Participating in a HSA (Health Savings Account) is at best, described as a very delicate dance!

You may be wondering what the heck I mean by that?!?

Well, we’ve been participating in a HSA for the past 3 years now, but we were sweating bullets the first year and a half, when we didn’t have enough saved up for the cap where the regular insurance would kick in (our threshold limit was $5,000) if a major accident happened!

Here are some of the negative aspects of starting a HSAs:

• When you don’t have enough in a HSA, a major health accident can really hit you hard if you don’t have enough in your HSA to cover the threshold cap!  So there is a risky period at the beginning.
• If you suffer a small injury (like I have), you will not want to go because you feel that you need a cushion in case one of your kids or wife has a serious injury.
• After a serious injury, and if we go above the $5,000 limit of our HSA, we will have to pay 15% of the total cost above the $5,000 from that serious accident!
• You will tend to suffer through colds and the flu if you catch them instead of going to the doctor’s office…
• There are nagging little fees that while don’t add up to much, are still frustrating!

So in my experience, the best time to start a HSA is when you are younger, but not too young, and perhaps a year or two before you want to start having kids.

If you are too young or active in sports, you might be at risk of being injured in which case a HSA wouldn’t be best for you.

If you have older kids, and are active or participate in sports it’s risky to start a HSA, unless you have enough money that it doesn’t matter!

Two years before you start to have kids is (in my opinion) the perfect time because it will give you time to build up the necessary protective net!

If your family (or your wife’s) has a history of cancer, heart disease, or any other health related problems that can be potentially inherited, a HSA may not be for you!  I know if I had such issues, I would stick to the regular health insurance.

Now, in HSA’s defense, it is really nice to save about $100 a month in health care expenses once the $5,000 threshold limit (in my company’s plan)  for the entire family!

If you have a HSA or you are thinking about starting one, please weigh the list I identified above.

Do you have any additional points that I many have missed?

-MR

Update: I also have an article at the “CashFlow Sherpa’s” today called:  Maximizing your Finanances and Experiences