Step 23: HSAs, FSAs, and Healthcare

Until recently, every time I’ve entered a new job, I’ve called my father, read him the summary of all healthcare and insurance options, and dutifully waited for him to tell me which to sign up for. I’ve never understood, nor cared to understand, my options.

Once married, it’s a little babyish to ask your dad to make important decisions for you and your husband.

Therefore, the Hubs and I strapped on our thinking caps and tackled the foreign world of healthcare acronyms. Here is what we learned:

1) An HSA and an HRA are two very different things.

Health savings account

Health savings accounts are similar to a 401(k) retirement account for medical expenses. You can only have an HSA if you enroll in a high-deductible insurance plan. Here are other things you should know about an HSA:

  • You own the account.
  • Anyone can put money into the account.
  • Money taken out of your paycheck by your employer for the account isn’t taxed.
  • Money put into the account that’s already been taxed (for example, money that was a gift), is tax deductible.
  • Money in the account can roll over from year to year.
  • You can invest the money.

Health reimbursement arrangement

health reimbursement arrangement is a benefit set up by your employer. It’s a fund that pays for medical expenses not covered by your health plan, such as deductibles, coinsurances or both. Other features of an HRA:

  • The fund is owned by your employer.
  • Your employer decides which expenses are covered by the HRA.
  • Money given to you for medical expenses is tax deductible for your employer.
  • You don’t have to pay taxes on money you get from an HRA used for qualified medical expenses.
  • Your employer decides whether leftover money in your HRA can roll over to the next year.
  • The money in an HRA can’t be invested.

 

2) An FSA is also different from the above.

Flexible spending account

An FSA is set up by your employer. They own the account, but you get to decide what qualified medical expenses to pay from your FSA. What makes it flexible? It works with most of our employer-sponsored health plans. Here are more facts about an FSA.

  • Only you and your employer can put money into the account.
  • You can only deposit money into your FSA through payroll deduction. That money isn’t taxed.
  • Some employers let you carry up to $500 into the next year. Otherwise, any money left in the account at the end of the year goes back to your employer.
  • You can’t invest the money.
3) Educating yourself on your healthcare and account options can help your budget.
By setting up an FSA with our employer and choosing an HRA plan, the Hubs and I are able to budget for medical expenses tax free. Because our employers own the accounts, we are never tempted to dip into them for other purposes. The money remains “out of sight, out of mind.” When an unexpected medical bill arises, we use our accounts to cover it instead of putting stress on our budget.
PLEASE NOTE: These fabulous account facts  were taken from the well-spoken educators at Blue Cross/Blue Shield: http://www.bcbsm.com/index/health-insurance-help/faqs/plan-types/health-spending-accounts/differences-between-an-hsa-hra-fsa.html

Step 18: have a garage sale

Garage sales can be a great way to earn a few extra dollars.

Especially when you are newly-wedded paupers with loans to pay off.

Fortunately for us, the in-laws decided to have one this summer.

In exchange for my help, The Hubs and I were allowed to sell our junk treasures at their sale.

Turns out garage sales are a lucrative business.

10 hours of bonding with my father-in-law, chatting with the neighbors, and arguing with pushy bargain shoppers, and we earned a whopping $15.

Don’t roll your eyes at me.

That’s 15 more dollars than we had yesterday.

 

 

 

Step 17: get a banking app

After deleting CashStrapped, I spent an unnecessary amount of time fretting over how to track my spending without constantly logging into my computer.

DUH.

There’s an app for that!

Apparently The Hubs downloaded it weeks ago. A few clicks and a password and all your banking info is in the palm of your hand!

Most banks (unless you are an admirable human being who uses a ma-and-pa family bank) will have a banking app.

It turns out this is an even better idea than CashStrapped because The Hubs and I both have access to it.

Welcome to the 21st century, self!

 

 

Step 16: delete your money-tracking app

It turns out that I am terrible at tracking my spending.

I never, ever remember to enter my receipts into the app.

Therefore, I never, ever know how much money I have.

Since I can easily not know how much money I have without the app, I’ve deleted it.

Next time, I will try a free app instead of wasting 99 of our precious cents on one.

Step 10: get a library card

10 days into this financial journey and I’m realizing my mother is a budgeting genius.

First with the calculator. Now with the library card.

Growing up we rarely bought books. The ones we owned were usually gifts or re-gifts given to us on birthdays and holidays. For all our reading needs we used the library. Which is fine. I mean, I love the library. Back then I loved the library so much that I dreamed of becoming a librarian when I grew up.

However, I also love buying books. As soon as I started generating my own income, I started buying books. There is nothing quite like buying your very own (new or used) book that you can do whatever the hell you want with. Also, there is nothing quite like the dream of having a Beauty and the Beast style library in your home.

Sadly, the budget does not allow frivolous book buying.

So I’ve put my Beauty and the Beast library dream on hold and re-kindled my becoming a librarian dream. (I mean, I can’t teach forever.)

Today, I will march down to the local library and get myself a library card.

My mother will be so proud.

 

 

Step 6: learn to shop with a calculator

When I was growing up, my mom would always bring a calculator with her to the grocery store. I never knew why. I never asked why. The free samples kept me distracted.

Today, I learned why.

SHE WAS ON A BUDGET!!!

Now that I myself am on a budget, I’ve learned I can no longer just zip into the store and mindlessly toss the items I need into my cart. I need to save every penny I can.

How do I do this?

A calculator.

Example:

We need toilet paper. Grab the 6-pack for $3.99. We’re poor, right? We need to save money by only paying $4 for toilet paper, right?

WRONG!

If you whip out your handy-dandy phone calculator you will discover that the “cheaper” $4 6-pack is actually costing you 67 cents per roll.

You will actually save money, and trips to the store, by spending $13.99 on the 36-pack. (38 cents per roll!)

**NOTE: many grocery stores list price per unit right on the shelf tag. Always check here first before busting out the calc.**

And to think, if I hadn’t been mesmerized by the allure of free samples, I could have learned this at age 7.

Step 5: get a money-tracking app

To help with our new budget, I downloaded a money-tracking app.

(I never, ever go online to check my bank statement)

Because we are now paupers, I downloaded one for 99 cents.

It’s called CashStrapped.

I enter our budget and it tells me how much we can spend each week.

Every time I shop, I must enter how much I spent.

CashStrapped deducts that amount and I watch in horror as our piddly $200 a week allowance gets spent in the first 3 days.