Barron's Streetwise
The Investing Merits of the High-Deductible Health Plan
Nov 3, 2023
Exploring the advantages of high deductible health plans and health savings accounts as an investment opportunity, including retirement savings potential. Debate on emergency funds strategy, risks and benefits of investing in T-bills. Discussion on minimum deductible, employer offerings, tax breaks and investment opportunities with high deductible health plans. Comparison between traditional PPO plans and high deductible health plans, highlighting the benefits of the latter. Explanation of tax advantages of health savings accounts and prioritizing contributions.
28:47
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Quick takeaways
- High deductible health plans (HDHPs) paired with health savings accounts (HSAs) offer a potential investment opportunity for long-term savers.
- HSAs provide tax advantages and flexibility in healthcare spending, functioning as a retirement savings tool that can be invested in stocks and bonds.
Deep dives
High Deductible Health Plans and Health Savings Accounts
High deductible health plans (HDHPs) paired with health savings accounts (HSAs) offer a potential investment opportunity for long-term savers. HDHPs have higher deductibles, but lower premiums, compared to traditional health plans. The HSA is a triple tax-exempt account that allows pre-tax contributions and tax-free growth and withdrawals for qualifying medical expenses. A study found that 75% of employees would be better off with an HDHP and HSA, especially when employers contribute to the HSA. The HSA functions as a retirement savings tool that can be invested in stocks and bonds, with the potential to accumulate significant funds over time.
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