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Best Health Savings Account Plans Question & Answers

2015 September 21
by Sarah Fields

Nancy asks…

What should a recent college grad spend money on?

I (with my wife) will be making about $100k a year. I plan on tithing 10% and then taxes will take another 30%. But that still leaves $60k. What is a reasonable budget for a year’s living expenses for a married couple with no kids in a townhouse? And witht the rest, should I pay off loans, start a savings account, buy a house, start an IRA, etc? And how much should I put in each one?

Sarah Fields answers:

OK, you are going to be off to a great start. The best and most important thing to do is set your goals up front and then design your budget around meeting them. This is easiest to do BEFORE you move, set up fixed expenses, and get into spending patterns. Here are the goals that I suggest:

1. Each of you should contribute enough to your 401ks to get any company match each month.

2. Each of you should contribute the max to a Roth IRA ($4000 each in 2007) each year. Make this $333/mo investment automatic.

3. Save 5% of your income in a high yield savings/money market. Make this contribution automatic as well. This account can cover emergencies, vacations, Christmas spending, and other irregular expenses.

4. Then I would focus on puttin as much as you can afford each month toward paying off debt (this might come before #3 if you have high interest rates). Credit cards are first priority, then car loans and other loans. Student loans are last priority (unless they have high interest rates).

Now make an Excel worksheet. Start with your gross income; subtract 401k contributions. Take 30% off that number for taxes and other deductions (health ins, etc). What you have left is your net income. Subtract 10% for tithe, 5% for cash savings, and your Roth contributions.

What’s left is what you have to play with each month. Make a line item for each fixed expense (loan payments, rent/mortgage, utilities, etc.). Subtract again: this number is what you have for food, gas, entertainment, extra loan payments, and other discretionary spending. Not enough? Go back and lower some fixed expenses. You can play with this sheet and use it to decide how much to spend on housing and other items.

Donna asks…

What does your employer call your High-Deductible/HSA plan?

If your employer offers a high deductible plan tied to a health savings plan (HDHP/HSA) (commonly known as a consumer-driven health plan, what do they call it? Is there a special name for the plan, or do they just call it the “high deductible plan”?
I’m just interested in how different plans are marketed to employees. I’m planning to rename our plan, and am looking for ideas!

Sarah Fields answers:

The proper name is “high deductible health plan”, which is the origin of the acronym HDHP. (The savings plan, properly known as a “health savings account”, is the HSA.)

Lisa asks…

Would it be better for me to switch to a Health Savings Account (HSA)?

Would it be better for me to switch to a Health Savings Account (HSA) plan, if I have a prescription for birth control and will need to purchase it monthly? Will it end up saving me, or costing me more money? OtheI have no health problems as of yet. :/

Sarah Fields answers:

In general, an HSA plan will save you money in the long run even with the prescription, especially for catastrophic occurrences. You’ll need to compare the total out of pocket with both plans to find out which will come out best in your situation.

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