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Ask Dave

HSA Breakdown

Dave breaks down why a health savings account is a good idea for Denise's healthy family of four.

QUESTION: Denise’s husband’s company is offering a health savings account for next year. Is it a good idea for a healthy family of four? Dave loves it.

ANSWER: Absolutely it is. We offer it here at my company. It stands for health savings account and it’s the wave of the future. It is to health insurance what the 401k is to pension plans. The health savings account works like this; it has a very large deductible, and after that it pays 100% of the healthcare costs.

Because most medical costs are less than $5,000, your premiums are much less. When you have your emergency fund established, you can cover those up-front expenses. You get a tax break on putting money in there and it grows tax deferred, and if it’s used for medical purposes, you don’t pay taxes on it. Take it if it’s offered.