I would like to posit a question? How much thought of the future goes into making a health plan choice at open enrollment? Most insurance participants have been conditioned to look at health insurance for the coming year with little or no thought as to what is just over the horizon. They briefly consider the most likely worst case scenario and then enroll accordingly. All of the guided decision support tools that I am aware of ask about current conditions, prescriptions, and overall health status now. What about the future? Are we more likely to need more healthcare or less in the future? Many plan for retirement using a 401(k) of some type and consider all of the fun things they want to do. Being in the business for over 25 years, I have rarely heard someone plan for their healthcare needs in the future. The cost of healthcare in retirement is becoming a topic of greater discussion in the media, but not so much at the point of enrollment in the worksite. When considering worst case scenario few people make the connection or are helped to make the analysis, that max out of pocket is generally quite similar across all health plan options, especially when premiums, tax savings and MOOP is compared accurately. Few consider the triple tax savings benefit of HSA.
HSA makes HDHP an effective tool for more people than actually participate. Lack of education and information may be to blame. When you consider that the massive healthcare spend in retirement, estimated as high as $250,000.00 for a couple that retires at 65, what will the true impact be of the tax consequence? Today's benefit enrollment strategy does not calculate the taxes that will be required on that spend in retirement. When reality hits, it will be too late.
The greatest tool in saving for retirement that is available today, is time. Investment advisors tell us that no investment strategy can overcome the time value of money. All would be well served to consider investing for their future healthcare needs in the best savings tool on the market, HSA! Money goes in tax free, can be invested to grow tax deferred, and can be withdrawn tax free for qualified expenses. No other retirement vehicle can make that statement.
I welcome your thoughts and comments.
Steve Messer
www.bendhsa.com