I love having a Health Savings Plan (HSA).
We have a high deductible family plan which allows us to contribute $7,000 (2019) this year. Once you have a minimum of $1,000 you can put your pre-taxed contributions to work for you. We invest our HSA contributions into VFIAX (Vanguard low-cost index fund). The AMAZING thing about an HSA is: it’s pre-taxed contributions, you are not taxed on the growth, nor are you taxed when you remove it. This is as long as it’s for health expenses. So, if I can cover our healthcare expenses in 2019 out of pocket, I am not pulling money from this account for any of my health expenses. Instead, I print the receipt and lovingly place it in a file called “FI HSA”. I will continue to monitor any tax changes to assure that I can still use those receipts in the future to pull out money when I need it. If you are lucky enough to make it to age 65 without using your HSA, you can start withdrawing money from it. You will be taxed at a regular rate but you will not have a penalty. So basically, if you have a medical emergency, you have emergency money, if you don’t have a medical emergency you have retirement money waiting for you at age 65.
If we have a catastrophic illness it will be amazing to have an account dedicated to our health expenses when we need it the most. Pulling out a $50 co-pay here, $100 medication co-pay there, will not give me the security that a fully funded HSA will give me in the next 5 to 30 years. If you can afford to fund your HSA, I highly recommend that you do it! You can’t afford
HSA explained in more detail here.