A few weeks ago I had to decide what type of health benefits I wanted to sign up for. I naturally looked for the cheapest plan, just because I don’t really ever use Health Insurance, in fact I don’t have any right now, just because I feel like I’m young, healthy and have very low risk (it’s a waste of $$). It’s been years since I’ve needed to visit a doctor (aside from a physical.) Besides I believe that a lot of the reasons people have health insurance is a direct result of the pressure society puts on those who can / can’t afford it. Last year I never used any of my Health Insurance benefits, despite spending several hundred dollars making sure I was covered. Then again I understand the point of insurance – hedging against potential financial loss due to some illness or injury.
So vowing to myself that I wouldn’t let money be wasted like that, I looked into the alternative investment vehicle known as a Health Savings Account. There was a fairly good article in the Wall Street Journal about a month prior that explained the basics of a HSA and how they are coupled with a High-Deducatble Health Insurance plan. I started looking more into it and essentially you are able to take pre-tax dollars (up to a certain limit) and deposit them into this personal savings account. You then use the account to pay for many Qualified Expenses up to the amount of your deductable:
Once you reach the deductable (generally above $1000, hence the word “high”) your expenses are covered by your health insurance plan. This way you are actually putting money away that you can invest (so it grows) and if you are like me and have very little health expenses, the money can be used. Surprisingly (if you look at the lists) there are a lot of things that qualify for medical expenses – eye glasses, dental work, etc.
Naturally I choose this option because the monthly expense was minimal, you save money to be used later in life and that money grows tax free. When you need to make purchases you get a debit card so it becomes a convienence. The advantage of an HSA over the other alternative investment vehicles is that you can take the money where ever you go, meaning if you leave your current employer, the HSA is portable to whatever company you go to work for.