This is only a part of the notion. It also provides for flexibility. In Ian's case, he'd have almost 4K (or more if he and Liz opted to put more money into the account)to spend on whatever mental healthcare provider he'd like, as well as medicine that's prescribed. To give an example, I'll use my own life path. I'm going to use some estimates, so take the numbers with a small grain of salt:
My first job with medical insurance came when I was 24. Now, I don't think it would meet the average I sited above so I'm going to assume it was only paying 2k a year in ins. premiums. I was on that job for a year, but I didn't go to the doctor except for a routine check up. The cost billed to the insurance company was 60.00 + my 15.00 co-pay. That's 75.00. There's also the premium for catastrophic health insurance. Let's say around 400.00 a year.
So let's say I had an HSA. I'd have had 2000.00 in the bank because I was young and didn't contribute. I had to take out 75.00 (we're going to assume no price drop due to HSAs) and that left me with 1925.00. I went to the dentist twice at 60.00 per visit. So that's another 120.00 deducted. That leaves me with 1805.00. Take out the catastrophic and we're down to 1405 At this point, I could take the money out and pay normal income tax on it. Or just leave there. I'm going to leave it there.
The next year, I changed jobs. Now, it took 3 mo. for my ins. to kick in. But with an HSA, I'd have been able to keep that 1405.00 and use it if something happened. Nothing did, and at my new job my healthcare contribution was probably higher than average. But I'm going to use the average number of 4K a year. Now, I only got 9 mo. of coverage that year, so that's 75%. That means 3k. My HSA now has 4405.00 in it. Less the same 195.00 for physical and teeth cleanings. That leaves us with 3810.00 after the catastrophic.
I stay in the same position for another year. I get the full 4K and I haven't used any of that money again that year, save for the same check up and teeth cleanings. So I'm at 8005.00. Then, disaster strikes. I lose my job. Fortunately, that 8005.00 is mine. I start doing contract work, so my real dollar income is up, even if my benefits are down. I don't add more to it, reasoning I don't know if this contract thing is going to work out and I need to pay my bills. I forego one teeth cleaning and the checkup, so I'm still at 7910.00. Maybe not too smart, but I'm 27 and healthy and in reasonably good shape so I take the gamble.
![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
(no subject)
Date: 2006-03-08 10:38 pm (UTC)My first job with medical insurance came when I was 24. Now, I don't think it would meet the average I sited above so I'm going to assume it was only paying 2k a year in ins. premiums. I was on that job for a year, but I didn't go to the doctor except for a routine check up. The cost billed to the insurance company was 60.00 + my 15.00 co-pay. That's 75.00. There's also the premium for catastrophic health insurance. Let's say around 400.00 a year.
So let's say I had an HSA. I'd have had 2000.00 in the bank because I was young and didn't contribute. I had to take out 75.00 (we're going to assume no price drop due to HSAs) and that left me with 1925.00. I went to the dentist twice at 60.00 per visit. So that's another 120.00 deducted. That leaves me with 1805.00. Take out the catastrophic and we're down to 1405 At this point, I could take the money out and pay normal income tax on it. Or just leave there. I'm going to leave it there.
The next year, I changed jobs. Now, it took 3 mo. for my ins. to kick in. But with an HSA, I'd have been able to keep that 1405.00 and use it if something happened. Nothing did, and at my new job my healthcare contribution was probably higher than average. But I'm going to use the average number of 4K a year. Now, I only got 9 mo. of coverage that year, so that's 75%. That means 3k. My HSA now has 4405.00 in it. Less the same 195.00 for physical and teeth cleanings. That leaves us with 3810.00 after the catastrophic.
I stay in the same position for another year. I get the full 4K and I haven't used any of that money again that year, save for the same check up and teeth cleanings. So I'm at 8005.00. Then, disaster strikes. I lose my job. Fortunately, that 8005.00 is mine. I start doing contract work, so my real dollar income is up, even if my benefits are down. I don't add more to it, reasoning I don't know if this contract thing is going to work out and I need to pay my bills. I forego one teeth cleaning and the checkup, so I'm still at 7910.00. Maybe not too smart, but I'm 27 and healthy and in reasonably good shape so I take the gamble.
(More coming in an additional reply)