Author Topic: Emergency Fund vs. HSA - or pay forever  (Read 2678 times)

wward6

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Emergency Fund vs. HSA - or pay forever
« on: January 13, 2015, 04:06:38 PM »
Greetings fellow Mustashians,

I'm kind of new in the finance realm, doing my best to start a family and save.  I currently have 1.5 months expenses (about $10k) for emergencies in a savings account.  We owe the hospital quite a bit, and we have another baby due any day with a $7k deductible on our health plan.

Right now the hospital lets us pay a minimal $25 /month which I doubt we'll ever pay off, but its interest free I believe.
My question to you is, should I take this opportunity and put $7k or more on my HSA card to pay off this deductible for the baby, or leave it where it is and continue to pile on more debt that I'll pay slowly each month to the hospital?

I don't feel that safe without an emergency fund, and I would love to pay what I owe with that $6k tax free but is that a smart move?  Any advice is greatly appreciated.

wtjbatman

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Re: Emergency Fund vs. HSA - or pay forever
« Reply #1 on: January 13, 2015, 04:54:18 PM »
Keep the EF, keep the HSA (for now) and let it grow, and just pay on the 0% interest medical debt. Save the documentation so that you can withdraw from your HSA at any time in the future.

There's virtually no risk. And as long as the medical debt stays at 0% interest, you have locked in its cost and it will get easier to pay over time. The debt doesn't "grow" in value, yet your income will continue to grow over time (hopefully!), and so will the value of any investments in HSA or otherwise. If at any time you need to get rid of the debt you can withdraw from your HSA and take care of it.

Thinking about it, I guess there's one positive to paying all your medical costs this time. With your deductible covered then depending on your medical insurance you could have significantly cheaper or even free medical coverage the rest of 2015. Do you expect to have significant medical expenses the rest of the year?

wward6

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Re: Emergency Fund vs. HSA - or pay forever
« Reply #2 on: January 13, 2015, 05:51:30 PM »
Good point, thank you!   Hopefully we won't have many other big expenses, although with a new baby and two kids, who knows.  Even if I don't pay off the deductible right away I'll still have it met after the birth though, so hopefully most of my expenses will be covered.

r3dt4rget

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Re: Emergency Fund vs. HSA - or pay forever
« Reply #3 on: January 13, 2015, 06:16:03 PM »
Greetings fellow Mustashians,

I'm kind of new in the finance realm, doing my best to start a family and save.  I currently have 1.5 months expenses (about $10k) for emergencies in a savings account.  We owe the hospital quite a bit, and we have another baby due any day with a $7k deductible on our health plan.

Right now the hospital lets us pay a minimal $25 /month which I doubt we'll ever pay off, but its interest free I believe.
My question to you is, should I take this opportunity and put $7k or more on my HSA card to pay off this deductible for the baby, or leave it where it is and continue to pile on more debt that I'll pay slowly each month to the hospital?

I don't feel that safe without an emergency fund, and I would love to pay what I owe with that $6k tax free but is that a smart move?  Any advice is greatly appreciated.
You spend $6k/month?

Mrs. PoP

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Re: Emergency Fund vs. HSA - or pay forever
« Reply #4 on: January 13, 2015, 06:20:03 PM »
Also, if you're going to pay in full for your medical debt, be sure to call about discounts to do so.  The local hospital chain here has a program that they run a couple of times per year (not advertised) that if you pay in full any remaining balance during that month, they discount it by something insane like 40%.  It's them trying to clear debt from their books before taking write-offs.  But you have to call in to billing once every few weeks and ask about it since they don't publicize it at all. 

wward6

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Re: Emergency Fund vs. HSA - or pay forever
« Reply #5 on: January 13, 2015, 08:35:29 PM »
Thanks! I'll check into that for sure.