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>> What I was going to do is to not draw on the HSA whenever I had medical expenses intead just rollover and let the funds grows for future. But as a potential early retiree, I just don't like the pre-65 restrictions on HSA savings. <<

Yeah, there is that. But I think I have enough in my traditional/rollover IRA (from my first job) and my current 401(k) that I wouldn't need the HSA for retirement income until 65 anyway. Of course, someone who is just getting started in retirement savings might not be in the same boat.

Plus, the way I look at it, if I have HSA money left at age 65, then we'll be fortunate since it means health care expenses didn't break us by the time I'm that age.

>> Also I didn't like the potential hit to my budget. In my case treating an HSA as savings requires me to not only fund the HSA but also outlay money out of pocket for all medical expenses (including Rxs) until I meet the deductible. The HMO option doesn't have a deductible. <<

That's when you have to look at the difference in out-of-pocket premiums and how likely you are to rack up significant medical expenses. If I had to guess, I'd imagine the difference between the standard PPO and the HDHP option might be as much as $250 a month for us, maybe closer to $300, based on the numbers last year and envisioning a considerably more expensive PPO this year. That's at least $3000 a year I could put in the HSA for the same amount of money out of my paycheck, *plus* the employer contribution to the HSA (which I know is a minimum of $500 plus other "opportunities" during the year, of which there is already a possible $225 more for next year if we both take the wellness assessment).

So at least in our case, I can easily see getting $3725 in an HSA this year without any extra expense than taking the PPO option, maybe more with the same out of pocket premium costs as the PPO. The question is: what will the deductible and out of pocket maximums be for us? If the out of pocket max isn't much over $5000 a year, the HDHP/HSA would seem to be the obvious choice based on the odds and the ability to self-insure a hit of up to $1275 a year should a significant medical issue arise. But if it's closer to $10,000 we may opt for the security of the PPO to avoid a potential $6275 hit.

For us, the prescriptions might be an issue. My wife is on three medications which would currently cost about $300 a month if we paid full price (but they now cost us $75 total, with three $25 co-pays). However, as I research more, one of her medications has a very similar drug on the market which has a generic option which might work, and one of her medications can be safely and effectively pill-split, so we might be able to cut that total payout in half or better. Prescriptions aren't currently a big issue for me -- not just because I don't use any now, but because I'm a member of an Indian tribe which uses gaming revenue to cover its tribal members with prescription drug coverage (they pay whatever is left to pay after insurance through its tribal pharmacy).

I'll report more on the details and the considerations we have to go through; I think that might be instructive for others in the same boat (trying to decide between HDHP with HSA and a traditional low-deductible plan). I'm assuming the HDHP will be the better option for us, but the devil will be in the details. I know the company is going to want to steer us in that direction, so I'd be surprised if they didn't make it the better deal overall.

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