If you work for a district that offers TRS Active Care, you have an important decision to make every year. Typically, you have three choices with one being Health Savings Account compatible (TRS ActiveCare 1-HD).
Before we get into the considerations, we should define what a Health Savings Account (HSA) is. A Health Savings Account as defined by the IRS in Publication 969:
A Health Savings Account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA.
No permission or authorization from the IRS is necessary to establish an HSA. You set up an HSA with a trustee. A qualified HSA trustee can be a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is different from your health plan provider.
Sounds complicated, doesn’t it? Basically, it is a way to save and pay for medical expenses much like a more familiar Flexible Spending Account (FSA) with one major difference: no use it or lose it stipulation. In other words, you keep the money you put in and it rolls over from plan year to plan year. Case in point, my wife adds a set amount to her HSA each month and has built up a balance of over $4500 which is impossible in an FSA.
Consideration: Cost of premiums and deductibles
Since you must have high deductible plan to qualify for an HSA, your deductible will be higher than one of the other TRS ActiveCare option. In this case, we’ll compare TRS ActiveCare 1-HD to ActiveCare 2 using numbers for employee only coverage found on a school district’s website.
|Yearly savings selecting TRS ActiveCare 1-HD with deductible met
So even with the deductible being met, your annual savings would be over $3000 which could be put into an HSA. If you don’t have any medical expenses, the savings would be the full $4,980 which would be a noticeable difference each paycheck. This brings us to our next major consideration, your health.
Consideration: Your current and expected health
If you are generally healthy, then you should seriously consider the ActiveCare 1-HD option paired with an HSA. It would offer you the opportunity to save much like an IRA and grow the savings tax free for future medical use or retirement savings.
If you require a lot of medical attention including medications, you need to review your options carefully. For example, the prescriptions you purchase all count against your deductible and your out of pocket maximums may be higher.
There are several other considerations to take into account such as:
- Record keeping of HSA purchase in case of audit
- Out of pocket maximums for in and out of network
- Need for additional retirement savings
We encourage you to take your time and consider your options carefully while you have time. If you wait until open enrollment to make your decision, you may not have the time to fully take all of the considerations into account.
Post author: Jamieson Mackay, CCUFC
The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.