My HSA has enough to pay for my meds using the 4% rule

[Gin1984]

I am on some maintenance medications but it was still cheaper to go with the high deductible plan this year, so we did.  We have now have enough in our HSA investments to pay for all my maintenance medications at the 4% rule.  Now my next goal is to get to our out of pocket max!

[forummm]

Interesting idea. Congrats!

[Need2Save]

Interesting indeed.  Are you factoring in any chance that the cost of your meds may increase over-time or that you may need to add new ones? Or are you counting on the growth of your HSA to cover these increases over time?  Is your SO on any drugs also or are you single? By your comment on reaching your OOPM, I assume you are also continuing to add to your HSA?  Sorry for all the questions, but I like to see what others are doing to calculate the efficiency of their HSA and what considerations they include for long-term planning purposes. 

You didn't mention which kind of meds you are on, and don't feel like you have to share, but new meds are coming out all the time.  For example, if you are on cholesterol medication, a new class of drugs is hitting the market soon if your Statin regimen isn't working for you.  Statins are generally very cheap now, but the new class called PCSK-9 inhibitors, will be very pricey in the beginning.  I've seen estimates of $7k-$12k annually, of course assuming your insurance will cover it (many will wait and add later on based on efficacy data to be built out) and you would pay only a portion of that but still. 

[Gin1984]

The four percent rule should account for the potential increase in cost for my meds but not for any increase in medical care or medications.  That is what me continuing to contribute to my HSA is for.  :)
I am on my husband's plan with my daughter but I am the only one with maintenance meds at this time.  I am aware that new meds are coming out all the time, but for now the generics work for me so I am not too concerned.
We max out our HSA but knowing that if we had to stop I'd still be able to have my meds is important to me.

[OneDollarAtATime]

I like it!  The MMM forum opened my eyes big time to the benefits of HSA.  I had been doing this all wrong before (getting min. company match and just leaving the money in there) but the light bulb went off while reading a post last month and I realized if I'm saving for retirement medical expenses, I might as well do it pre-tax in the HSA!

[Trimatty471]

I am going to enroll in a HSA for 2016.  This group has me convinced.

[Trudie]

Can you explain the HSA 4% rule for us newbies?  Thanks much.

[Thegoblinchief]

We're going to start maxing ours out next year. I need to switch providers to get to one with some investment options, even though at first the balances will be low enough to keep it in cash equivalents for safety's sake (we need the $ there, unlike others that are able to use the HSA purely as a retirement account and pay for med expenses out of pocket, saving receipts for later reimbursement just in case.)

Within a year or two I'm hoping to have enough carryover that I can invest a good portion of it.

Can you explain the HSA 4% rule for us newbies?  Thanks much.

HSAs work like any other investment account. What OP is saying is that they've got enough saved in it already that, even with no more contributions, the investment returns should cover their medication expenses indefinitely because of the 4% rule.

It's just like people looking at their total NW on the way to FI and saying: " okay, my passive investment income is now enough to cover (say) groceries and rent".

[charis]

I am on some maintenance medications but it was still cheaper to go with the high deductible plan this year, so we did.  We have now have enough in our HSA investments to pay for all my maintenance medications at the 4% rule.  Now my next goal is to get to our out of pocket max!

You have only been contributing for a year?  What is the balance that has gotten you to this point?

[Gin1984]

I am on some maintenance medications but it was still cheaper to go with the high deductible plan this year, so we did.  We have now have enough in our HSA investments to pay for all my maintenance medications at the 4% rule.  Now my next goal is to get to our out of pocket max!

You have only been contributing for a year?  What is the balance that has gotten you to this point?

Yep only a year.  $2866 is what I have now invested.  That gives me $114/year at 4%.  My two meds are $22/3 months at COSTCO (without insurance) and $5.70/3 months at Walgreens with insurance ($10/3 months without it at COSTCO).  Walgreens would have charged me $98/3 months for my meds (with insurance) that COSTCO is charging me $22.  Sure shows how looking around can save you a ton of money and get you to FI faster than just making more money.