Using A Health Savings Account To Buffer The Coming Medicare Insolvency

Using A Health Savings Account To Buffer The Coming Medicare Insolvency

The Medicare Conviction Silver will nowadays be out of money, and there will be no practical way for the government to prolong to grant the level of benefits that current Medicare recipients receive. The conclusion will be serious rations, waiting periods, and a reduction in benefits. If you yen to maintain your medical freedom, and have access to a high level of medical service, you must be prepared to pay for it yourself. The best strategy is to take good care of your health, and to build up your medical retirement hard cash as goodly as possible by using a Health Savings Account.
The Coming Medicare Insolvency
The total federal debt is now over $10 trillion. But if you also append the current unfunded liabilities of social security, Medicare, and other programs, the total federal debt is at primitive $54 trillion. This number has been confirmed in three separate studies - by the American Enterprise Institute, the National Center for Policy Analysis, and the Brookings Structure.
It is difficult to get a grasp of a number that big. That ' s $180, 000 per person currently living in the United States. It is four times the U. S. Gross Domestic Product, the measure of the final amount of all goods and services produced in this country in the course of a year.
As the program is currently structured it is unsustainable, and the silver is expected to be depleted by 2018. That is a mere 11 years from now. The exigency in Social Security and Medicare revenues will linger to increase as the years go by - it will exceed $2 trillion by 2030. At that point, half of all tax dollars will have to go to Social Security and Medicare.
That plainly can ' t happen. Instead, the system will face massive cuts in benefits, customary in addition to vast tax increases.
Who Will Pay Your Medical Expenses During Retirement?
So will Medicare be there for you? It depends on how mature you are. Unless you are simple in the next couple years, I certainly wouldn ' t count on it, particularly if you want to assure that you have access to high quality medical care during your retirement years.
Last year Delight Investments reported that the average couple docile in 2006 would need $200, 000 just to cover medical expenses during retirement. That estimate did not consist of the cost of over - the - counter medications, most dental services and, long - term care, if needed. And it did not comprise the charges that are currently paid by Medicare.
If we cannot depend on Medicare to be there for us, the only smart solution is to save as much money as possible. This will make certain that you can achieve the quality care you need. If you are not currently putting as much money as possible aside to pay for these expenses yourself, you are making a serious inaccuracy.
What Is Your Solution?
As most readers just now know, the very best tool for accumulating funds for future medical expenses is a Health Savings Account. An HSA is the only investment that provides a tax deduction when you cache the money, yet never taxes the money if it is used to pay for good medical expenses.
Therefore, you should put as much money as possible into your HSA, and withdraw as little as possible. The contribution limit for 2007 is $2, 850 for an individual, and $5, 650 for families. Those over 55 can also contribute an $800 grasp - up contribution. Making the maximum contribution each year will help you build a medical retirement beans that can be used to pay future medical expenses, tax - free.
Rather than withdrawing money from your account to pay for medical expenses as they befall, you should pay for medical expenses that are not covered by your health insurance, out of your own cop. Save your receipts ( for doctor visits, eye glasses, aspirin, etc ), and assent your money in the account to get bigger tax - deferred. There is no time design before you have to reimburse yourself, so you can make the most of this tax - free investment.
As promptly as possible, you may also want to traject some of the money into requited payment. While some HSA administrators are paying preoccupation rates as high as 5 %, the only way you are game to really age the account is to get a much higher return on your money. Many HSA administrators offer a discount brokerage option, so you can locale your funds in virtually any stock or requited cabbage.
For a family that contributes the maximum contribution each year, it is wholly fair to assume an HSA account value well over $1 million after 25 or 30 years. Medicare may be empty-handed, but at primary you won ' t be.
" Medicare HSAs? "
The solution to the pending Medicare meltdown is very complicated, but it is unclouded that government - run medical programs don ' t work. The dismal results can be seen pervasive, from the former Soviet - bloc countries, to the shattered down national healthcare systems of Canada and Europe. Medicare must be transformed into a program where seniors have an clench consequence in the money they are spending.
Replacing the government ' s obligation to maintain benefits with a voucher that seniors could use to purchase health insurance from competing private insurers, and / or heap into a " Medicare Health Savings Account, " would bring market efficiencies and competition into the picture. This idea is accredited by both the American Medical Association and the American Hospital Association.
Retirement HSAs may or may not ever come to fruition. But fortunately, HSA plans are available to those unbefitting age 65. If you do not yet have an HSA, get signed up for one now. You will lower your health insurance premiums, and can produce putting money aside for medical expenses you will halfway inevitably incur during your older years.