This is my first post here, but I have been a reader for quite some time. I've been looking over some of the arguments for and against HSAs with a high deductible health plan, and I can't quite figure out why someone with average health issues wouldn't taking an HSA and a high deductible plan plan as soon as possible.
If you are a college graduate who starts with a HSA+high deductible plan and you can invest the amount in mutual funds, the tax-deferred nature of the account and above-the-line deduction make the HSA option very attractive. In fact, the savings are so substantial it makes sense to pay for medical expenses out of a separate, non-tax-deferred account and to use the HSA as a retirement account. My calculations (shown in the attached spreadsheet) show that the only way this candidate wouldn't take the HSA option is if he pays $91 in premiums annually for a low deductible plan and needs $4250 worth of medical expenses (the max contribution amount) each year. Why doesn't everyone do this? Can anyone explain to me where I've gone wrong with this logic?
Long story short: it seems like having an HSA and a high-deductible plan is a no-brainer for most people with average health expenses, as the potential retirement savings are enormous. What am I getting wrong here?
Looking forward to hearing from everybody!