D-E-A-L-ish

• KC at Desert Deals Diva is giving away a $50 Safeway gift card. Go enter here!
• Savvy Savings Tucson is also giving away a $50 Safeway gift card. Her contest ends Wed Nov 25. Go enter here!
• Also, Phoenix readers can enter to win a free 6-month supply of Honest Tea by Thursday Nov 26 (Thanksgiving!) over at Saving Cents with Sense. I'm really hoping to win this one! :)
• Saving Cents with Sense is hosting yet another Phoenix-only giveaway for a $50 PartyLite Gift Certificate (think candles!) that ends Sunday, Dec 6. Go enter here!

Note: This is the second post in my HSA enrollment series. To see the first post, go here.

As I said in my previous post , there are two different HSA-eligible HDHP accounts available to Intel employees: the Cigna HDHP and the Anthem HDHP. They both offer the same annual cost, deductibles and health care coverage for 2010:

Intel Sponsored HDHP features:

• $0 Annual Fee
• $1200 deductible for single coverage, $2400 for family coverage
• 10% coinsurance after deductible is met
• $2100 out of pocket maximum for single coverage, $4200 for family coverage
• $3050 max annual contribution to HSA for single coverage, $6150 for family coverage
• No limit on rollover amounts
• 100% preventative care coverage

For Intel employees, JP Morgan Chase is the HSA administrator for the Cigna HDHP, and Mellon Bank is the HSA administrator for the Anthem HDHP. The administrator’s responsibilities include customer service, processing claims, preparing claim reports, and arranging for services such as network access and case management.

Essentially, the only difference between the two plans is the network of health care providers and the custodial bank fees, which I outline below.  I’ve bolded any noticeable difference in fees.

CIGNA HDHP/ JP Morgan Chase HSA:

• FDIC-insured cash account
• Currently earning 0.19% APY (as of 11/13/09)
• Monthly account fee: $3 (Paid by Intel while actively enrolled in the Cigna HDHP)
• Check processing fee: $1.35 per check
• Monthly paper statement fee: $0.85 (can opt out to avoid fee)
• Debit card transactions: no charge
• ATM fees: No charge when using a JP Morgan or WaMu ATM
• Check reordering fee: $0 (10 checks per order)
• Replacement/additional debit cards: $15 per card
• Account closing fee: $20
• Once your account reaches $2000, you can transfer your funds to an HSA Investment Account

 JP Morgan Chase HSA Investment Account Features:

• 8 funds to invest in
• $1.67/month administrative fee
• No online trading fees
• Phone-assisted transaction fee: $10/call
• No load fees or commissions (there will be fees shown on the prospectus, but they do not apply to HSA account holders)
• Management fees: All mutual funds have management fees, which include shareholder servicing fees and 12b-1 fees. See prospectus for expense ratios.
• Early redemption fees: Varies from 1-2% for select funds. See prospectus.
• No minimum investment amount
• HSA Investment Account is not FDIC-insured

Anthem HDHP/Mellon Bank HSA:

• FDIC-insured checking account
• Currently earning 0.25%APY through end of 2009
• Monthly account fee: $3.00 if balance is less than $1,000 (Paid by Intel while actively enrolled in Anthem HDHP)
• Check processing fee: $0
• Monthly paper statement fee: $0
• Debit card transactions: no charge
• ATM fees: $1 per usage  (ATM access is not available for Blue Cross/Blue Shield Arizona yet)
• Check reordering fee: $10 (40 checks per order)
• Replacement/additional debit cards: $5 per card
• Account closing fee: No charge
• Once your account reaches $1500, you can transfer your funds to an HSA Investment Account

 Mellon Bank HSA Investment Account Features:

• 20 funds to invest in
• $2.90/month administrative fee
• No online trading fees
• No additional transaction fees, loads, or commissions
• No minimum investment amount
• HSA Investment Account is not FDIC-insured

Which Provider Did I Choose?
I don’t have a primary care provider (PCP) yet, and all my current specialists are located at Mayo Clinic, which is covered by either plan. So with regards to health care providers, I’m impartial to Blue Cross/Blue Shield or Cigna.  I was leaning toward Cigna just because my current plan is with them, and I’ve been very happy with the coverage.

After studying the HSA bank fees, I determined that it really didn't matter for me which plan I chose. The interest rate is fairly pathetic for both. I don't plan on reimbursing myself often, since I plan to use my HSA for savings. If I do ever need to withdraw funds, I'll just do an ACH transfer.  But if you plan on using the ATM often, you might want to consider Chase (Cigna), and if you plan to write yourself checks then you might want to consider Mellon Bank (Anthem).  The other major difference I noticed is the account closing fee. Chase charges $20 to close your HSA account, while Mellon charges no fee. Hopefully, I'll stay employed long enough that I won't have to close my account anytime soon and deal with this annoying charge.

Note, there is a difference in the investment funds available through each plan. I plan on rolling over my HSA funds to an external account with better interest, more investment options, and lower expense ratios, which I will detail in another post. Chase seems to be more limited in their offerings, and requires a higher minimum to invest, so this might sway investors to choose Mellon (Anthem). However, if you plan to invest in either of these HSA accounts, then I'd recommend pouring over the prospectus of each of the funds and comparing expense ratios and performance. 

In the end, it came down to personal preference for providers. I ended up choosing the Cigna HDHP/Chase HSA plan out of personal preference for Cigna over Blue Cross/Blue Shield. 

You Can Use a Bank of Your Choice to Administer Your HSA
Remember that the HDHP insurance portion is a separate beast from the HSA account itself. You are under no obligation to use the plan's "preferred" bank to administer you HSA. You just won't get the benefits of payroll deduction if you choose a different bank. Remember, from my last post, contributions made through payroll deductions are exempt from social security and medicare tax. If you use an external HSA account and contribute with "post-tax" money, you will miss out on this 7.65% tax savings.  I will contribute through payroll deductions to the JP Morgan Chase HSA account, and then transfer my money to an external HSA account that has better investment options. 
 

There are two options to move money to another HSA: direct rollover or trustee-to-trustee transfer. Direct rollover is where you take money out of one HSA and put it in another one within 60 days, and these are limited to once every 12 months. You can also do an unlimited amount of trustee-to-trustee transfers, which are handled by the banks directly, usually at a hefty charge. For example, Mellon charges $25 for each outbound transfer. The official rules on rollovers/transfers are on page 6 of IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. 

Most of the time, if we see a boy at one of these things, they’re there for one of three reasons. Here are the reasons, in order:

1) They were dragged there by their wife, girlfriend, or sister
2) They were sent there by their wife, girlfriend, or sister
3) They are there of their own accord.

1. Instead of sourcing three different types of peppercorn, I was going to take a shortcut and use Trader Joe's four peppercorn mix. As luck would have it, my TJ's stopped carrying this mix a while ago. I only had time to make one grocery store stop, so I thought I'd just make do with the one type of peppercorn I had at home. And that's what I did. I took six tablespoons of the peppercorns and ground them up in my mini coffee/spice grinder.
2. I assumed that I had black peppercorns. Wrong assumption. As it turns out, the bulk package of peppercorns that I'd been using ALL THESE YEARS to fill my lovely pepper mill was really Szechuan peppercorns! Wow. I had gotten the package at the asian grocery store, and the only description is "Chinese Prickly Ash."
3. Tony kept complaining about his tongue going numb last night, and I just laughed at him. Poor baby. Today, when I snuck some leftover cold steak (yummy) out of the fridge to snack on, my tongue went numb. I couldn't deny that Tony was on to something...so off to Google I went. As it turns out, Szechuan peppercorns are well known for their tongue numbing ability. The pods are also used in China as a toothache remedy due to their numbing qualities. Heh. 
4. Szechuan peppercorns should be pan-roasted before grinding "to bring out their flavor."  Oops.
5. I made the mistake of using too high of heat to reduce the balsamic vinegar. EWWW. Review this Chowhound thread for advice on balsamic vinegar reductions (Martha makes it sound so easy!). Also, I thought my LC cast iron skillets were enameled, but I could be mistaken...and the acid in the vinegar could have reacted with the iron. Either way, it tasted like Chinese Prickly Butt. I immediately trashed the sauce.

If you register your credit or debit card with JCP Rewards right now, you'll immediately be able to print a $10 Welcome Gift voucher which you can use online, over the phone, or in-store to purchase anything which is $10 or more. Use it in-store on a clearance item which is right around $10 and it will be free or close-to-free after this voucher! This could come in handy for last minute Halloween items...

I just signed up, and it was completely painless. The $10 voucher doesn't expire until November 17, 2009.

Go here to sign up.

• Open an Optimum Rewards Checking Account in person
• Make 10 Visa Debit Card Transactions each month
• Set up 1 Direct Deposit or Automatic Payment from your account each month
• Enroll and receive electronic statements

• Hard to find location
• This is the most foo-foo bank I've ever stepped foot in!
• Odd cycle: starts on the 10th of each month
• High interest (5.0%), with high balance limit ($25K)
• Relatively low debit card requirements (10 transactions)
• Can open as many accounts as you wish to take advantage of the 5.0%APY - you just need to satisfy the requirements for ALL accounts
• A competitive rate on balances over 25K (2.01%APY)
• Can make deposits at any Wells Fargo ATM (with a $50K maximum deposit)
• Limited banking hours (9-5, M-F)

1. Preheat oven to 375°F.
2. Spray or wipe a 9x13-inch baking pan with olive oil. Spread a few Tbsp Punjab sauce on the bottom. Add a single layer of lasagna noodles.
3. Thaw spinach, or place it in a colander under cool water until thawed. Drain well, squeezing out excess water with your hands.
4. In a bowl, combine spinach, peas, and remaining Punjab sauce. Mix well.
5. Layer 1/4 of spinach mixture over noodles, followed by 1/3 of the ricotta and another layer of noodles. Press down lightly to compact layers. Repeat layering 2 more times. Spread final 1/4 of spinach mixture on noodles and top with a layer of mozzarella.
6. Cover loosely with foil and bake for 25 minutes. Remove foil and cook 20 minutes longer, allowing cheese to get bubbly and golden.

Open enrollment for benefits starts next week at Intel, and I plan on switching from my Cigna Open Access Copayment Plan to a Health Savings Account (HSA) at that time. I figure some of my friends might be in the same boat, so I thought I would share some of my research on the HSA/HDHP and my thought process for choosing the plan that I chose. HSAs are probably one of the least known health accounts out there, which is a shame, since they can be an extremely powerful tax-advantaged investment account. Hopefully this post will shed a little light on HSAs. Let me know if you have anything to add!

To participate in a Health Savings Account (HSA), you must be enrolled in a qualified High Deductible Health Plan (HDHP).  Currently, there are two different HDHPs available to Intel employees: the Cigna High Deductible Health Plan and the Anthem High Deductible Health Plan. I’ve outlined the 2010 IRS limits on HSA-compatible HDHPs below, along with the features of the HDHPs at Intel.

IRS limits for HSA-compatible HDHPs for 2010:

• The minimum deductible is $1,200 for single coverage and $2,400 for family coverage.
• The maximum contribution that can be made to an HSA for employees will be $3,050 for single coverage and $6,150 for family coverage.
• The maximum out-of-pocket expense, including deductibles, that employees will be required to pay next year will be $5,950 for single coverage and $11,900 for family coverage.

Intel HDHP features for 2010:

• $0 Annual Fee
• $1200 deductible for single coverage, $2400 for family coverage
• 10% coinsurance after deductible is met
• $2100 out of pocket maximum for single coverage, $4200 for family coverage
• $3050 max annual contribution to HSA for single coverage, $6150 for family coverage
• No limit on rollover amounts
• 100% preventative care coverage

Note that the maximum out-of-pocket is $2100 for Intel employees with individual coverage and $4200 for those with family coverage in 2010. For me, this means I can contribute $950 more than my out of pocket maximum in my HSA next year, either to be rolled over for future medical expenses or invested in an HSA investment account.

Premiums for an HSA plan are normally lower than other traditional plans.  Intel employees enrolled in HDHPs pay $0 in premiums for both single and family coverage (meaning Intel does not take anything out of your paycheck). Based on the annual paycheck deductions from the Cigna Copayment plan, enrolling in an HDHP will save me $924 in premiums in 2010.

Contributions to an HSA can be made pre-tax, if your employer has the option available, or post-tax and then deducted from your tax return. In general, you are responsible for all out-of-pocket expenses until you meet the deductible, and then there usually is a co-insurance portion.  For me, the first $1200 in medical expenses will come straight out of my pocket (i.e no co-pays, I pay the entire bill). Between $1200 and $2100 out of pocket, I pay 10% and the plan pays 90%. So for me to reach the out of pocket maximum, my total medical expenses would have to exceed $1200 + $9000 = $10200. After I hit $2100 out of pocket, the plan pays 100%.

Benefits of an HSA Plan:

• Tax savings: You can contribute to the HSA through pre-tax payroll deductions, or contribute on your own for an "above-the-line" tax deduction on your income tax return. Your pre-tax contributions are not subject to federal income tax, FICA (Social Security and Medicare) tax and for most states, state income tax. For me, if I contribute the maximum amount of $3050 to my HSA, I can save $995.83 in federal and Fica taxes.
• FICA (Social Security and Medicare) tax savings: It seems to be a lesser known fact, but "frontloading"  your HSA with post-tax money at the beginning of the year costs you the FICA taxes on that money, even though you can get the above-the-line deduction on your tax return.  Say someone with family coverage contributed the full $6150 to their HSA on January 1, 2009.  Had they waited to contribute over the year pre-tax, that's $470.48 (7.65%) of FICA taxes they could have saved from payroll deductions.  You don't even get this FICA tax break when contributing to your 401k with pre-tax dollars. Thus pre-tax payroll deductions are better for most people. If you are over the social security AGI cap (currently $106,800), then you only save on medicare taxes (1.45%) by contributing pre-tax versus post-tax.
• Another tax benefit for contributing to an HSA is that it will reduce your federal AGI by up to $3,050 (for self-only coverage) or $6,150 (family coverage).  If you are on the border of qualifying for an income-based tax credit/deduction (economic stimulus check, child tax credits, first time home buyer tax credit, etc), contributing to an HSA could help you qualify.
• Interest and dividends earned on HSA balances grow tax-free and don’t count toward contribution limits.
• HSA distributions are tax-free if they are used for qualified medical expenses. Similar to an IRA, if you use the funds for non-medical expenses, you pay a 10% penalty plus income tax. However, once you reach 65, the 10% penalty does not apply and you only pay income tax on non-medical expenses. At this point, your HSA basically becomes a tax-deferred account for non-medical expenses (similar to a 401K) and a tax free account for medical expenses (similar to a Roth).  
• There is no time limit for when you can reimburse prior years’ expenses as long as they were incurred on or after the date the HSA was established. If you incur $5500 in out of pocket expenses this year, you could still request that money, tax and penalty free, any year in the future, even 2020 if you so choose. This means you could pay all your medical expenses out of pocket now, then save all your receipts and take the reimbursement out of your account when you retire tax free. Need proof? Go here.
• There’s no need to look in your crystal ball and forecast your health care spending for next year as you would with an FSA “use it or lose it” account.  If you spend less money than expected, any remaining money in your HSA rolls over.
• With an HSA, it doesn't matter if the money is there first or not. You can always reimburse yourself later, even from next year's contributions if you have spent over the limit this year.
• Preventative care is covered 100% by the Intel HDHPs. Preventative care items include things like annual physicals, immunizations for children, and annual well woman checks.
• Debit card and checks can be used to pay for eligible medical expenses directly from your HSA account.
• The HSA works like a bank account, where you earn interest on the cash in your account. (The interest varies based on your plan and the bank they use). After reaching a certain dollar amount contribution, usually $2000, you can link your account to a mutual fund or brokerage account and invest your money in a variety of funds.
• Portability: If you leave your employer, change medical coverage, become unemployed, move to another state, or change your marital status, your HSA goes with you.
• You can use the money in your HSA plan to pay COBRA or Medicare premiums, if necessary.    
• The list of HSA eligible items is generally much broader than those covered under a traditional health plan. You may use HSA dollars to pay for dental, vision, orthodontia, over-the-counter medication, qualified long-term care insurance premiums and more. You can reference section 213 of the IRS publication 502 to see a list of qualified expenses. This is a good reference for qualified expenses.  
• Using coupons can lower your out of pocket maximum (OOP max).  Say you need to fill prescription X that costs $300 before you’ve met your deductible, and you have a coupon from the drug manufacturer for $50 off the full price. You end up paying $250 out of pocket.  Insurance still "sees" that you paid $300 for that prescription, so you just lowered your OOP max by $50 more than you actually paid. Also, many of the CVS and Walgreens free after rebate deals are HSA eligible and can help lower your OOP max.  
• There are no salary restrictions on HSA contributions. This is unlike a Roth IRA, for example, which begins to phase out at a MAGI of $105,000 for 2009.

Disadvantages of an HSA Plan:

• Many people feel that if you have to pay all expenses out of pocket, that you will be less likely to go to the doctor when something is wrong, and that a serious medical problem could go undiagnosed.
• You could have a lot of out-of-pocket expenses before there is any money in your HSA to cover them. For example, you could have a big claim in January and end up spending the OOP max ($2100 for individuals, $4200 for families) all at once (instead of distributed throughout the year in the form of premiums, like traditional plans). A lot of people don’t have this kind of money immediately available.
• Recordkeeping: If you choose to leave your money in your HSA to grow tax-free and pull out your reimbursements at a later date for retirement, then you have to keep good records. There's always a chance you could get audited by the IRS when you pull out that lump sum, so records are a must.
• This plan may not be suitable for patients who prefer to not be in charge of every detail. I'm somewhat of a control freak, so this is no problem for me :)
• HSAs were set up as a federal program, and some states choose not to comply with federal guidelines concerning tax treatment of HSAs. For example, in California, contributions are not deductible and dividends and interest are taxed at the state level.
• HSAs may be more expensive for maternity coverage. The math is still fuzzy on this one for me. If you plan on getting pregnant in the next year, evaluate all your health coverage options.
• HSA accounts seem to have high enrollment fees and monthly maintenance fees.  As HSAs catch on, there will be more competition which may lower fees for everyone, similar to IRAs.

I first contemplated naming this post "How I Started Saving for My Child's Education." I was amused by all the potential reactions that it might stir up. "Huh? What child?" or "OMG YOU'RE PREGNANT" or (my grandma’s) “More baby blankets to knit!”  Hehe. No, I'm not expecting. Unless you count the food baby I acquired on my recent vacation :)

I figure my kids' college expenses will come much sooner than my own retirement, so it's never too early to start saving. I shudder to think what the cost of tuition will be by the time they go to college. When Tony found out I was starting a 529 plan for my unborn child's college education, he made an offhand comment along the lines of "Oh good grief, she's nesting already." He thinks all those mommy blogs I read are having too much of an effect on me, I'm sure :)

If you're not familiar with them, 529 plans are college-savings plans operated by a state or educational institution. The earnings from 529 plans are tax free, and the funds can be used at any college in the country. Payments can be for tuition, room and board, or books. Each 529 plan offers different investment options. The Ohio 529 plan has actually been ranked among the top five 529 college-savings plans in a recent article by Morningstar. I've outlined some of the highlights of the Ohio 529 Plan below.

Ohio 529 Plan Highlights

• Low investment fees. Total expenses are 0.23% to 0.47% for the age-based options, 0.24% to 0.46% for the static options, and 0.23% to 0.91% for individual fund options.
• No enrollment fee or maintenance fee.
• A wide variety of investment options, including both active and passive.
• Low initial investment ($25), which means you could open accounts for nieces or nephews or other young children in your life, in addition to your own.
• You don’t have to live in Ohio, although Ohio residents can take a tax deduction.
• If you don’t have kids, you can just use yourself as the beneficiary. If you don’t have plans for college, you can withdraw your deposit and referral bonus five business days after it is deposited. (Just remember, earnings are subject to income tax when withdrawn, plus 10% additional federal tax.)

Here's how you sign up:

1.       Open a new Ohio CollegeAdvantage 529 account with a minimum deposit of $25.  You can enroll online or through the mail. I enrolled online and it was super quick and easy.

2.       The first step is to input your personal info and choose a login/password. Next, you’ll verify your e-mail and complete the application.

3.       After that, you’ll choose your funding amount and select an investment fund. Your initial deposit must be a least $25, and is funded using the account/routing numbers of your bank account.

4.       To get the bonus, you will need to enter a referral code at the end of the application. You can enter mine: 2512918.

5.       In 1-3 days, your initial deposit will be taken from your bank account, and in 5-7 business days you will get your $25 bonus. The $25 will be deposited directly into the 529 account, and will be invested in the same fund as your initial deposit.

6.       You must establish an account on or before December 15, 2009 to be eligible to receive the referral bonus.

Personally, I like the low expense ratios of Vanguard.  I also like the idea of inflation-protected bonds (TIPS), so I went with the VIPB fund. If you’re ultra-conservative, you may be interested in the 10 or 12 year CDs with a guaranteed return of 5%APY (minimum balance of all CDs is $500).  Jonathan does a good job of reviewing conservative 529 options here. If you like more volatility (ahem, TONY), there are plenty of other options that may suit you.

$25 ETF or Payroll Deduction Bonus Instructions
There is also another promotion where you receive a $25 bonus if you start a new automatic transfer from your bank account or payroll deduction.