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I don’t understand why any decision maker in any business in the USA chooses to offer their employees (and hence themselves) health FSAs at all, especially when

I don’t understand why any decision maker in any business in the USA chooses to offer their employees (and hence themselves) health FSAs at all, especially when the much superior in every way Fidelity HSA is available.

supportengineer 1y ago
HSA requires a high deductible health plan, not everyone could afford that deductible. "To contribute to an HSA, you'll need to be enrolled in an HSA-eligible health plan, also called a high-deductible health plan (HDHP)."
- xhrpost 1y ago
  Yup, I agree HSA is superior but depending on your situation (and plans offered), the HDHP can be much more expensive out of pocket[1], even if you're paying with after tax dollars. Sweet spot I think is using a good low deductible plan when it makes sense but having a spouse with an HSA which both spouses can use for expenses. [1]: or so it seems, I tried to figure this out earlier in the year and the data is just lacking in order to make a perfect decision.
delecti 1y ago
HSAs are only available alongside high deductible plans (HDHP), which aren't necessarily ideal in all situations. FSAs are the only option like that if you don't have an HDHP.
- fnicfnac 1y ago
  What is the point of having a low deductible when you could put the premium difference in a HSA and use it on either the deductible or something uncovered?
  - hibikir 1y ago
    The math on whether you are ahead with the HSA or not is non trivial, especially if you are married and neither employer offers any subsidy when you put your spouse in your plan. HSAs are often better, but it's a very unfortunate math problem, where you carry quite a bit of risk. The HSA contributions from your employer are often nowhere near enough to make it win all the time. If your employer's does, consider yourself lucky. On any given open enrollment, my household has at least 30 combinations of healthcare plans to consider, and that's ignoring dentals, visions and the like
  - bobmcnamara 1y ago
    There are some cases where an HSA is unavailable. I've had an employer not offer a high deductible plan. I've had an employer offer a high deductible plan, but the insurer not supply it in my home state. There are cases where it doesn't make fiscal sense. One employer covered 1x premium/employee(spouses and kids were full rate).
- lotsofpulp 1y ago
  Surely, that is offset by having to forfeit or waste any FSA money not needed by the end of the year. It really only makes sense if you have a minimum amount of guaranteed healthcare expenses every year.
tpmoney 1y ago
All the FSA money in your account is available immediately at the beginning of the year. Ironically that would make it a better choice for anyone with a lot of medical expenses on an HDHP if it wasn’t for the fact that FSAs are capped by law. As someone who does deal with enough medical stuff to clear the deductible (and sometimes the OOP max) on their normal health plan annually, it’s still much more convenient, again because the money is all there at the beginning of the year when the expenses are highest
- lotsofpulp 1y ago
  My HSA money is also available in the first pay period of the calendar year. It’s up to the employer to decide when they want to contribute it.
  - tpmoney 1y ago
    That assumes your employer does any contributions to your HSA. And if your employer is sticking you with an HDHP, that’s not always a given. Your own payroll deductions are pay-as-you-go
  - firesteelrain 1y ago
    I think he is saying that if you want your FSA to be $5000 then it’s funded immediately but it gets taken out of your paycheck every pay period. HSA is funded as you go
- firesteelrain 1y ago
  FSAs are limited in scope if you have a HDHP by law. Only LPFSAs are allowed. HSAs don’t have that restriction other than you have to be on a HDHP to get it
deathanatos 1y ago
I've never seen the point of HSAs, either. The only benefit is the tax difference. There are (usually unknown, unstated upfront) plan fees that eat into that, and coupled with the higher deductibles and worse plan coverage, you're going to pay more out of pocket. It's never been clear to me if (higher OOP + plan fees) < (tax savings) is true, like they want you to believe. And it's a time suck.
- lotsofpulp 1y ago
  An employer sponsored HSA is the single most tax advantaged account in the US, and Fidelity HSA have no fees. No FICA tax, no income tax going in, on investment returns, and coming out. Worth tens of thousands of dollars over 20, 30, 40+ years. If your employer is shitty and doesn’t offer Fidelity HSA, you can also easily rollover the HSA funds to Fidelity every year to avoid the fees. The coverage for HDHP plans is the same, since it’s the same insurer. The only change is deductible/copay/oop max, which is offset by lower premiums and higher cash flow for younger/healthier/higher earners shouldn’t matter.
- firesteelrain 1y ago
  HSAs are one of the best accounts and last until death.

supportengineer 1y ago

HSA requires a high deductible health plan, not everyone could afford that deductible. "To contribute to an HSA, you'll need to be enrolled in an HSA-eligible health plan, also called a high-deductible health plan (HDHP)."

xhrpost 1y ago
Yup, I agree HSA is superior but depending on your situation (and plans offered), the HDHP can be much more expensive out of pocket[1], even if you're paying with after tax dollars. Sweet spot I think is using a good low deductible plan when it makes sense but having a spouse with an HSA which both spouses can use for expenses. [1]: or so it seems, I tried to figure this out earlier in the year and the data is just lacking in order to make a perfect decision.

delecti 1y ago

HSAs are only available alongside high deductible plans (HDHP), which aren't necessarily ideal in all situations. FSAs are the only option like that if you don't have an HDHP.

fnicfnac 1y ago
What is the point of having a low deductible when you could put the premium difference in a HSA and use it on either the deductible or something uncovered?
- hibikir 1y ago
  The math on whether you are ahead with the HSA or not is non trivial, especially if you are married and neither employer offers any subsidy when you put your spouse in your plan. HSAs are often better, but it's a very unfortunate math problem, where you carry quite a bit of risk. The HSA contributions from your employer are often nowhere near enough to make it win all the time. If your employer's does, consider yourself lucky. On any given open enrollment, my household has at least 30 combinations of healthcare plans to consider, and that's ignoring dentals, visions and the like
- bobmcnamara 1y ago
  There are some cases where an HSA is unavailable. I've had an employer not offer a high deductible plan. I've had an employer offer a high deductible plan, but the insurer not supply it in my home state. There are cases where it doesn't make fiscal sense. One employer covered 1x premium/employee(spouses and kids were full rate).
lotsofpulp 1y ago
Surely, that is offset by having to forfeit or waste any FSA money not needed by the end of the year. It really only makes sense if you have a minimum amount of guaranteed healthcare expenses every year.

tpmoney 1y ago

All the FSA money in your account is available immediately at the beginning of the year. Ironically that would make it a better choice for anyone with a lot of medical expenses on an HDHP if it wasn’t for the fact that FSAs are capped by law. As someone who does deal with enough medical stuff to clear the deductible (and sometimes the OOP max) on their normal health plan annually, it’s still much more convenient, again because the money is all there at the beginning of the year when the expenses are highest

lotsofpulp 1y ago
My HSA money is also available in the first pay period of the calendar year. It’s up to the employer to decide when they want to contribute it.
- tpmoney 1y ago
  That assumes your employer does any contributions to your HSA. And if your employer is sticking you with an HDHP, that’s not always a given. Your own payroll deductions are pay-as-you-go
- firesteelrain 1y ago
  I think he is saying that if you want your FSA to be $5000 then it’s funded immediately but it gets taken out of your paycheck every pay period. HSA is funded as you go
firesteelrain 1y ago
FSAs are limited in scope if you have a HDHP by law. Only LPFSAs are allowed. HSAs don’t have that restriction other than you have to be on a HDHP to get it

deathanatos 1y ago

I've never seen the point of HSAs, either. The only benefit is the tax difference. There are (usually unknown, unstated upfront) plan fees that eat into that, and coupled with the higher deductibles and worse plan coverage, you're going to pay more out of pocket. It's never been clear to me if (higher OOP + plan fees) < (tax savings) is true, like they want you to believe. And it's a time suck.

lotsofpulp 1y ago
An employer sponsored HSA is the single most tax advantaged account in the US, and Fidelity HSA have no fees. No FICA tax, no income tax going in, on investment returns, and coming out. Worth tens of thousands of dollars over 20, 30, 40+ years. If your employer is shitty and doesn’t offer Fidelity HSA, you can also easily rollover the HSA funds to Fidelity every year to avoid the fees. The coverage for HDHP plans is the same, since it’s the same insurer. The only change is deductible/copay/oop max, which is offset by lower premiums and higher cash flow for younger/healthier/higher earners shouldn’t matter.
firesteelrain 1y ago
HSAs are one of the best accounts and last until death.