For many years I participated in my employer’s health savings account but as I grew older I realized I would be relying on health care more and more. For starters, when you hit a certain age you suddenly need to start doing things like preventive checkups such as colonoscopies, electrocardiograms, and prostate tests. All of these things are expensive and if you’re in an HSA you have a much higher deductible to meet before the insurance kicks in to absorb some of the costs.
Of course those tests are needed as you get older because as you age your body takes a toll from all the wear and tear, endless exposure to virii, bacteria, fungus and whatever else is crawling around the earth.
HSA Benefits
There are benefits to an HSA such as employer matching funds, the ability to invest your HSA in the stock market or other investments and the ability to pay for medical expenses later in life. I strongly believe HSAs are a good thing if and only if you meet two conditions:
- You are young.
- You are healthy.
If you are neither young nor healthy, you need to crunch the numbers and decide if an HSA is truly beneficial for you versus being better off with a traditional health plan.
When To Dump Your HSA?
The answer to that question is going to vary from person to person but I think generally speaking, I think once you hit age 50 it’s time to bank that HSA and switch back to a traditional health plan.
I doubt I’ll ever go back to HSA and I only bring this topic up because a few people have suggested that I should be taking advantage of the free money. I explained that no firm is going to offer “free” money unless it was extremely beneficial for them to do so. The “free” money from your employer likely helps reduce the overall costs of them offering health insurance.
It is a great plan for people that are young and healthy and don’t need a great deal of healthcare but it’s not that great when you’re relying heavily on healthcare.
Share The Wealth
What do you think? Do you like your HSA and high deductible plan? Let me know in the comments below.