHING to do with the fact that I am a DPC doc, HSA's make financial sense. Unless someone else straight-up pays all of your bills, HSA's make sense.

 

Hope this helps people understand that this is ONE option of how to control your dollars, save some money (maybe) and reduce your taxable income. It is more of an IRS issue than a healthcare issue. HSA's are different than HDHP's. And the conversation about the two things should be separate.

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