Thursday, January 3, 2008

More on Health Savings Accounts

I've covered my decision not to use a Health Savings Account. Now comes another story asking if HSAs are right for you (free WSJ Digg link).

Not my experience

High-deductible plans have premiums that are often 20% to 25% lower than those of health maintenance organizations, usually the cheapest type of comprehensive plan.
This wasn't my experience with the HSA/consumer driven option I had. The premium savings were a little over 12%. These savings weren't nearly high enough. I hope in next year's options a 20-25% premium savings is available.

Young and healthy workers who are unlikely to incur many medical bills are most likely to benefit from high-deductible plans, says Wendy W. Bunnell, a benefits attorney and consultant in Minneapolis.

High-income individuals and families who can afford to pay their own medical bills with cash up to the deductible limit also may benefit. While paying for some care directly, they can use an HSA primarily to invest tax-free and fund medical care in retirement. (You can submit receipts for reimbursement at any time, even years after the money went into the HSA.)

I do see the benefits in using the tax-free money for retirement medical care, and the HSAs seem like a good fit for the mass affluent. I'll need more than a $500 premium savings to use for funding an HSA to make it worthwhile though.