[scfr]

It has been ages since I had a FSA, so I am really out-of touch with the current rules, but here are some things you may want to think about:

- What sort of coverage would the HDHP plan offer after the high deductible has been paid. [With the plan we got, the post-deductible coverage is outstanding, much better than a lower deductible plan, so it was really a question of "could we handle the deductible on our own"?]

- What expenses are you currently paying for from your FSA? Will they be covered by a HSA? If my memory is correct, FSAs cover several expenses that HSAs do not (for example, perhaps pertaining to your situation, daycare).

- What is the max you can contribute to the FSA vs HSA? (For 2008, the max contribution to a HSA is $5,800, and the max would be prorated depending on how many months you had the HDHP)

- Where would you have your HSA? Do you get to choose, or does your employer specify where it has to be? What interest rate would you earn, and is there a monthly or annual fee (or other fees such as setup fee)? We found the interest rates paid to be quite a bit lower than the typical MMA, and some HSA providers provided rather high maintenance fees. But I have heard that some employers get special fee waivers for their employees. And while the interest rate paid may be low, if a FSA is paying 0% interest, any interest earned is better than nothing.

- Can you have both a HSA and a FSA? [I don't know if the law allows it, but if it does, does your employer allow it?]

- The HSA certainly offers advantages such as:
- Being able to carry it over to subsequent years (if your kids just needed routine care for several years but then one year one had a more serious illness or needed surgery, you might have a big cushion built up in your HSA. Unlike a FSA, you don't have to "use it or lose it.")
- Your HSA should be portable ... In other words, if you move to a different employer, you should be able to move the HSA money.
- You don't have to fill out paperwork and wait for reimbursement from your employer (that's what we used to have to do with our old FSA). Your HSA is like any other checking account ... You have checks and/or a debit card, and you just pay the provider with your HSA funds.
- Under current laws, if you don't use all of your HSA funds, when you reach retirement age those funds esentially become like an IRA.

I'm sure when there are kids involved emotions start to play a much bigger role, as in, "If something happens to one of them (God forbid), will they get the care they need?"

But to think of it as strictly a financial decision, it may be just like deciding whether or not to raise the deductible on your car insurance. If you can cover the deductible, you'll likely save money long-term. But if you can't cover the deductible, and a car accident would end up ruining you financially, it may not be worth the risk.

Good luck making your decision!