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Once Again, Our HSA Saves The Day!

As promised, I'm back with an update on the current status of the medical bills from my son's recent four-day hospital stay and our strategy for paying them off. 

First and most importantly, he's doing really, really well since his Type 1 diabetes diagnosis! He's consistently stayed on top of his blood glucose monitoring, carb counting, and insulin injections, and his blood sugar readings have mostly been in his target range for the past two weeks. He's regained his energy and is back to his old self. He even managed to knock out two AP exams right after he got out of the hospital. Pretty impressive for a teenager who's been living with this condition for only a month! 

Predictably, at this point the medical bills are starting to roll in. Our current grand total for diabetes-related expenses is $48,818. This includes the hospital stay, labs, and prescriptions as well as bills for some of the specific ER, PICU, and peds doctors who managed his care while he was admitted. I'm sure this total will increase over the summer.

We're not paying that much (relatively speaking) out of pocket, thankfully, because (1) we've already hit our $5000 deductible, after which my insurance company covers almost everything as long as it's in-network, and (2) here in the good old US of A, the non-adjusted total on any hospital bill is basically a meaningless number pulled from some mysterious healthcare hat. It's almost always adjusted through negotiations with the insurer or with the patient (if they are uninsured). 

For example, the emergency room doctor who spent a grand total of four minutes giving us my kid's diagnosis officially charged $1400 for his services. The insurance company paid him $400 and the claim was marked as complete. 

How did they arrive at that adjusted number? Who knows. The whole process is clear as mud.

Technically, we have enough in savings to cover the $5K deductible, but we've decided to take the tax-advantaged approach we used four years ago when my kid had an appendectomy. That is, we're using an HSA (health savings account -- a savings account earmarked specifically for healthcare expenses) to pay the bill via a no-interest monthly payment plan. 

Because I have a high deductible health insurance plan, or HDHP, I'm eligible for an HSA. (This is just one of many quirks of our exemplary healthcare system: you have to have an HDHP to open an HSA, which seems pretty stupid to me. Why not make HSAs available to everyone, regardless of insurance status or plan?) I selected the high deductible plan at the end of 2021 because my company pays the monthly premium for both me and my son. They offer some lower-deductible plans, too, but then I'd be responsible for a portion of the premium and, again, I'd lose the HSA option. 

Anyway, after my son was diagnosed with T1D, I increased my monthly HSA contribution from $200 to $600. HSA contributions aren't taxed as long as they're at or below the yearly contribution limit, so right off the bat, it's financially beneficial.

Then I set up a payment plan with the provider -- in this case the hospital, the bill for which ate up most of the deductible. A few years ago, I had to call the hospital billing department to request a payment plan. This time they automatically offered several options through their online payment portal: one-time payment of the full balance, a 12-month payment plan, and a 24-month payment plan. Neither payment plan charges interest.

I chose the 12-month payment plan, which comes out to approximately $350/month. For the payment method, I'm using my handy HSA debit card. That way, our monthly payment will come from my HSA without ever touching our main bank account. Added bonus: as long as we use the money in the HSA for medical expenses, taking the money out of the HSA is also tax-free!

To be honest, a few months ago I was questioning whether an HSA is worth it. I've had a few HSAs in my adult life and I've always been pretty underwhelmed with them, mainly because I was healthy and didn't have much to use for them, but also because some HSAs hide hefty fees. 

However, now that we've got an ongoing health condition to consider, I'm kind of loving the HSA. The tax benefits will be a boon for us come tax time next year. Moreover, from a purely psychological standpoint, I feel more secure knowing that medical expenses are coming out of a designated account that is entirely separate from our main bank account. 

There are some other tax-y things to consider, like itemized medical deductions, but mommy's tired and will worry about that in 2023.

We're lucky to have insurance, to have savings, to have providers that are willing to work with us on billing, and to have time during the day to make phone calls and ask questions. Thanks to past experience, we're familiar with common insurance lingo and how to interpret our benefits. 

But even with these privileges, the whole experience of paying for medical care is overwhelming and confusing, especially because you just never know when you're going to be hit with some weird surprise (like a bill from a provider who turns out to be out of network or a claim that rolls in nearly a year after the fact or a prescription that the insurance company suddenly decides not to cover).

I keep thinking how much harder it is for people who live with chronic conditions but don't have these opportunities and resources. And once again, I can only conclude that there must be a better, less stressful, more affordable way to ensure that all Americans get the care they need.


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