Should I Switch to an HSA?

Dave explains the basics of the Health Savings Account (HSA).

QUESTION: Anthony is considering switching his traditional health insurance to a Health Savings Account (HSA).  Is that a good idea?

ANSWER:  The HSA could be the answer to the health care crisis we have in America.  For example, if you have a typical couple at 30-years-old, they can get an 80/20, $1,000 deductible policy for $250 a month.  If that same couple took out an HSA they could get that same plan for $150 a month. 

The difference is that the HSA will pay 100% of the costs after the deductible.  But the deductible is much higher – like $5,000.  You’re saving $100 a month though.  With the HSA, you’re also allowed to save your deductible annually into a tax-deductible savings account, and it grows tax-deductible.   

For this type of health care insurance to work, you need to have a good emergency fund for the minor doctor’s visits that will come up.  You also need to take the $100 each month that you’re saving and put that toward saving. 

The HSA is fantastic for people who are not chronically ill.  For a healthy family, the HSA is a perfect plan.  
The other great thing about the HSA accounts is that it forces the insured to apply market pressure to keep medical costs reasonable. 

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