The HSA Experiment One Year Later: How Did We Do?

Saving & Investing / Tuesday, January 6th, 2015

Early last year I blogged about how we had switched to a high deductible, Health Savings Account (HSA) eligible health insurance policy for 2014. You can follow the link above to read the specifics, but the basics were these:

1. While we had had a high deductible policy for a number of years, our policy had office visit and prescription drug copays, which meant it wasn’t an HSA eligible policy. Our new policy had no copays, meaning expenses were covered at 0% until the deductible was met ($6300 individual/$12,600 family); after that point, everything was covered at 100%.

2. Our goal was to fully fund the HSA at $6550 (the family limit for 2014), but not use it to reimburse ourselves for eligible expenses. We hoped to leave the full amount there as additional tax-advantaged retirement savings.

Earlier this week, I pulled up a Quicken report to see how we did. Here’s how the final numbers shook out.


The good news is that the cost of our new policy was just about half of the old and we saved $7856 in premiums in 2014 over 2013. About $750 of that savings was due to our daughter graduating college and becoming gainfully employed with her own benefits. We only had to cover her from January through July of last year. The rest was the difference in the cost of the policies.

Out-of-Pocket Expenses

Our out of pocket costs, however, were quite a bit higher in 2014 than 2013. Part of this was a result of no longer having copays for our office visits and prescription drugs. The rest was due to the fact that on the last day of May I fell and broke my wrist, which required an ER visit, two surgeries, and physical therapy. (I know…ouch.) When all the dust had settled our out-0f-pocket costs for 2014 were $5178 higher than in 2013.

The Bottom Line

But as you can see, our savings in premiums were greater than the increase in out-of-pocket costs. All in all we paid $16,429 for health care premiums and expenses in 2014, compared to $19,107 in 2013, a savings of $2858. And I’m happy to say that we were able to fully fund our HSA with $6550 and not withdraw any of it to cover expenses. That not only helps our tax situation for 2014, but has boosted our retirement savings by that amount too.

Going Forward

So what’s the plan for 2015? To stay the course.

First of all, we’re sticking with the high deductible/HSA eligible plan. We received a 17.25% increase in our premium amount from our carrier. That hurts, but our new premium is actually less than what we were able to get with other carriers when we shopped around.

We are again setting the goal of fully funding our HSA ($6650 for 2015) and banking it for retirement. Since we’re self-employed, that additional tax-advantaged savings is especially important to us.

How did your health insurance plans work out in 2014? Are you making any changes going forward?

Note: This post contains an Amazon affiliate link. See my disclosure policy for more details.

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