Author Topic: Where's the "gotcha"  (Read 1595 times)

samustache

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Where's the "gotcha"
« on: November 09, 2017, 08:34:22 AM »
I'll try to keep this short and sweet:
We are pretty close to FI*, but my wife intends to keep working anyway, so I'm thinking about a sabbatical until I figure out what I want to do next.
She's already working part time contract for good money, and can very easily pull in 60k averaging 25 hrs a week. There will also be taxable dividend + interest income around 5k. This is plenty for us to live on, but it does mean walking an ACA tightrope.

My plan is to work the first few months of next year, putting 100% into HSA, then 401k, then traditional IRA. As I understand it, this makes my MAGI for ACA subsidies 0.
The sweet spot seems to be 200% - 250% of FPL, which keeps the kids off CHIP, and gives us a nice silver plan for between 150-250 a month - if her income AFTER her traditional IRA is between 52000 and 61500 (family of 4).

What am I missing?

I know this already:
The ACA plan in my state is 1 choice and a very narrow network
I won't get my employer match fully unless I stick it out for the true up at the end of the year
I can do Roth conversions to bring income up if needed

*I think we're there, my wife likes things a little more comfortable :)

therethere

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Re: Where's the "gotcha"
« Reply #1 on: November 09, 2017, 08:39:55 AM »
You can only contribute to the HSA up to the time you're on the plan. If you only are on the plan 3 months. You can only contribute 3/12 of the annual maximum. It is not like 401k where you can front load to the maximum and then quit mid-year.

samustache

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Re: Where's the "gotcha"
« Reply #2 on: November 09, 2017, 08:41:46 AM »
You can only contribute to the HSA up to the time you're on the plan. If you only are on the plan 3 months. You can only contribute 3/12 of the annual maximum. It is not like 401k where you can front load to the maximum and then quit mid-year.
Wow, ok, that's good to know.

samustache

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Re: Where's the "gotcha"
« Reply #3 on: November 09, 2017, 08:44:06 AM »
You can only contribute to the HSA up to the time you're on the plan. If you only are on the plan 3 months. You can only contribute 3/12 of the annual maximum. It is not like 401k where you can front load to the maximum and then quit mid-year.

So the company seeds our HSA with $1000 on Jan 1 - how does that figure in?

therethere

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Re: Where's the "gotcha"
« Reply #4 on: November 09, 2017, 08:58:45 AM »
Since employer contributions count towards the maximum, I would think that would count towards the prorated maximum. Not confident though you would have to confirm with HR.

Aggie1999

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Re: Where's the "gotcha"
« Reply #5 on: November 09, 2017, 09:22:43 AM »
You can only contribute to the HSA up to the time you're on the plan. If you only are on the plan 3 months. You can only contribute 3/12 of the annual maximum. It is not like 401k where you can front load to the maximum and then quit mid-year.

Does it actually matter that the OP front loads his HSA amount if he is going to continue coverage through the ACA on an HSA plan? Seems like it wouldn't.

samustache

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Re: Where's the "gotcha"
« Reply #6 on: November 09, 2017, 09:26:10 AM »
You can only contribute to the HSA up to the time you're on the plan. If you only are on the plan 3 months. You can only contribute 3/12 of the annual maximum. It is not like 401k where you can front load to the maximum and then quit mid-year.

Does it actually matter that the OP front loads his HSA amount if he is going to continue coverage through the ACA on an HSA plan? Seems like it wouldn't.

There are no silver plans with HSA unfortunately, just a bronze with 13k deductible (AZ). Though I might consider it since the premium is near $0 a month...
« Last Edit: November 09, 2017, 09:27:53 AM by samustache »

Aggie1999

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Re: Where's the "gotcha"
« Reply #7 on: November 09, 2017, 12:59:38 PM »
You can only contribute to the HSA up to the time you're on the plan. If you only are on the plan 3 months. You can only contribute 3/12 of the annual maximum. It is not like 401k where you can front load to the maximum and then quit mid-year.

Does it actually matter that the OP front loads his HSA amount if he is going to continue coverage through the ACA on an HSA plan? Seems like it wouldn't.

There are no silver plans with HSA unfortunately, just a bronze with 13k deductible (AZ). Though I might consider it since the premium is near $0 a month...

Ahh, didn't realize that. Is that just for your county/state or is it a ACA rule that only bronze plans are high deductible plans?

Acastus

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Re: Where's the "gotcha"
« Reply #8 on: November 09, 2017, 01:21:22 PM »
My company adds money throughout the year, and my contribution is automatically reduced. i believe your contribution + company contribution total is applied to the contribution limit.

samustache

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Re: Where's the "gotcha"
« Reply #9 on: November 09, 2017, 03:45:31 PM »
Ahh, didn't realize that. Is that just for your county/state or is it a ACA rule that only bronze plans are high deductible plans?

Honestly not sure. There definitely isn't one here now, but I vaguely remember the first year we had one.