SECTION FOUR: New Health Savings Accounts
The project combines several concepts developed in other chapters, but is ready to be considered as a whole.
Westphalia: Church Politics Adjusts Boundaries, Then Everything Changes
In 1648, the Treaty of Westphalia created the modern nation-state.
Insurance-Like Financial Retirement
There are other ways to support retirement, but most retirement plans before the public are based on the insurance model.
A point which cannot be emphasized enough is that a Health Savings Account is just about the best way to invest, if you have given little thought to investing. The deposits are tax-deductible, and the withdrawals are tax-free if they are medical in nature. Even if they aren't medical, they can be anything at all after you reach 66. You probably ought to give a lot of thought and investigation to the particular agent you choose, because they aren't necessarily legal fiduciaries, no matter how friendly they may be. They have no obligation like a doctor or lawyer to put the client's interest ahead of their own, and they can later hire partners you don't care for, so make certain you can terminate the arrangement and switch to someone else without penalty.
Be careful to choose a representative carefully. But whether to choose an HSA, at any age and stage of advancement, always leads to the same answer: Yes, do it. That being the case, a certain number of HSA owners will find themselves with an account they don't know what to do with. There's almost always an exit strategy, although you may need professional advice to judge which one is best for you.
If you started your account near or after retirement, you may have the idea you will never have surplus funds. But if Congress can be persuaded to make it legal, one of your options might be to roll the surplus over to a grandchild or grandchild-like person. If this suits your situation, please notice that a newborn child has some special medical problems. In the first place, the first year of life is unusually expensive; in the aggregate, 3% of all medical expenses are spent on the first year of someone's life. To anticipate a little, 8% of health cost are spent before age 21, which is generally held to be the beginning of the earning period. Children are generally pretty robust, but when a child is sick, he is vulnerable to lasting disabilities of a very expensive sort, so you don't like to see a family cut corners on child care.
But newborns have no earning power, their future is in someone else's hands. The average woman has 2.1 children today, two women thus have 4.2. Four grandparents roughly have one apiece. The way the law of averages is working out, if every grandparent took care of the health costs of one grandchild, things would be close to solved. Things would have to be adjusted for the non-average case, but they would be close to being solved by adding one grandchild's cost to each average Medicare cost for the elderly.
In this case, however, the legal and political problems are greater than the financial ones, so it would suffice for a beginning, just to permit those who want to volunteer, to be permitted to leave unused leftovers in their HSA to children under the age of 21. If there is concern about dynasties and perpetuities, it might be left to the child's HSA, to be exhausted by age 21, or transferred to the HSA of a second child. The sum in question might be around $8000.
Originally published: Wednesday, April 29, 2015; most-recently modified: Sunday, July 21, 2019