In order to get attention in the crowded social media space these days you need to have the standard top 10 list of “Absolutely Essential” information. Otherwise it is absolutely necessary to use a sensational headline that is about 40% truth and the rest. . . well you guessed it.
Financial planning for retirement is especially susceptible to this phenomenon. There are so damn many issues to deal with. The first and most important is finding the money. Without that, everything else is unnecessary.
The American system is way too complicated and that is unlikely to change anytime soon. With all of its complexities it is not surprising when someone claims to have a cool and slick solution, people jump to hear the answer. But are such claims
accurate? More importantly, do they work for your special situation?
The media often ignores answering these questions; their job is to make headlines.
Health Savings Accounts
Health Savings Accounts were created back in 2004. The fake news explained how HAS’s provide more freedom to the individual, more choice and more opportunity.
In reality, HSA’s are pre tax savings that can compound tax-deferred. They are similar to IRA’s but without the mandatory withdraw requirements. Anything that has a tax-free or even tax-deferred benefit is always going to get attention.
For most families HSA’s do little more than add another layer of detail to our already insane health care system. Instead to adding more individual choices, HSA’s place more of the health care responsibility onto the individual.
Here are some of reasons why this is the case.
Not everyone is eligible so the first thing you need to do is determine if you have healthcare coverage and if it qualifies as a low cost high deductable plan.
If you are an individual and spend more than $541.67 per month ($1,083.33 for families) and if your deductable is less than $1300 ($2,600 for families), sorry, you can’t have an HSA. Sorting through all of this mumbo jumbo is enough to make you sick.
One so-called professional financial planner was recently quoted on CNBC extolling the virtues of HSA’s with this minor caveat, “ HSA’s aren’t for everyone. If you are on medications, have chronic illness or if you are older-anything where you might be going to the doctor a lot, then having a high-deductable will probably be very expensive.”
In other words, if you use the health care system of the United States, just go ahead and pay outrageous premiums every month so the first $1299 of costs comes out of your pocket, too bad sucker. But you have to figure that our for yourself.
But What If You Qualify
If you make it into the HSA club, you can only use the money for qualified medical services. Granted, the list is long and generous but still, this is the government telling you what healthcare services you can and can not spend your own money on in order to get a tax-deferral.
If you decide to go forward and start an HAS, the government limits your contribution to $283.33 per month ($562.50 per family). On a tax deferred basis, investing this amount over a long period of time can add up to a tidy sum. If later on you should violate the rules and spend a few bucks on a Saturday night fling, no problem. You just pay a 20% tax on the fling.
Why Must It Always Be So Complicated
HSA’s appear to be the perfect solution for young people with absolutely no medical issues of any kind. If you are older, especially if you take lots of prescription medications, forget about it.
The larger question remains, why must everything our government does in the name of democracy end up shackling us with less freedom.
The fact has been stated many times. In no other country is healthcare so complicated and so expensive. There are countries like Mexico that are expertly serving the medical needs of Americans at a fraction of the cost. Medical tourism is a booming business in most resort towns. We’re not talking about procedures covered by insurance either.
When the cost of travel from the United States, accommodations and medical costs add up to the same as just a few months of US healthcare premiums, suddenly, things get very simple. Oh yes, the low cost of prescription drugs are another bonus.