Author Topic: HSA vs. Roth IRA questions - what is right for me?  (Read 2970 times)

carozy

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HSA vs. Roth IRA questions - what is right for me?
« on: October 06, 2016, 11:57:00 AM »
Open enrollment is coming up soon at my company for next year's health care choices.  They are now going to offer an HSA with a high deductible plan.  I am investigating it and found this information - the HSA has a monthly fee (I called and asked how much and the lady said she thought it was $2/month).  I asked if Vanguard was one of the choices for investing and the lady couldn't tell me one way or another about any of the investment choices.  The only way to find out would be to go ahead and get the HSA and find out once I have it and can login to their website.  The brochure also says there is also an investment advisor which in my eyes means more $.  The company info about the HSA says the IRS limit for associates would be $3,400.

To shed more light on why I am being cautious about this - I make ~$49,000 and by maxing out my 401k, I'm already in a lower tax bracket.  I am on a budget and my emergency fund has been almost completely used for moving and purchasing new furniture in the last few months.  I currently have Kaiser, which I like and trust.  I am mostly healthy and don't see myself going to the doctor much although I did go recently for an ingrown hair and appreciated that I did not have to pay a monstrous amount for what amounted to doctor's advice that in retrospect I should've googled.  I paid $25.  If I'd had the high deductible plan though, that would've been higher, I'm sure.  So what I'm trying to say is I like having decent health care that I can use without having to worry too much about money.

On the other hand, since I also want to retire early, I'm thinking the HSA would be valuable.  But maybe not for my situation, not right now?  I want to concentrate on getting my emergency fund back up and then on investing (maybe the EF) in a Roth IRA.  So my question is - considering my situation - would that be the smarter choice?  Or should I go for the HSA.  I'm not sure I could do both the HSA and Roth IRA since I need money to live also.

If you need me to provide more info, just let me know.  Advice appreciated!

boarder42

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #1 on: October 06, 2016, 12:05:47 PM »
HSA before roth even with that fee its better if you can do salary deduct it bypasses the FICA tax as well.

Jack

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #2 on: October 06, 2016, 12:10:24 PM »
I am investigating it and found this information - the HSA has a monthly fee (I called and asked how much and the lady said she thought it was $2/month).  I asked if Vanguard was one of the choices for investing and the lady couldn't tell me one way or another about any of the investment choices.  The only way to find out would be to go ahead and get the HSA and find out once I have it and can login to their website.  The brochure also says there is also an investment advisor which in my eyes means more $.  The company info about the HSA says the IRS limit for associates would be $3,400.

Call back and talk to a more helpful person to get more information. There's no excuse for making that some kind of secret until you enroll in the plan.

I currently have Kaiser, which I like and trust. ... So what I'm trying to say is I like having decent health care that I can use without having to worry too much about money.

How does the Kaiser plan compare to the HDHP in terms of premiums, copays, deductibles, max out-of-pocket, exclusions, etc.? Which one do you think would actually be cheaper in best-case, average, and worst-case scenarios?

Mother Fussbudget

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #3 on: October 06, 2016, 01:27:25 PM »
Which HSA company is your plan associated with? 
My company is with HSAbank, and my HSA account has an associated investment account at TD Ameritrade.  In our plan, there's a $3/month fee *unless* you keep at least $3000 in cash in the HSAbank account.  The rest you can transfer to Ameritrade for investing.  So every month, I log-in and transfer that month's contribution to Ameritrade.

The representative couldn't tell you anything about the investments because the HSA investment account doesn't work like a 401k - you're not limited in what you can invest in / you can invest in WHATEVER you want.  Stocks, bonds, ETF's, etc. 

Think of an HSA as a specialized t-IRA account - they're very similar in that there are no pre-defined investment options.   See http://www.madfientist.com/hsa/ and other posts by the MadFientist regarding HSA accounts.   And good luck.

therethere

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #4 on: October 06, 2016, 01:33:11 PM »
HSA's are awesome while you're young. I've been contributing the max for a few years and now I have 25k in my account. 23k is invested in an SP500 index fund and 2k immediately accessible. I feel much more secure about a medical scare now. Otherwise, I'd probably go bankrupt. Some companies will contribute money into an HSA if you choose that option. Mine does up to $450/year pp if you do the wellness checkups.

That being said, I'd get your emergency fund back up first. In my opinion, a Roth would be a great place to put it because it can be withdrawn if you need it. Once you have "some" emergency fund established then max out your HSA. Assuming this will take a few months, in the meantime, I'd switch to an HDHP and contribute the difference in premiums to an HSA. I don't pay too much attention to the company or the fees as its all a wash with the amount of taxes saved.

nobody123

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #5 on: October 06, 2016, 02:44:11 PM »
There are tons of threads here on how to calculate whether the HSA & high deductible plan makes more sense.  You need to determine how much you'd save in premiums vs. the traditional insurance, as well as your likely expenses and how the policies treat those expenses.  My HD plan still lets me get the "negotiated rates", so it's not like I'm paying list price for any medical procedures. 

Assuming you're relatively healthy and the out of pocket maximum isn't some atrocious number, I'd sign up for the HSA just to get the $450, it's like you're getting a ~1% raise.  Personally I'd lower my 401k contribution to allow me to max out my HSA, since that is also tax-deferred.  Once your EF is back up to where you want it, increase your 401k.  Also, if the investment choices stink in your employer-sponsored HSA you can always roll the money over into your own HSA somewhere else.


rubybeth

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #6 on: October 06, 2016, 03:09:32 PM »
Not really enough info. to decide. You need to compare the health plans. Right now, you have a traditional plan with co-payments. How much of the cost of this plan does your employer cover? All of it? If so, I might advise to just stick with your plan and rebuild your emergency fund for 2017. However, if you are paying for any portion of your plan, it definitely pays to compare plans, especially if you are an infrequent use of health coverage. If you switch to a high deductible health plan (HDHP), you will pay more when you make a doctor visit, but you will have the HSA funds to cover those expenses or save as you see fit.

carozy

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #7 on: October 06, 2016, 05:53:09 PM »
Thanks for all your responses.

It's hard to get my company to give details on these plans (for instance enrollment begins 10/18 and the Benefits Enrollment page on the website only has one Medical video, none of the other links work, and no cost info.  I've pulled much of this info from scouring the website and the video - you'll see some important details to help compare are missing.  Below is all that I know from investigating right now.  I plan on calling the Benefits line tomorrow (but if it goes like it did last year, I doubt I'll come away with much new knowledge).

Key Point: I have Kaiser, which the corporation that owns my company has been phasing out.  Because of a very confusing, hard to explain company structural change, I was "grandfathered in" to pick Kaiser as my health plan last year.  I did so (even though my company NEVER gave me a Kaiser packet with you know, important plan details) because I'd had a different very crappy health plan with the previous corporation owner and had ended up paying a huge amount for a hospital stay because of it (had to pay a company called CoPatient to bring the medical bill down to an affordable level).  The previous health plan (shall I just name it?  It was Cigna) did everything they could to avoid paying any of my healthcare expenses.  Excuse after excuse after excuse.  My coworkers also had horror stories (one lady found another job because Cigna would not cover a wrist surgery she needed).  So I jumped on Kaiser, even though with the structural changes, the healthcare offerings were Aetna, not Cigna any more.  I'd had Kaiser in the past and knew it was OK so I went with that, thinking it was better.  The premiums were about the same as the middle plan of the 3 Aetna offerings last year (Aetna Basic, Aetna Classic, or Aetna Premium).

2016 - what I have now
Kaiser HMO
My cost: $133/month
Company pays: $199.19/month + I get a $18 wellness benefit every month on a paycheck (added to my earned income)
Never received plan details despite calling both Kaiser and my company's HR department.  They both refer to each other and no one will send me a plan.  I was charged $25 for a doctor's visit.

Offerings for 2017

I think Kaiser will be an option for me again, although not advertised on the company website.  Probably the same as what I have now, but no info anywhere about it from the company website and HR is no help.

Aetna Classic
Preventative: 100% Covered
Doctor: $30 Copay
Specialist: $50 Copay
In-Network Deductible: $1000 Individual
Other Services: Pay 30% after deductible met
Maximum: Covers 100% after max of $6350 Indv.
Out-of-Network: Pay 60% after deductible $2000 Indv.
Cost: Not shown anywhere (yet - will probably be visible once open enrollment starts)

Aetna Premium
Preventative: 100% Covered
Doctor: $30 Copay
Specialist: $50 Copay
In-Network Deductible: $700 Individual
Other Services: Pay 15% after deductible met
Maximum: Covers 100% after max of $6350 Indv.
Out-of-Network: Not Covered
Cost: Not shown anywhere (yet - will probably be visible once open enrollment starts)

High Deductible Health Plan with HSA
Preventative: 100% Covered
Doctor: Pay until deductible met
Specialist: Pay until deductible met
In-Network Deductible: $1300 Indv.
Other Services: Pay 30% after deductible met
Maximum: Covers 100% after max of $6350 Indv.
Out-of-Network: Pay 60% after deductible; $2600 Indv.
Cost: Not shown anywhere (yet - will probably be visible once open enrollment starts)

HSA info
Ran by PayFlex www.payflexdirect.com
IRS contribution limit for 2017 of $3400
My company will make an annual deposit of $500 for 2017
usual HSA stuff - tax advantages, portable, no "use it or lose it", invest after HSA balance exceeds $1000.
PayFlex website mentions the fees (like I said, lady said $2, and an investment advisor - not sure of the charge on that and didn't get much helpful info from lady when I called).

I will try calling HR Benefits line tomorrow morning and see if I can get more info.  (Doubt it though) :(


rubybeth

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #8 on: October 07, 2016, 07:34:14 AM »
You'll have to wait for open enrollment to decide.

The main question to be answered is: how much would be taken from your paychecks for any of the options above? With one doctor visit this year, I think you could stand to save some money by switching to the HDHP. Right now, you are paying $133/mo. or $66.50 per paycheck? That's pretty low, honestly, so I would hope that maybe the employer would fully cover the cost of a the HDHP option. And, it sounded like they would also contribute some to the HSA for you (did I read $450?). That's a nice little benefit. If you visit a doctor once during the year, the $450 would likely more than cover that. A deductible of $1,300 is also pretty low. If you fully fund the HSA up to the individual maximum of $3,350, you'd have way more than the deductible, and you'd still be saving.

carozy

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Re: HSA vs. Roth IRA questions - what is right for me?
« Reply #9 on: October 07, 2016, 11:50:31 PM »
Thank you and thanks for everyone's responses so far.  I think I will have to wait until I know the cost to me to decide.  The advice everyone has given has been helpful.  Once I know how much the different offerings cost, I'll see which one is best for me.  Thanks again!