Question on HSA

[sdt1890]

I work at a small company and we do not have a company plan. I currently pay for one of the better plans from Anthem that cost $325 per month. I recently received the renewal letter that I'll have to start this process over and select a new plan for 2018 (goes up 5%-10% each year it seems).

Is there any reason I cannot buy an HSA plan? I was not all that familiar with the HSA until earlier this year, but it seems like it would be a much better option given that I don't get sick often and my tax rate will be either the 25% or 28% range, so $325 each month after tax dollars is a large monthly expense.

Also, not sure if this changes anything, but we do have a 401K plan where I do receive a match, so I would not be viewing the HSA as a way to get "free money" from a match, just as a potential better healthcare options and/or means to use before tax $.

A few other relevant pieces of information. I am 28 year old male, no kids, not yet married, and in overall good health.

Any reason I should not switch to an HSA plan for 2018?

[sdt1890]

2 other comments/questions

1) Given that I am currently paying $325 per month and my current tax bracket is 25% I am effectively paying $325 * 1.25 = $406.25 per month * 12 months = $4,875 and given that the current max out of pocket for an HSA is $6,550, it seems like the HSA makes even more sense.

2) I read you can put the full $3,400 (through payroll) in any time during the year whether it be monthly or a lump sum. If I opened an HSA, I could manage to drop the full $3,400 in January which would allow me to have full access to the $$$ if needed and on the flip side, get the $ to work faster from an investment perspective. Is this how most people do this? Seems to make the most sense.

[topshot]

If I understood correctly you are paying for a private non-HSA plan currently. If your company offers no health insurance than, yes, you can pay for whatever plan you wish. However, since it not a company plan I don't see how you would get the added benefit of before-tax contributions (thus lowering FICA) to the actual HSA unless you convinced your payroll people to do that somehow.

If you have HSA coverage by Dec 1, you can also contribute the full $3400 for 2017.

[sdt1890]

If I understood correctly you are paying for a private non-HSA plan currently. If your company offers no health insurance than, yes, you can pay for whatever plan you wish. However, since it not a company plan I don't see how you would get the added benefit of before-tax contributions (thus lowering FICA) to the actual HSA unless you convinced your payroll people to do that somehow.

If you have HSA coverage by Dec 1, you can also contribute the full $3400 for 2017.

Correct, I am currently paying for a private non-HSA plan.

That was my hopeful interpretation that the payroll company we use could pull the money out pre-tax from my salary to fund an HSA I would select on the open market.

"If you have HSA coverage by Dec 1, you can also contribute the full $3400 for 2017." - This is a very interesting idea.

[MDM]

Correct, I am currently paying for a private non-HSA plan.

That was my hopeful interpretation that the payroll company we use could pull the money out pre-tax from my salary to fund an HSA I would select on the open market.

"If you have HSA coverage by Dec 1, you can also contribute the full $3400 for 2017." - This is a very interesting idea.

If you are covered by a qualifying HDHP, you may indeed open and fund your own HSA.

You get to avoid the 7.65% in FICA taxes only, however, if the HSA contributions are made under your employer's "cafeteria plan".  If the company doesn't offer that, you fund the HSA on your own and deduct your contributions on line 25 of 2016 Form 1040 - f1040.pdf.

See 2016 Publication 969 - p969.pdf if you haven't already regarding HSA details.