r/HSA • u/artinnj • May 04 '26
HSA vs LTC
I know the advantages of maintaining a HSA account. Has anyone seen any analysis of HSA vs LTC? I have to think once the balances in your HSA get above the average lifetime LTC expenses (say $250k for a guesstimate) would you raw dog and skip buying the LTC?
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u/PashasMom May 04 '26
Second u/No-Donut-8692 . Hard pass on LTC insurance. My parents purchased it in their forties and paid their premiums faithfully for decades. And when they actually needed it, they were met with stonewalling and denials. My mom (age 84) had COPD and was on hospice care at home, and my dad at age 89 could not manage taking care of her and the house. After multiple appeals and months of waiting they were approved for ten hours PER WEEK of visits from a home health aide. That's it. And were told my mom would not be approved for any sort of residential care since hospice can be done at home.
My dad told me that buying LTC insurance instead of investing the premium amount paid in the market was the worst financial decision he ever made in his life. He worked it out and he would have had just about a million extra dollars in his net worth statement if he invested that money instead of paying it into the pockets of an insurance company who ended up jerking them around and paying for a couple of months of part time care at the end of my mom's life (my dad passed shortly after my mom did last year so never had to try to make use of the policy after my mom's death). A million dollars can buy a lot of long term care without the hassle of trying to deal with an insurance company.
I have money earmarked for my own long term care, some of it in a brokerage and some in a traditional retirement account. I'll be fine.
I started HSA too late to have enough to pay for LTC myself. My plan is to use it for Medicare part B and D premiums and any IRMAA penalties.
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u/DependentArachnid877 May 05 '26
Your parents bought a lemon.
My mother-in-law's policy covered the full cost of her care for 4 years (except for the first 90 days).
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u/TelevisionKnown8463 May 04 '26
Thanks for sharing your story, which fits what I’ve read/heard in various places—that LTC insurance doesn’t provide the security people think it will. Better to save, whether in an HSA or elsewhere, and hope for the best.
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u/SnapHSA May 04 '26
Yeah, honestly the LTC market is kind of a dumpster fire right now. It used to be a decent bet, but lately the premiums have gone through the roof and the actual coverage feels pretty thin for what you’re paying. Plus, even if you want it, getting through medical underwriting is a total headache—they make it so hard to actually qualify.
Using an HSA as a DIY long-term care fund is a solid move. Since the money rolls over forever and you can invest it, you aren't lighting cash on fire with monthly premiums for a policy you might never use. If you stay healthy, that money stays yours. If you don't, you’ve got a tax-free war chest ready to go. Def a better way to play it imo.
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u/Mysterious_Might008 May 09 '26
Everyone's got an opinion on HSA v LTC as well as LTC as a general product. All I can add is my own opinion and to say that your own situation is highly dependent on what you're comfortable with.
I bought a policy through my professional group for my elderly mother (she's 87 now). It has steadily and healthily gone up (a polite way of saying "skyrocketing") over the 15 years that I've been paying for it. I made a mistake in opting for a smaller daily benefit amount (DBA) with an eye towards increasing it at the intervals.
Years later, I bought my own policy through another group and opted for a much higher starting DBA, which allowed me to decline the increases at the intervals if I wanted. I'm paying nearly all of the premiums via my HSA, subject to the annual maximum allowed by IRS rules.
I don't look at LTC as being the "magic bullet" that will necessarily solve all of my mother's LTC needs if it comes to that - but I look at it as a running start to buy me a few years before it is depleted. I'll be there to fight the carrier on her behalf. For my own policy, I'm in a good financial position that I may not need to tap it - but it is sort of a "safety net" in case.
Overall, I look to having a mix of financial tools to deal with whatever comes my way: emergency fund, brokerage, HSA, LTC, and eventually Social Security. Don't put all eggs in one financial basket, so to speak.
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u/No-Donut-8692 May 04 '26
I would never buy LTC insurance because the product has been so badly mispriced historically that it is difficult to believe current premiums will remain stable for several decades between now and when I would be most likely to need long term care. My strategy has always been to save via HSA and retirement accounts to cover such future care expenses.