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These programs were mentioned briefly on the Retirement page, but I wanted to go into more detail on this page. These programs are a fantastic solution to the current Health Care Situation in the U.S. Having an HSA empowers you as an individual, allowing you to save Pretax dollars in an investment account and withdraw the money tax free for Medical Expenses. If any money is withdrawn for other reasons, tax penalties can occur in regards to the same rules of retirement penalties.

The key to the success of these plans is the High Deductible HSA Health Insurance policy. For example, if your deductible is $2500, you can put up to $2500 tax free into your HSA bank account every year.

Lets look at how the Plan works for our ficticious person "John Smith."

John is a single person who has good health, non-smoker, average height/weight ratio, and no pre-existing conditions.

John pays the insurance company $80 per month for his HSA health insurance premium which gives 100% coverage after the deductable. Now traditionally we would think having a high deductable is bad, but John has $2500 in his HSA savings account after contributing $220 per month for the last year. Now if he has to go to the doctors, or even a major emergency, the most he would have to pay is $2500 which he can write a check from the HSA account or run a bank card to cover the deductable.

What makes this a powerful plan is the monthly contributions to the HSA savings account. If John does not get sick, or have an emergency, or go to the doctors for 3-years he will have $7500 plus annual compounded interest on the HSA savings account. Now if something major happens, the deductable is still $2500 with 100% coverage afterwards, leaving John with $5000 still in his HSA account. Now what are the chances that John will have something major happen every year (very low) so he will always have more money building and compounding in that account which will offer nice medical seucurity for retirement.