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Health Savings Accounts in action

Sound Mind Investing went to HSAs for our employees in 2006. So with three years under our belts, we can vouch for how they affect spending decisions. Here's how they recently affected mine.

Let me first say that my wife Kim and I have been trying to pay our health care expenses out-of-pocket so that we can use our HSA as another type of retirement vehicle. And since we're more or less keeping our hands off of it, we might as well invest it, right? So every month, the company makes a deposit into our HSA which is held by The Sound Mind Investing Funds and used to purchase shares of SMIFX.

Now this is a great way to plan for retirement, but it's not cheap because remember, we're paying our health care costs out-of-pocket, NOT out of our HSA. So last year, when we had another baby, we had to have the cash to pay for the doctors and hospital visits if we didn't want to use some of our HSA investments in SMIFX.

But there's some good news. Once we meet our deductible, everything over that deductible is paid for by our insurer. So when December rolled around and we had finally met our deductible, I promptly scheduled visits to a chiropractor. I also scheduled a visit to a new allergist as it had been a while since I had been tested for allergies. It's a painful enough procedure without the cost. So at least getting it done for "free" helped soothe the burn a little.

Furthermore, our health plan covers prescriptions after the deductible is met. And wouldn't you know, the allergist prescribed three new medicines. We're on mail-order prescriptions where they send three month's worth at a time. This amounted to $600 worth of medicine that I didn't have to pay for. But I needed to get these prescriptions in before the end of 2008 because come 2009, we're back to paying everything ourselves. This is an HSA in action.

Fast forward to about four weeks ago, I started having heart palpitations. I'm a reasonably healthy guy and was a little concerned. I seem to read a story every year about some super fit athlete who dies unexpectedly from an undiagnosed heart ailment. But here's the thing — if I were going to be tested, it was going to cost me. It came down to peace of mind vs. what will likely be $1,000 worth of EKG's, stress tests, and Holter monitors. I decided it would be prudent to have the testing done regardless. As it turned out, my tests came back with good results. So yes, I'm paying a lot of money for what amounted to assurance. But that's okay. It was my decision. This is an HSA in action.

Fast forward to this morning. I've been battling a cold for a while, so when I was getting my allergy shots yesterday, I made an appointment for this afternoon with my allergist. But when I woke up, I felt a lot better. Cough was more or less gone and my voice was no longer hoarse. So I had a decision: Pay for a doctor visit when I'm potentially on the mends or forgo it and hope for the best? I canceled it first thing. This is an HSA in action.

HSAs are the real deal. There's a tax benefit, a choice benefit, and a cost benefit. They give the consumers the freedom to spend or save or invest based on what's best for his or her life situation. Giving the consumer the ability to decide for themselves how best to manage their health care costs — and pocket the savings — is an HSA in action.

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