okay — i do this for a living so i’ll try my best to explain it. if you have any other questions, you can send me a message or ask it here.
HSA is a health savings account that is like an IRA for your health expenses. You can open it at any bank or at the bank that your employer chooses. We use Merrill Lynch because of our relationship with them. It is not the best option in terms of HSAs but it works for us.
An HSA has to be paired with a high deductible health plan (deductibles have to be at least $1,200 to qualify as high deductible plan for 2011). If you have an HMO or PPO, you are not allowed to have an HSA. The annual maximum contribution is $3,050 (single) and $6,150 (family). If you have expenses above this you can also open up a limited flexible spending account. I have both accounts.
With a high deductible plan, you are paying the full amount each time you see a doctor or fill a prescription. It’s not the “retail” amount but it’s the health carrier’s contracted rate which should reflect some sort of discount. For example you go see your doctor, I find this usually ranges about $150 (primary care) to $400 (specialists). My prescriptions also range depending on how “new” they are. So when I pick up my Singulair, it was about $120 per month.
What the other poster mentioned about preventive care doesn’t cover many visits. Most carriers go by the AMA guidelines for your gender and health. So for me I get my annual gyno visit covered but that’s about it. For birth control pills, it’s currently not covered but Obama is requiring health insurance companies to cover them starting August 2012.
So why have insurance if you’re paying out of pocket for everything? So how the plan is supposed to work is that you pay for everything and it gets applied to your deductible. In your case it’s $5,000. Once you hit your deductible, the carrier picks up 100% but not 100% of everything. My plan has a $1,500 deductible (that I met by having sinus surgery earlier this year) so now almost everything is covered at 100% with the exception of my prescriptions. My prescriptions are now on a copay system so instead of paying $125 for Singulair, I pay the $50 copay.
So what is the HSA for? You should be able to pay your expenses directly or reimburse yourself from your HSA. My employer funds $3,000 per year into an HSA for me so doing the math, after meeting my deductible, I’m still up $1,5000. However, most employers are not as generous so employees are stuck doing pre-taxed contributions to their HSA. Some employers don’t even assist with opening up an HSA so employees are forced to do it on their own. HSAs got a bad reputation because many employers starting switching over from traditional PPOs to high deductible plans for the monthly premium savings without using some (or all) of the premium savings to fund an HSA for their employees. I think employers should at the very least provide the seed money by at least covering the deductible for the first year and since the money rolls overs form year to year, the idea is that there’s leftover money to help with the following year.
I like my high deductible plan because my employer funds my HSA. If I don’t go to the doctor, I can save the money in my HSA. If I leave my employer, I can use HSA money to pay my COBRA premiums and when I retire, I can use the money for non-medical expenses.
I know you said you were concerned about birth control pills. I find that most run about $65. Sometimes you can sign up for a promotion card from the pill’s manufacturer. For example, I was able to get Yaz for $25 because Bayer covered the rest. I know a few coworkers go to Planned Parenthood because it’s cheaper.