Reply to Employer only offering high-deductible HSA in the future

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[quote=Anonymous][quote=Anonymous]pp summarized it pretty well conceptually.

in real terms, unless someone has a chronic condition, you're probably better off with the high-deductible plan and the HSA, assuming well-child visits would still be covered.

think about it this way:

Say you're currently paying around $6,000 a year in premiums for family coverage. If you switch to a high deductible plan, say the premiums are reduced to $2,000. You continue paying the extra $4,000 to yourself, only you deposit that money into the HSA. You go through the year and have the normal bumps and bruises and flus, and pay out of pocket $2,000 or so in doctors bills (you may also think twice about going to the doctor for some things, like viruses -- which is how this helps save money on a macro scale). You debit your $4,000 account for that $2,000. At the end of the year you still have $2,000 in your HSA. That money rolls over into next year.

Repeat the scenario I just described, and after year two the balance of your HSA is $4,000 before you have contributed anything more.

Carry on like this for five years -- no major incidents, just routine doctor visits. The balance of your HSA is $10,000 before you've made the new year's contribution.

And then, suddenly, BOOM! One kid needs braces. Good thing you have $10,000-plus sitting in the HSA you can use to pay for them.

The DOWNSIDE is if you have a major medical expenses early in this process, in which case your out-of-pocket burden will be high. Or, if you have a chronic condition like diabetes or cancer or something. [/quote]

I regard the HSA as funding the deductibles and copays etc.  You can also use the HSA for dental, orthodontia, vision, prescriptions, etc.  If the coveage after the deductible is comparable and the OP's premium savings are comparable to the deductible then it's a wash.  Except for the HSA and items that OP might not have any coverage for like orthodontia.  That means the HSA tax benefit is the advantage.

http://www.irs.gov/taxtopics/tc502.html

Another interesting tax topic is theft and casualty losses.  Think tree damage - big limitations based on income.  Lower income gets a deduction others no.[/quote]

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