Suze Orman on HSAs

Personal finance writer Suze Orman says in a recent column on Yahoo! Finance that health savings accounts may be a good way to put away money to pay out-of-pocket healthcare costs during retirement.  

“If you’re in good health,” Orman writes, signing up for an HSA-compatible high-deductible health plan “can be a cost-effective way to protect yourself and save money.”  While minimum annual deductibles are $1150 single, $2300 family, Orman notes, “In return for taking on the financial responsibility of those high deductibles, your annual premium will be lower.” 

And that equals savings…if you’re in good health.  And if you’re not in good health?  “If you or a family member ends up in need of care, your savings will be offset (or exceeded) by the higher out-of-pocket deductible cost. And the HDHP also will typically have a higher annual maximum out-of-pocket cost than a traditional plan. For 2009, the maximums are $5,800 for an individual and $11,600 for a family….That’s a lot of money to be on the hook for, but the HSA part of the equation will help,” she writes.

Or you can do what a lot of people do: sign up for an HDHP but don’t bother funding an HSA.  Then if you get sick, you can get the worst of both worlds.

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