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Ask Dave

Insurance and saving

Amy has an unusual idea where their insurance and savings are concerned.

QUESTION: Amy just realized their health insurance has a health savings account (HSA) option. They are in Baby Step 2, and she has a unique idea for saving money. Dave gives Amy his thoughts on their situation.

ANSWER: There are two components to an HSA, the insurance component and the savings component. You don’t have to participate in the savings component. The insurance component is simply a large deductible, 100 percent coverage after the deductible, cheaper-premium health insurance plan.

I would not do the savings component if I were in Baby Step 2. I would only do the insurance component, or I’d do the medical sharing program. I’m not sure why you’d need to jump back and forth if you’re going to permanently move to a medical sharing program. I get the idea of saving money, but I wouldn’t recommend your idea for someone who’s in debt. I wouldn’t fund a savings account of several thousand dollars only for medical when you’re not even on Baby Step 3.

It’s not the end of the world if you don’t fund the HSA portion of your current insurance plan. If you went with a medical sharing program, and just saved up a large emergency fund, the only thing you’d really lose out on is the tax deduction associated with an HSA.