HSAs + HDHPs can make sense in some circumstances, especially if your employer contributes to it and you are a high earner.

So in all health insurance plans, you're working with pre-tax money. In all cases, your monthly premium is paid for in pre-tax money. With HSAs, additionally, any contributions you make are also pre-tax, and can be invested.

Whenever you're dealing with pre-tax money, the more money you make, the more of an advantage this is. If you make very little money, you generally pay very little tax on it, so the discount from using pre-tax money is small. The reverse is true if you earn a lot of money.

The advantage of using the HSA is that you own the money and can keep it forever. You can always use it to pay for medical expenses without incurring taxes, and you can also start to draw from it after 65 as though it were a regular retirement account and pay the income taxes then. Because they roll over forever, you can amortize medical costs over a longer period of time. And because the money is invested, in theory it can increase without you doing anything.

The disadvantage of using an HSA is that it is invested. It's entirely possible that the value of what you buy with your HSA money goes down, and then you have less money for medical expenses. Or if the arcane math of medical costs work out so that you'd have ended up paying less with a lower-deductible PPO or HMO.

tl;dr: If you make a lot of money, your company contributes to it, and you don't get sick, an HSA is basically a free extra retirement account that can both always be used to purchase medical services and can lower your current year tax burden.

I'll note that I'm super risk averse and so I have a traditional PPO, but one of my friends is a big money guy and he does an HSA (despite having lots of medical bills, he still swears by it).

HSAs are just tax breaks for wealthy people who are already paying cash for medical treatment

HSAs are not very useful for ordinary folks but for people who can afford to pay deductibles and stuff out of pocket it’s basically back door way of investing tax free after maxing the 401(k)

They’re a handout to rich people and fund managers basically

No one could explain was a deductible was to me until my late 20s. Probably because it makes no sense. I ALREADY paid you mfs, youre saying I still have to pay??

Relatedly: Matt Bruenig: The Welfare System Stole $2k From Me

This is a long rant about Flexible Savings Accounts, which are these ridiculous schemes that allow you redirect some of your untaxed paycheck into accounts that can only be spent on certain health care or child care items. To use them, you have to guess how much you are going to spend on those items during the year, and if you wind up wrong, you the money you put into the account is forfeited to your employer. Nearly half the people who use the accounts forfeit money to their employer ever year!

The HSA rhetoric was annoying because it was only useful to people who didn't really need financial help, and even then the benefit was something like a tiny tax credit. I was offered one of these at an old job. I don't remember if it was risk-free or not. I didn't bother with it, one of my coworkers said you lose anything you don't spend at the end of the year. No idea if that's true.

Also btw if you already have an HSA but then switch to a different job that doesn't sponsor it, just take the tax hit to withdraw the money and close the account if you don't have anything to spend it on. I found out a few months after I moved that my account has been getting dinged $4 a month for "administrative fees" and an extra dollar a month for paper statements that never got forwarded to me. Normally these fees would be paid by the employer.

what if health insurance was individualized in the same way 401k and retirement stuff was, and you could "call your broker" at your "health savings account" to tell them to invest your tax-free "medical dollars" in the latest gizmo or whatever.

Lmao. No way. You’re kidding right? HSAs are literally just investment accounts, but it’s just branded as being health related?

The cost of your insurance goes way down if you have a high deductible, and a deductible is basically what you'd have to pay before the insurance actually pays anything

I don’t get this shit at all lol. My health insurance pays like 85% of clinic visit fees. I’ve called them on multiple occasions and asked about my deductible. Apparently if I meet it, they’ll start paying 80% of my bills? But they literally already do! What exactly is the benefit here? Do they mean they’ll pay 80% of hospital procedures or some shit?

Well typically you’d have the option of like, paying $150 for a high deductible plan or $300 for a low deductible plan. If you paid $150 in premiums plus $150 to an HSA you’ve got the ability to save up for a big expense during years when your costs are lower.

Let’s say in the situation above, the high deductible is $3000 and the low deductible is $1000

If you pay 3600 in premiums and 1000 for a deductible that’s 4600 a year.

If you pay 1800 in premiums and 3000 for a deductible that’s 4800 a year, pretty close, but 1800 of your deductible is already saved in your HSA if you paid the equivalent of what your higher end monthly premium would be

but if you Don’t hit your deductible you can save for the upcoming year.

Just FYI, you can buy certain things with your HSA money if you have it, besides just healthcare services. For example you can buy first-aid supplies and stock up on trauma kits or street medic stuff.

Trying to clear up confusion on what an HSA is:

If you have a high-deductible insurance plan, an HSA is an account where you can save money up to a limit without paying taxes on it (for now). It's an investment account, which means that you shouldn't get fucked by inflation if you keep money in it for a long time, but if you need to pull money out at the wrong time you can get screwed (not ideal for money meant for emergencies). Money in that account does not disappear at end of year, and can be left to a beneficiary if you die.

When you take money out of an HSA account, there are a few possible scenarios. If you use the money on a medical expense, you pay no taxes on this money. If you're over 65 and use the money for a non-medical expense, you count the money as income for this year, essentially delaying you income taxes on that money. This is roughly equivalent to a 401k. If you're under 65 and use the money for a non-medical expense, then you not only pay income tax on it but also a 20% fee. This is a very bad scenario.

If you're going to save for retirement and you're eligible for one, money in an HSA will likely end up being completely tax-free unless you save so much that you can't spend it on all medical expenses. Unless you're trying to micro-optimize, make all of your medical payments from the HSA so they're tax-free.

HSAs are distinct from and mutually-exclusive with FSAs (except for a limited-purpose FSA, which you can have alongside an HSA). FSAs are much weirder, one reason being that the money disappears (IIRC goes to your employer) at end of year.

My brother had a job where they choose between a high deductible plan + company match for HSA or a more expensive plan without HSA. After accounting for tax savings, employer contribution, and premium savings, you came out ahead with the HSA option even if you maxed out the deductible every year. Of course this assumes you are already getting your max employer match for 401k and can afford to do that.

Personally, I haven't had a job that provides any sort of health benefits except being a student.

It sucks because the healthcare system sucks, I ended up getting one because it just seemed like a good idea to sock some money away specifically for medical needs and I wasn't planning on sticking with the company because the healthcare sucked. I didn't think about the investing part, for me it was more just putting a fence around the money tax-free so I wouldn't need to dip into savings for that stuff.

Pretty much yes. My current job offered me the choice between an HSA or a PPO, and once I read the terms of each the HSA came out looking so bad I wondered why they bothered offering the choice at all - but the monthly payment for the HSA is less, so I guess there's my answer.

My employer contributes to my hsa. It’s two fifths of the deductible.

If you do have an hsa, there’s two schools of thought: the first is to never use it, roll the amount over your deductible into some kind of retirement account and use it as a tax dodge. The second is to use the shit out of it, hit all your deductibles every year and get the maximum utility out of the insurance you’re paying for or getting as compensation.

I have an interesting situation on this; I work a pretty bougie office job, so i have a nice PPO that covers me and wife very well. She works an office job that has the HSA, and the employer does pay quite a bit into, but also they pay double if the spouse is on the plan. So we stock up big numbers in the HSA and use it for all the deductible garbage from my plan.

This shit is all garbage though, and I hate it with every fiber of my being.

I know people who got suckered into thr HSAs. They had to pay out the ass before benifets kicked in. Few of them are going back to the PPO plan.

They are scams and I can see a market crash affecting them or decent amount of financial crime by the banks for which they'll get a slap on the wrist while their victims are cleaned out. Sooner the better to nuke HSAs and their bastard FSA cousins for good.