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Improving Your Financial Life

Blog > 2009 > June > Health Saving Account Saves Family from ...
June 22, 2009

Health Saving Account Saves Family from Bankruptcy.


Statistics show that more than 60% of bankruptcies are linked to medical bills.

I have some friends who recently filed bankruptcy due to medical bills for their 6yr old daughter. Their daughter had been receiving treatment from a children’s hospital that would not accept their insurance. They had accumulated over $40,000 in debt to the hospital. The hospital told them they would not continue to treat their daughter until the bills were paid in full. As a result they were forced to max out every credit card and line of credit they had. The debt became too much to bear. Had they been on a High Deductible Health Plan (HDHP), with a Health Savings Account, it might have been able to help them avoid bankruptcy.


 They were married 8 years ago. If they had been on a HDHP, family plan and put away $5,000.00 each year into the plan, they would have had plenty to pay for their daughters medical bills. The two of them are young and healthy. The only medical bills they have had to pay over the past eight years are on the birth of their daughter and general visits. If you assume a 3% rate of return and $5,000 deposited into the account each year they would have had between $40,000 and $42,000 in their HSA at the time their daughter became ill (this includes a deduction for the birth of their daughter and office visits). They would not have maxed out their credit and been forced into bankruptcy.


I think a lot of people forget if you don’t use the money in your HSA it is there the next year, and the next year, and the next. It will be there when you need it. What a great way to save for the unexpected.

Your savings federaly insured to at least $250,000 and backed by the full faith and credit of the United States Government: NCUA, Equal Housing Lender, ESI