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Next week I'll get the materials for open enrollment, and I'll be able to see how much more it will cost me to have the traditional low-deductible PPO option compared to the HSA option (those will be the only two options this year). I also don't know what the deductible will be or how much possible employer contribution is out there. I suspect the numbers will tell me to go with the HSA, but I can'tt be sure yet.



Yes I am in the same boat. It is open enrollment and my company is only going to offer two options (down from 6) a traditional HMO and an HSA option. I already received all of the enrollment documentation, so I know how much my employer would contribute to HSA. I have compared the potential costs of both (based on 2007 health costs). Even with The HMO would be somewhat cheaper. I still might have gone for the HSA strictly for the tax free savings. 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.

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.

By the way -- did you know that if you fund your HSA with payroll deductions -- making it a Section 125 cafeteria plan -- the HSA contributions are not only pre-federal income tax but also not subject to Social Security and Medicare taxes? On the other hand, 401K contributions are subject to SS and Medicare taxes. So putting a dollar into an HSA instead of a 401K can actually save you 7.65 cents in payroll taxes.

Good point!
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