Health Savings Account plans: not a bargain?

I’ve looked at Health Savings Account plans, and they seem to come with higher premiums than I would have expected.  Shouldn’t these plans be really cheap, since they have such a high deductible?

Penny Watcher

Dear Penny Watcher,

The Health Savings Account should, in theory anyway, have lower premiums.  The HSA plan should definitely cost less than a plan with a lower annual deductible, though it may not be a whole lot less.  These plans are required to cover a lot of things with a small co-pay just like the lower deductible plans.

In your first year of an HSA plan, your HSA may not have enough money in it to pay the whole deductible.   Thus, you are a more cautious consumer of medical care — it’s coming out of your pocket, after all.  This is part of the reason a high deductible plan costs less: they are counting on you being careful with your own money.

In the second or later years, you may have more than enough in your account to cover your deductible.  Thus, you are less cautious about what you are spending on medical care: you’ve got the money in the bank.  Over time, the deductible does not have the impact that it once had.

Since HSA rates are based upon the whole population of people, your rate is based upon HSA newbies and veterans.  I’m guessing this is watering down the rate advantage HSA plans used to have.

Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.