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David Bach The Automatic Millionaire

David Bach, The Automatic Millionaire

Seven Things to Know About Health Savings Accounts

by David Bach

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Posted on Monday, October 22, 2007, 12:00AM

The open enrollment season for next year's benefits elections is already underway.

Whether you're an employee being faced with new health insurance options through your company plan, run your own company like me, or purchase individual health insurance, the choices you make regarding your health insurance are an important part of your 2008 financial strategy.

A Misinterpreted Benefit

Last month, I spent some time looking into health insurance options for my small group of employees and myself. It was an unsettling exercise as I reviewed the various plans and calculated the increase in premiums (which, according to Hewitt Associates, are set to rise an average of 8.7 percent this year).

Around the same time, I caught an episode of ABC's "20/20" that profiled the success popular grocery chain Whole Foods has had with the health savings accounts (HSAs) they offer their employees. After watching the show, I decided to do a little more digging to see if an HSA might make sense here at FinishRich Media.

What I found is that there are a lot of misconceptions about HSAs, including that if you don't use the entire balance of your HSA before the end of the year, you forfeit it. That's not true -- with an HSA, there's no "use it or lose it" rule.

What You Need to Know

Here are the top seven things I discovered about HSAs that might help you determine if this type of account is right for you:

1. HSAs are essentially tax-free medical savings accounts.

You can think of an HSA as a 401(k) or an IRA dedicated to paying for your medical expenses. You contribute to the account with pre-tax dollars if you save through your employer's plan, or your contributions are tax-deductible if you have an individual plan. Contributions are invested much like your retirement savings (investment options vary by provider), which allows for compounded growth of your savings over time.

When you have qualified medical expenses, you can use the money you've built up in your HSA to pay for them without incurring any tax consequences.

2. You need a high-deductible health plan to qualify.

To be eligible for an HSA, you also need to have medical coverage under what's called a high-deductible health plan (HDHP). For 2008, an HDHP is defined as any health plan with an annual deductible of at least $1,100 and annual out-of-pocket expenses not exceeding $5,600 for individuals.

For family coverage, an HDHP must have an annual deductible of at least $2,200 and annual out-of-pocket expenses not exceeding $11,200. You also can't be over 65 or have any other medical coverage other than your HDHP.

According to Hewitt's research, more than 20 percent of companies already offer, or plan to offer, an HDHP with an HSA this year. Combining the two lessens the pain of having to shell out so much money from your own pocket before your coverage kicks in.

3. You contribute to HSAs just like retirement accounts.

If your employer offers a plan, you can make payroll-deducted contributions on a pre-tax basis. If you're not going through an employer, you make ordinary contributions with after-tax money, which you can then deduct from your taxes.

What's even better is that some employers -- like Whole Foods -- also make contributions to HSAs on behalf of their employees. Does yours?

For 2008, the maximum amount you and/or your employer can contribute to an HSA is $2,900 for individuals and $5,800 for families. Those age 55 or older can make additional catch-up contributions of up to $900 for 2008.

As with IRA contributions, you have until April 15 of the following year to make your annual contributions. For instance, you have until April 15, 2008, to make your 2007 contributions (or establish a new account for this year). Note that 2007 contribution limits are slightly less than the 2008 limits I already mentioned.

And as I mentioned above, your unused contributions aren't lost if you don't use them within a given year. Rather, they simply remain in your HSA and continue to grow over time with interest or investment earnings (depending on how you have them invested) until you use them.

4. Eligible expenses go beyond those that count against your deductible.

Many of the expenses you can pay for with money from your HSA go to cover the high deductible you must meet before your insurance starts paying. But you can also use the funds in your HSA to pay for other medical expenses not typically counted toward your deductible -- such as some over-the-counter medications, COBRA insurance, or qualified long-term care insurance.

You can find a complete list of qualified medical expenses in IRS Publication 502.

If you're younger than 65, you can use the money in your HSA for anything other than these qualified expenses. However, much like with an IRA, you'll be responsible for ordinary income taxes -- and there's a 10 percent tax penalty on the amounts you use.

5. HSAs offer real flexibility, and portability.

Who hasn't felt confined by their HMO or PPO plan when they need to see a doctor who isn't in the plan's network?

When you contribute to an HSA, you have a lot more freedom to shop around for medical care, as high-deductible health plans typically don't use doctor networks. If you're like me, you may find that some doctors aren't even taking insurance any more.

Paying for your doctor visits through an HSA also encourages smart consumers to actually start asking doctors about their fees. This, in turn, could even create an incentive for medical providers to keep their fees competitive. Imagine that!

Another huge benefit of HSAs is that they're portable from employer to employer, or from one provider to another. When you leave your job, you get to take the balance of your HSA with you and either roll it over to your new employer's HSA plan or open an individual plan with another provider. With an HSA, you're in control of your money.

6. Once you hit 65, the money is all yours -- penalty free.

Let's say you contribute to your HSA for years and years, and actually have lower medical expenses than you expected. When you turn 65, you can start tapping into your HSA for any reason, not just qualified medical expenses.

You'll still pay ordinary income taxes on non-qualified expenses because you funded it with pre-tax dollars, but there's no penalty.

7. HSAs aren't the same as HRAs or FSAs.

I know, all that alphabet soup can be confusing. Let me break it down for you.

HRAs are health reimbursement accounts much like HSAs, with two major differences: Only employers fund HRAs, and HRAs aren't portable. In other words, if you change jobs or health insurance companies, you may lose any balance in your HRA.

FSAs are flexible spending accounts, and there are generally two types. First is the health care spending account, which is used almost identically as an HSA, but with one major difference: Whatever you don't use at the end of a calendar year is forfeited (commonly known as a "use it or lose it" plan).

Next, there's the dependent care spending account, which is used for tax-advantaged payment for child- or elder-care. Neither of these plans are portable from one employer to another.

How to Find Out More

Ask your benefits department if your company offers an HSA. Then see if you need to switch health plans and enroll in a high-deductible option (if you're not in one already).

If you're in an eligible medical plan but your employer doesn't offer an HSA, inquire about opening one on your own. They're now being offered by some banks, brokerage firms, mutual fund companies, and even insurance companies. To find out more, check out First HSA or HSA Bank online.

For more details about health savings accounts and high-deductible health plans, the Treasury Department offers an easy-to-read brochure. Check it out, and get ready to take control of your medical care and how you pay for it. Taking advantage of tax benefits like this one -- for expenses you'll have anyway -- is an excellent way to save today for a better tomorrow.

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76 Comments

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  • Yahoo! Finance User - Sunday, November 4, 2007, 7:14AM ET  Report Abuse

    • Overall: 4/5

    Great article! This is my second year using a HSA account and I am pleased with the savings I have accrued. My insurance has a $3000 family deductible with a $1,000 premium. Compared to the $4500 premiums for EPO and PPO plans offered at my company, I would pay about the same out of pocket if there was a medical emergency with bills totaling over $4000K. The difference is, if there isn't a need for more than preventive care in a given year, I get to keep the $3000K and invest it tax free. I have accrued $6000K in my HSA account so far, enough to cover two years of deductibles and avoid monthly fees. My husband and I decided to keep his coverage separate because he has health problems but as an individual he pays less than $800 for his plan. The total $1800 in premiums is far less than the $4500 I would pay in CT for a PPO for the whole family. my goal is to save $10K plus in preparation for the day I leave corporate america for an extended maternity leave. It is likely I won't be making $100K during those years (even with a thriving home based business) so keeping health expenses low will be a top priority for our family.

  • Jonathan - Monday, October 29, 2007, 6:19PM ET  Report Abuse

    • Overall: 5/5

    Excellent! There will always be details to assess on your own, but this goes a long way toward getting the information needed for, what I believe to be, one of the overall best health insurance choices available! I've had one now for nine years (since they became available in 1998 as MSA's)

  • Yahoo! Finance User - Monday, October 29, 2007, 12:28PM ET  Report Abuse

    • Overall: 3/5

    Nice article, but a key point was missed. The HOPE Act passed by Congress at the end of 2006, effective 1/1/07, allows individuals to set up HSA's prior to year end and to fully fund for the year. For example, if an individual gets his High Deductible Plan before year end 2007, he could contribute the entire $5650 for a family this year (up through 4/15/08), then contribute another $5800 for 2008, totalling more than $11,000 immediately into the HSA. The deductible would be more than covered immediately. If cash is tight, an IRA transfer could be conducted to cover one of the year's contributions. It's a bit advanced HSA info, but important for people starting their accounts to know.

  • Dmitriy - Sunday, October 28, 2007, 2:09AM ET  Report Abuse

    • Overall: 4/5

    A good article. Although basic, but to the point and has a lot of useful information. However, I'd add a few things to take some shine away from HSAs and paint a bit more realistic picture. First, HSA savings accounts are managed and have management fees (all I've seen anyway). Secondly, if you compare HSA-eligible health plan with a similar plan not eligible for HSA, the latter will generally be a better deal of how much coverage you get per dollar if tax savings are not counted in. If your tax rate is low, chances are you are better off without HSA. Thirdly, the maximum annual contribution to HSA is , in many cases, insufficient to cover all possible out-of pocket annual expenses. My plan, for example, has $8k deductible, it'll take me many years of contributions before a large medical expense would be truly covered by pre-tax money. Another thing is that HSAs are advertised as investment vehicles. The problem is, the choice of investments is usually very poor (with my plan at least). Also, because of low balances, the only viable investment choice is to stick the money into some mutual fund which will likely charge additional fees without much to show for it. On top of all that, if you end up in a hospital on a bad day for Dow Jones, you may end up having less money available for your medical expenses than you put in. In my opinion, HSAs have many hoops to jump through before you get into some savings which may not be as great as expected.

  • Yahoo! Finance User - Saturday, October 27, 2007, 12:47PM ET  Report Abuse

    • Overall: 5/5

    Great job on the article! As a health and welfare benefits consultant, what you've laid out is absolutely on target. The one thing I like to emphasize is that the interest earned is tax free as well. A question was asked by a commenter about what happens to the HSA funds if the account holder dies. The account holder can elect a beneficiary. If the HSA is left to the spouse it becomes the spouse's HSA. If it is left to a non-spouse benefiticary, the account is no longer an HSA and the fair market value of the HSA becomes taxable to the beneficiary. (http://www.irs.gov/publications/p969/ar02.html#d0e886)

  • Yahoo! Finance User - Saturday, October 27, 2007, 12:44AM ET  Report Abuse

    • Overall: 3/5

    unfortunately, HSA is not an option in our company. Our company only offers FSA which is too time-consuming to be worthwhile.

  • Yahoo! Finance User - Friday, October 26, 2007, 9:58AM ET  Report Abuse

    • Overall: 4/5

    One of the commenters was confused about the difference between the deductible and the out-of-pocket maximum, thinking both might have to be satisfied before benefits were paid. This is a somewhat common misconception. Here's the scoop. The deductible has to be satisfied before most benefits will be paid. There are some exceptions. For example, often the deductible is waived for preventive care or emergencies. Once the deductible is met, benefits are paid at the 80% or 90% or whatever your contract states. When you reach your out-of-pocket maximum, the benefits are paid at 100% for the remainder of that year. It's a way to put a ceiling on the amount you will pay in a given year. I am about to start my first HSA. My company contributes the full $2900 at the beginning of the year, and the premium is about $16.00 per month. I'm excited! My hope is to roll most of it over for the next eight years until I turn 65, and then have a nice amount for paying Medicare premiums and any health issues I hopefully don't develop. My one question that hasn't been answered yet is whether this is money that can be left to my children if there's any left when I die. Timely article!

  • Yahoo! Finance User - Friday, October 26, 2007, 9:35AM ET  Report Abuse

    • Overall: 4/5

    Another great article by David Bach that is of absolutely no use to me. I have been trying to open an HSA account since the president signed them into law in December 2003. Here it is 4 years later and they are still not offered in New Jersey! It is simply unacceptable that a federal law is ignored by some states. Aren't all citizens supposed to be able to avail themselves of this legislation? DAVID, please find out why these policies are not available in every state in the nation, and what we can do to get them implemented! I am tired of being imprisoned by my state laws!!!

  • Henry - Friday, October 26, 2007, 8:39AM ET  Report Abuse

    • Overall: 3/5

    Nice artical. You also need to alert consumers that the HSA bank will have monthly charges to maintain the account that should be considered... and the paperwork and personal time to keep all of the accounting for the HSA and HDHC are very considerable. I have 3 Excel sheets for each charge.

  • Yahoo! Finance User - Thursday, October 25, 2007, 12:19PM ET  Report Abuse

    • Overall: 5/5

    Concise & informative article on a very relavent topic.

  • Yahoo! Finance User - Thursday, October 25, 2007, 10:19AM ET  Report Abuse

    • Overall: 4/5

    Be aware that the Democrats HATE these Health Savings Accounts, perhaps because HSAs have the potential to help solve the medical coverage crisis without the government taking over the health care system and raising taxes on everyone who's making a decent living (the same thing is going on concerning Social Security private accounts). The Democratic argument is that HSAs only benefit the rich (the same argument they use for pretty much all economically sensible policies). However, the information I have gotten from advisers who work with HSA users is that many middle income people use them, especially when they were starting their own businesses. Vote accordingly folks. Maybe write your representatives in Congress too. Government-run health care is not going to be any more sustainable that Social Security, Medicare, and all the other entitlements we have saddled ourselves with.

  • RC - Thursday, October 25, 2007, 9:46AM ET  Report Abuse

    • Overall: 5/5

    Atagrob - What a great comment. Thanks for the info. I have elected not to have insurance for years and notice the doctors charge a lot less and was given the same reasons. It DOES make you shop for the good deals. I'll be looking into HSA's.

  • Yahoo! Finance User - Wednesday, October 24, 2007, 6:23PM ET  Report Abuse

    • Overall: 5/5

    Excellent. It opened my eyes to something new that I can do more research on. It feels good to learn new things; articles like this one are worthwhile.

  • Brendan - Wednesday, October 24, 2007, 4:58PM ET  Report Abuse

    • Overall: 2/5

    You skipped over an important use of HSA. I’m 39 and self employed. I have a Major Medical policy with Blue Cross Blue Shield. I have an annual $5,000 deductible but then my policy covers 100% of expenses up to $5,000,000. I pay $1404 annually for this policy. I have had this sort of coverage for several years now. In 2004 I opened a HSA with Health Savings Administrators. They offered low fees and Vanguard Mutual Fund. I now have over $9,200 in the Vanguard LifeStrategy Conservative Growth Fund. In 2008 I will rebalance the account to have $5,000 in Conservative Growth and the remainder will be invested in 100% equities. I have never taken any money out of my HSA! It just keeps growing and growing. I cover my medical expenses out of pocket. I get regular physicals and currently take two prescription drugs. One for depression and one for high blood pressure (It’s genetic my doctor told me I have no lifestyle risk factors). I eat right and regularly exercise. After my 2008 contribution I will have enough money in my HAS to cover my deductible twice. If I do have a big medical expense I have the money already set aside. This set up also makes me an active shopper of health care. I always ask about generic alterative for prescriptions. I get 20mg pills and cut them in half which saves me about 40% on one of my drugs. I always ask up front how much a doctor visit will cost. I have found there is a lower price per visit for cash paying patients because the doctors know how much they are getting paid the same day. They don’t have to deal with the insurance companies who limit what they are going to pay. They don’t have to pay someone to handle the insurance billing for them. This is a big problem for the doctors because they know if they don’t take the insurance they lose their patients. So they charge extra and collect as much as they can. Yes this takes me out of the insurance pool. I want to be out! As someone who takes great care of themselves why would I want to support all the overweight, smoking, drinking, drug using, inactive, non-preventive medicine people? They should bear the cost of their life style directly. On a bigger picture what I am doing is saving money during my healthiest years in preparation for later in life when my healthcare expenses will most likely go up. It is the same idea as saving for retirement. You save when you’re young and can earn well for when you’re old and unable to earn as well.

  • Pete - Wednesday, October 24, 2007, 3:44PM ET  Report Abuse

    • Overall: 4/5

    One LARGE drawback I didn't see mentioned, your HDHP will not be considered a HDHP for this purpose if it includes a prescription drug plan (for example, $20 copay for non-generic prescriptions). This really defeats the purpose for a lot of businesses, specifically those with plans comprised mostly of women, and is the only reason our firm continues to pay the big bucks for health insurance.

  • JOel - Wednesday, October 24, 2007, 2:37PM ET  Report Abuse

    • Overall: 2/5

    It is well documented the use of HSAs. However they do not address the issue of healthcare containment, when in fact they create a anti matket environment where the true cost is never located in anyone cost center. The result is employers can continue to pass the cost onto the backs of their employess while not living up to their responsibilty to support a economic environmnet where the maket place works. Although I beleive that if employers want employees to be portable and un afffected by market swings and their needs , employers need to create and support a working culture that meets the needs of both. The difficulty is finding a employer that verbalizes and in practice is ethical to understand this standard. Creating this culture and accepting the responsibilty that goes with it will do a lot to acheive true loyalty from working Americans.

  • Yahoo! Finance User - Wednesday, October 24, 2007, 1:17PM ET  Report Abuse

    • Overall: 4/5

    The long term thing about these plans it that since companies are offering both HSA's and PPO's today, smart sick people will realize that they need to stay with the company PPO plan because they will need to spend more with the HSA plan, and smart healthy people will go to the HSA, realizing that they make out better with that plan. This leaves less people in the PPO pool and more of those people will be sick, so PPO costs will continue to rise even more quickly, and over time the PPO will have to change, or will be phased out at lots of companies. So get used to the HSA now, it may be your only choice in the future.

  • Melanie - Wednesday, October 24, 2007, 9:52AM ET  Report Abuse

    • Overall: 4/5

    We use this along with a plan with Aetna called a CDH plan (consumer driven health plan). Our deductible for the year is $3000 for the family if we use in network providers and everything after that is covered 100%. It works out pretty good for us knowing that we won't have to pay over that amount for medical expenses in 1year and all the money we do use comes out of the HSA account.

  • Yahoo! Finance User - Wednesday, October 24, 2007, 9:40AM ET  Report Abuse

    • Overall: 5/5

    Thanks for looking into it

  • Teresa - Wednesday, October 24, 2007, 9:15AM ET  Report Abuse

    • Overall: 4/5

    We've done our own version of an HSA without the help of a bank or provider. Just set aside all the money that you would have to pay out in a year's time for your medical insurance's copays and other things that are charged before they kick in at 100%. Put it in a savings acct. and keep it there until you need it. Add the same amount each year, but only use it for medical expenses. So simple, and it's all ours, with no "portability" worries, or someone saying we can't spend it for this or that. Tax-free, schmax-free, hey, just pay your taxes and enjoy the roads, schools, and a free country...it's worth it.

  • Rochelle - Wednesday, October 24, 2007, 8:44AM ET  Report Abuse

    • Overall: 5/5

    I applied for a HSA insuance plan the only thing i had a problem with afterwards was finding a bank that carries that type of accout. I still have not found one in So. CA.

  • Yahoo! Finance User - Wednesday, October 24, 2007, 8:37AM ET  Report Abuse

    • Overall: 4/5

    In response to many of the comments about custodians, there are custodians that charge little if any fees. It is actually better in most cases to use a bank that has been administering HSA accounts for awhile than an insurance carrier anyway, because if you leave that insurance carrier, you do not need to move the HSA at that time. These plans can be real money-savers if you consider the annual savings you gain in premium difference and any contribution your employer may fund to your HSA account. The fact that everything, including prescription drugs, applies to the deductible is something to consider, but can even be outweighed if you otherwise consider the savings of such a plan. It is really a situation where if you have a choice to take this plan, you need to sit down and look at your health care costs. Are the costs you expend less than the savings incurred on the plan?

  • Yahoo! Finance User - Wednesday, October 24, 2007, 7:59AM ET  Report Abuse

    • Overall: 4/5

    One problem that is not evident in this article is the whole issue of the custodian. I currently have a high-deductible major medical plan. When I asked my insurance company about setting up an HSA, I was told that the company didn't provide the "HSA service" with my existing plan and that I would have to applay (and requalify) for an "eligible" plan. Guess what? The increase in cost pretty would pretty much eat up any tax savings. I checked other insurance companies and experienced the same results. So, not only are these companies getting their fee, they are selling you a MUCH more expensive policy with no additional benefits.

  • Yahoo! Finance User - Wednesday, October 24, 2007, 7:42AM ET  Report Abuse

    • Overall: 5/5

    Why don't we use this model for a basis for national healthcare? Instead of having the HDHP take over after your deductible is met why can't this be where the national health plan comes in. Seems to me that this would ensure that the consumer is an active participant therfore keeping costs down while still allowing growth. We could also allow people to draw from their HSA accounts to pay for "first class" healthcare. Maybe a bigger room or more privacy better meals etc. This would keep the fundamentals of basic capitalism in the system as a catalyst for constant improvements. Obviously in this short of a response the answer is oversimplified, but this doesn't seem that unacheivable to me.

  • Yahoo! Finance User - Wednesday, October 24, 2007, 6:35AM ET  Report Abuse

    • Overall: 4/5

    I don't understand what the "$5,600.00 out of pocket expenses" is. If the deductible is $1,100.00, and out of pocket expenses is $5,600.00, does that mean I have to have paid $6,700.00 before I can tap into my account? I guess I don't understand the difference between "deductible" and "out of pocket" ??? Rest of article was very informative. Comments from others also enlightening. Apparently the fees are a huge consideration as well.

  • Yahoo! Finance User - Wednesday, October 24, 2007, 1:15AM ET  Report Abuse

    • Overall: 4/5

    article was great....the person below mentioned how it was more expensive for meds and such....yes and NO. If you pay 5 dollars on a HMO, and 85 on the HSA, you feel like you've overpayed 80 bucks. BUT, if your HMO is costing you 900 a month and the HDHP is only 225, you are actually ahead....EVERY month! that is our case. Not once have we been CLOSE to even meeting the premium for our old insurance payment. And that's even at summertime with the 3 kid's physicals and such (dr., eye, dental). And if you let your doctor know that you are on this plan.....they will work with you and the insurance bills them less, and in turn you pay less. So, say you pay 25 bucks a visit; but they bill 195.....this plan you pay 70 bucks and they bill the insurance 120?! It all works out great for us!

  • Yahoo! Finance User - Wednesday, October 24, 2007, 12:15AM ET  Report Abuse

    • Overall: 4/5

    I like this plan and I do not think the companies shift the cost to the employees. The only thing I do not like about it is my insurance company has a third party to handle the admin stuff and the bank holds the money. I called all of them to ask for the account information and none of these parties gave me my account information that I could give to my company so they would deposit directly into my account. At this moment, I still cannot deposit anything for tax deduction. I think It's a simple thing, but they are still not getting it right.

  • LowellR - Tuesday, October 23, 2007, 9:14PM ET  Report Abuse

    • Overall: 3/5

    Lot's of good info and lot's of people who don't have a clue. 90% of all claims made in this country are $1000 or less. It cost an insurance company $1.35 to pay a $1.00 claim. That's 35% in administration, overhead, payroll, commissions, etc... By eliminating the "nuisance" claims and buying insurance for what it is really for, covering a cost you can't afford, everyone wins. You can't beat Vegas winning small jackpots and you can't beat insurance companies by getting them to pay small claims. Insurance companies love people that buy low deductible plans with low co-pays. They will charge you $2,000 in premium to cover $1,100 in claims. if I offered you a policy to pay $1000 worth of medical expenses and was going to charge you $2000 in premium you would tell me to take a hike. Come on people wake up. National Healthcare is not the answer. The VA is a mess-Social Security is bankrupt- you cannot solve this problem by throwing more money at it. If the goverment gets invloved we are doomed to long waits, endless redtape, and restricted access. Should there be a program to protect citizens against catastrophic health care costs-absolutely- But giving everyone unlimited access to healthcare without realizing what the real cost is cannot be a smart move. We have access to the best healthcare in the world, and the rest of the world knows it. Why do you think they come here? The problem we have here is not access to care-it;s the cost of the care. if we could get the cost of care under control you would not believe how affordable insurance would be.

  • Yahoo! Finance User - Tuesday, October 23, 2007, 9:11PM ET  Report Abuse

    • Overall: 4/5

    Our small company added an HSA option 2 years ago (the HR director was out on maternity leave, so the renewal was dropped on the two newest members of management :O) and it has been fabulous. The first year only one of the owners, the two of us who added the option, and about three others out of 120 participants joined. This past year, we switched providers, added a wellness program, made our other option an HRA, and began employer contributions to both the HSA & HRA. Just over 1/3 of the participants chose the HSA, and our costs year over year are down over 20% - which was also passed onto the employees, especially the HSA participants. We did make a higher contribution to the HSA to encourage people to lean that way (5:3 ratio), and will increase that to 5:1.5 this year, with the intent of phasing out the non-HSA option within a few years. No matter what happens with Health Insurance in this country over the next few years, this will be an ever larger part of the market. If health coverage stays tied to employment, it will grow because it is good for the employer. If we make the mistake of going to universal government health care, those who can afford it will get private insurance, and will use an HSA to keep their costs down. Or if we treat health insurance like any other insurance, it will again be the option of choice to keep costs down.

  • Yahoo! Finance User - Tuesday, October 23, 2007, 8:28PM ET  Report Abuse

    • Overall: 2/5

    But you failed to include the downside of HSA's. They are great for the employer, because it takes a big chunk out of the premium. But it basically shifts to costs to the employee. In particular, costs such as medicines, which, these days, are usually paid with a reasonable co-payment ($5 - $50) and do not count against the deductible, must be paid at full cost until the deductible is satisfied. This plus the cost of regular chair will eat up each year's savings for most couples over 50 or anyone starting a family. It makes it very difficult to save any money for retirement. The real and only solution to the health care problems in the US is to join other industrialized countires with a universal, single-payer system.

Showing comments 6-35 of 76<< PreviousNext >>

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