Bingo! Found a report that partially solves the "intangibility" problem for me.
Your kind comments yesterday also helped. Intangible is definitely the word for the problem. Earning interest in an incentive. And I can buy into the insurance deductible thing.
Thanks to My Money Blog, who mentioned it here:
The most common kinds of unexpected expenses are medical, car, home and housing, life events and children. The %'s for other occurrances is way lower.
We can save for medical deductibles and expenses in the HSA. I already have special savings accounts for car repair and replacement, household repairs and maintenance. That kind of leaves unemployment, veterinary expenses, and funding car and homeowner's insurance deductibles, and life event things like traveling for funerals.
The deductibles for car and homeowners comes to $2000.
Veterinary is kind of discretionary, and would depend on how much money we had on hand. Some people spend thousands trying to keep an animal alive, some would let a dog go naturally or have it put to sleep.
I can see building up the HSA to cover our $3000 annual medical deductible, and keeping $3000 handy for other deductibles, vet expenses and family events. We'd be covered for all the most common things.
I STILL can't see the point of building up even more cash-equivalent savings for remote possibilities I can't imagine, rather than increasing our retirement savings and getting the house paid off.
I haven't said so before, but we have some "untouchable" money in a regular brokerage account plus IRAs. It's not in the form of ready cash, but in the case of unemployment we could survive on it for well over a year. I don't see the point of cashing it out and putting it in the money market just because that's where Dave Ramsey says an emergency fund should be.
So I'm going to aim for $3000 in the HSA, and eventually $3000 in the money market, even though that's only a little over 2 month's expenses. And I'm going to concentrate on fully funding the HSA first, since medical expenses are the most common and we get a tax break.