On my previous post, I mentioned that we were debating making the switch from a PPO to an HSA. Thanks to all who commented! We’ve decided to go the HSA route, and what’s more, we’ve decided to use the option to roll over funds from an IRA to the HSA (we are contributing the maximum contribution for 2010 via the IRA transfer.)

Many financial experts would consider this to be a stupid decision (we’re touching our retirement funds!), and usually I would agree. However, with our new arrival, Tiff isn’t working.. this means that money is very tight, and making this move allows us to not worry about health expenses at all for the next two years. Once our debt is paid down to a reasonable level, we’re planning on contributing 15%+ to retirement, so I’m not overly concerned that I’m taking $6000 away from the pool of money that can earn long-term compound interest.

If the IRA transfer had the regular penalties (even if it was just the 10% tax for early withdrawal), I would not have considered this – however, in this case, it lets us use our IRA funds with zero penalties. I was also able to sell funs in the IRA that was worth more than we paid for it.. I’d hate to be taking a loss on fund sales right now, as they would likely recover within the next few years.

In your opinion, is this a real boneheaded move, or is it reasonable in our situation? I’d love to hear what you think!

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1. Why I won’t use PayPal without a credit card
2. Help! Health insurance – Blue Cross PPO, or Blue Cross HSA?

Open enrollment for health plans starts at my day job soon. Now that I have a child, I’m looking at the HSA (Health Savings Account) combined with a HDHP (high-deductible health plan) with a high deductible versus the PPO (traditional) health plan option again, and with a few changes that have been made in the HSA plan over the last few years, it looks quite appealing. I’m not seeing any real downsides, but though I’d ask for opinion from my friends on the good ‘ol interweb. ;)

Basics of HSA:

• HSA paycheck deductions will be ~$2000/yr less than PPO
• HSA has a single deductible for the family of $3000
• Preventative care is paid at 100% at all times.
• All other care is not paid until deductible is met; then is paid at 100% (including prescriptions.)
• Reading through the plan summary, post-deductible coverage appears identical to PPO

Basics of PPO:

• $300 individual / $600 deductible
• $1500 individual / $3000 family out-of-pocket maximum (not including prescription copays)
• $30 office copays
• 80% coinsurance after deductible for most other services, including lab

As far as expenses go on the HSA, I’ve added things up, and we will be paying around $225/mo for medication copays for the three of us. This means that our monthly expenses will be a little bit more than the premium savings just for medication. If we add any office visits (which we will — chiropractor, etc.), the monthly expenses go up much quicker. However, once we hit $3000 total, we’re done paying out of pocket. In the year in full, HSA can only possibly cost us $1000 more than PPO (if we never buy medications or see the doctor under the PPO, which isn’t the case).. and it will likely cost us much less, because of the $600 family deductible under the PPO and the copay cost for medications (one medication alone ends up being $400/yr, as there is no generic available.)

The only real downside I see to the HSA is that it may end up “frontloading” medical expenses — if an emergency room visit was required in January or February, for example, it’d be a $3000 expense out of pocket. However, we wouldn’t have to pay another penny for the rest of the year, as I understand it at least.

Have any of you made the switch to HSA, and if so, has it been a positive move for you? Are there any downsides that I am not seeing?

Appreciate your comments! HSA vs PPO isn’t an easy choice..

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1. Why I made a “stupid” financial move – intentionally

A few months back, I purchased a server on eBay. I contacted the seller multiple times asking for shipment status, and after receiving tracking numbers that were obviously false, after about a month I opened a dispute with PayPal. That finally prompted the seller to ship the server; however, it was missing two hard drives and two heat sinks that were supposed to be included. At that point, I re-opened the PayPal dispute, but only requested $189.96 (the value of the missing components) instead of the full amount.

A few weeks later, PayPal notified me that they had decided in my favor, but were unable to recover the funds from the seller. The exact wording was:

We have decided in your favor, however, we were unable to recover any funds from the seller’s account. As stated in the PayPal User Agreement, recovery of funds associated with a Buyer Complaint cannot be guaranteed.

Please know that we will make our best effort to recover the funds in question if they become available in the seller’s account in the future and will take appropriate action against the seller. Such action may include issuing a warning, a temporary restriction, or terminating the account. Keep in mind that PayPal uses a number of factors to determine when to take action, including member complaints. Due to privacy laws, we cannot discuss the details of any action taken. We hope you understand our policy and that it assures you that you are safe using PayPal.

In any case, if I had payed with an “Instant Payment” (ie, from my checking account), or with a PayPal balance, I would have been out of luck — PayPal wasn’t going to give me my money back, even though it was covered by their “Protection Policy.” Fortunately, I always charge my purchases on PayPal to an American Express card. I was able to contact American Express, and process a chargeback through them. Since American Express is a charge card, once I opened the dispute, they immediately made a provisional credit to the account, which would be reversed if the chargeback was decided in the seller’s favor. Since the chargeback was eventually decided in my favor, that money was mine to keep. If I had made this purchase with a debit card instead of a credit card, I would have likely been out the money until the bank decided in my favor. If I had paid with a direct transfer from my checking account, I may have still recovered my funds, but it would have certainly been longer before I had use of the money again.

I hope that this helps some of my fellow internet shoppers avoid losing money in the future! I should also note that I’ve had nothing but luck with American Express — their customer service for dealing with disputes is by far the best I have dealt with. I also like the fact that it’s a charge card instead of a credit card — I don’t have the option to go further into debt with it. ;)

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1. Why I made a “stupid” financial move – intentionally