So we’re getting ready to do our health insurance enrollment for the next year and my employer is pushing hard on a new health savings account and I’ll be honest…it’s a no-brainer to sign up at least for the first year.

So how does a health savings account work?   It’s essentially a “401k” for your health and there are so many levels of irony here that I don’t know where to begin but I think it does spell the end of health insurance as we know it just like 401k’s spelled the end of pensions as we knew them back when corporations offered them.    Corporations are adept at finding new ways to provide less so why should health insurance be any different?

Back in the day…many companies offered pension plans which was part of a “three-legged stool” whereby an employee would get a retirement pension supplemented by social security/medicaid and savings.   As corporations didn’t want to offer or could not afford pensions, they gave employees the old switcharoo by offering 401k plans as they transitioned pensions out.  To sweeten the deal the corporations offered incentives such as employer match of 6% or more.     Fast forward a few decades later and pensions are a thing of the past….it takes a generation or two to forget they were ever offered to begin with in the biz world.

So now, my employer is offering health savings account with some sweet incentives such as:

1. Your monthly premiums will be cut in half!  Yes, whatever your health insurance costs are today, imagine slashing them in half.

2. The employer will put in a few thousand dollars in money into your account (first year only!) to cover your deductible.

3.  Free preventive care visits (no copay).

4. It’s tax deductible!

So what’s the catch?  Does the above sound too good to be true?   Well there are a few catches.   First, the plan has a high deductible meaning that before the insurance plan pays out a single dime, you must incur the first $3,000 in medical expenses.    This means that if you take regular prescriptions then that’s all on you up to the first three thousand.     Of course, if your employer is going to put in a few thousand into the plan then your first year is free right?  This is the no-brainer part!

After the first year though, the employer isn’t offering a pool of money so the first 3k will be entirely on the employee the second year.   Sound familiar?  It’s the pension to 401k trick!

To be fair, the employees can still choose the old plans which include PPO and HMO at increased costs which doesn’t make them very appealing.  I can’t really complain and I’m taking advantage of the money and the tax deduction to lower my MAGI at the end of next tax year.