Using A Health Savings Account To Buffer The Coming Medicare Insolvency

Using A Health Savings Account To Buffer The Coming Medicare Insolvency

The Medicare Credence Wherewithal will just now be out of money, and there will be no practical way for the government to move ahead to heel the level of benefits that current Medicare recipients receive. The issue will be serious rations, waiting periods, and a reduction in benefits. If you preference 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 wad as immense 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 bear the current unfunded liabilities of social security, Medicare, and other programs, the total federal debt is at virgin $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 Disposal.
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 rate 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 bankroll is expected to be depleted by 2018. That is a mere 11 years from now. The paucity in Social Security and Medicare revenues will go on 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 markedly can ' t happen. Instead, the system will face massive cuts in benefits, routine in addition to substantial 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 unobtrusive in the next couple years, I certainly wouldn ' t count on it, particularly if you want to secure that you have access to high quality medical care during your retirement years.
Last year Taste Investments reported that the average couple deferential in 2006 would need $200, 000 just to cover medical expenses during retirement. That estimate did not teem with the cost of over - the - counter medications, most dental services and, long - term care, if needed. And it did not embody 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 clinch that you can attain 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 oversight.
What Is Your Solution?
As most readers nowadays 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 grip the money, yet never taxes the money if it is used to pay for expert 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 coinage 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 occur, you should pay for medical expenses that are not covered by your health insurance, out of your own compass. Save your receipts ( for doctor visits, eye glasses, aspirin, etc ), and ok your money in the account to swell tax - deferred. There is no time objective before you have to reimburse yourself, so you can make the most of this tax - free investment.
As soon as possible, you may also want to pack some of the money into mutual fund. While some HSA administrators are paying case rates as high as 5 %, the only way you are energy to really turn the account is to get a much higher return on your money. Many HSA administrators offer a discount brokerage option, so you can seat your funds in virtually any stock or reciprocal property.
For a family that contributes the maximum contribution each year, it is wholly unbiased to assume an HSA account rate well over $1 million after 25 or 30 years. Medicare may be bankrupt, but at basic you won ' t be.
" Medicare HSAs? "
The solution to the pending Medicare meltdown is very complicated, but it is fine that government - run medical programs don ' t work. The dismal results can be seen omnipresent, from the former Soviet - bloc countries, to the ill-starred down national healthcare systems of Canada and Europe. Medicare must be transformed into a program where seniors have an clutch suspicion 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 have into a " Medicare Health Savings Account, " would bring market efficiencies and competition into the picture. This idea is authenticated 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 below 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 initiate putting money aside for medical expenses you will halfway inevitably incur during your older years.