The View From Your Sick Bed

by Patrick Appel

A reader writes:

In my last job I had an an HSA plan and I loved it.

We are a family of three, my wife and I were then in our late thirties, healthy and with a new son.  My paycheck deduction for health care was going to be ~$400/mo no matter if I went with an HMO, PPO or an HSA plan.  However under the HSA, the $400 was put into an account under my control.  The insurance company got the employer contributed portion.  My account was more or less like an IRA.  Money could accumulate year after year and after I turned 65, if there was money left in the account I could take it out.  Otherwise, my wife and I were issued debit cards from that account which we could use to pay for any medical item, like doctors visits or Tylenol at Walgreens.  No messy reimbursement forms.

The deductible under that plan was about $5000/year.  But that did not mean that I was paying the first $5000 of our medical care.  Just like any other non-HSA plan, the rates were negotiated, doctors visits had small co-pays, prescriptions were $10, etc.  But, if there ever were to be a situation where the deductible would come into play, I would already be contributing $4800/year (12 * $400) from my paycheck.  If not, that money did not disappear at the end of the year like in an FSA.  By the end of year two, allowing for normal expenses, I could have $8000 in the account, etc.  And I could spend this money on any medical expense I wanted, including glasses, Lasik, etc.

With my current employer, I am back to a "normal" plan, with a $3500 deductible, my paycheck deduction goes to the insurance company regardless of what happens, and I need to put on my 'clairvoyance' hat every January to guess how much to put into the frustrating FSA plan, knowing that if I guess wrong, at the end of the year, any remaining money in the FSA plan goes 'poof.'  During the year, it is usually a frustrating experience whenever I submit reimbursement claims to the FSA plan.

Here's a question for your readers, where does the unused FSA money go and on whose bottom line does it appear?