When I initially looked at the Health Savings Account it seemed like a no brainer. Set aside money in a tax advantaged account instead of throwing it away on health insurance premiums. It makes perfect sense for our family. We tend to be light consumers of health care services with the majority of our costs coming as a result of the kids during cold and flu season. My wife and I get our annual physicals (free of charge) and other than that we just let our HSA grow. If you read the health savings account rules you will see that beyond age 65 you can use this money for any purpose. So really it’s another tax advantaged way to put away money for retirement if you stay health and let the funds grow.

Detractors say that these plans are only for healthy people, but I can’t agree totally with that. Even those who regularly visit doctors can use money from their HSA to pay the deductibles and other fees not covered by a high deductible insurance plan. The key is to start out by modestly increasing the deductible on your health insurance and then getting more aggressive as the cash balance in your account grows.

Another thing detractors say is that people are less apt to go to the doctor when they are sick leading to more advanced disease. I’m not sure this is completely true, most people who wait too long do so because they hate going to the doctor. Before having an HSA I never saw the doctor and didn’t have a physical for 15 years. Now since getting our Mellon HSA I’ve had 3 physicals in 3 years so I’m not sure they have this absolutely right.

The main thing that I look at when it comes to any form of expenditure the consumer should have some skin in the game. If there is no cost for them to consume health care services, many people will consume much more than necessary. If doctors, clinics and hospitals are paid per visit or per treatment they have the incentive to book more appointments, run more tests and provide more treatments.

As the baby boomers move through retirement things are going to have to change. The U.S. is already drowning in budget deficits and with unlimited health care for 42,000,000 aging people there are going to have to be changes to the current system.