Author Topic: To HSA or not?  (Read 1950 times)

pminkler

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To HSA or not?
« on: October 16, 2015, 12:45:56 PM »
To get an HSA, I would need a health plan that comes with an HSA.  My problem here, is that I already get free healthcare from Veteran's Affairs.

My employer isn't contributing that much towards my benefits.  If I signed up for the cheapest monthly health plan that has an HSA, and contributed the max to the HSA, I would pay $58/mo for the health plan and $279.17 would go into my HSA.

This feels like I'm paying $58/mo or $700/yr just to have an HSA.  When, I could just keep it and deposit $337 into the stash I already have.

I understand that the deposit is tax-free, and the withdrawl is tax-free for a medical expense (or anything after age 65).  Would this advantage be worth more than $700/yr (deposited into an index fund) somehow?  I'm already maxing my IRA and 401k.

I assume there's also the fact to consider that my contributions would lower my annual earnings and thus my taxes.  How can I go about determining the exact benefit, if any?

The other thing to consider, is that I'm already stretching myself pretty thin by saving so much.  To max out the HSA and pay for a health plan that I won't use, would remove $337/mo from my cash flow.  I'm not sure I could handle that...so, it's likely that I wouldn't be able to max the HSA contributions...or would tone down my deposits to my taxable accounts.

Another thing, if I were to take the health care plan, I likely wouldn't take OTHER benefits that the employer offers, because I would pay out of pocket for them (instead of getting them covered by the employer with the money that isn't used to pay for the health plan).  Such as accident insurance, critical illness and legal help. 

I'd also have to pay for my own dental insurance (that I do need), since again, the bulk of the money would be soaked up by the health plan.

Option A: Pay $161.69/mo for all of the benefits offered.  $279.17/mo goes into HSA.

Option B: Waive health plan, pay $3/mo for all of the benefits offered.  No HSA.  Would just deposit surplus money into a taxable account.  I could probably get it down to $0 by waiving/downgrading benefits.

Option C: Pay somewhere in between by seriously waiving/downgrading other benefits. 

I guess my main question here is if the HSA is worth the cost of the health plan that I won't use?  What things am I not considering?

rubybeth

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Re: To HSA or not?
« Reply #1 on: October 16, 2015, 12:54:06 PM »
I guess my main question here is if the HSA is worth the cost of the health plan that I won't use?  What things am I not considering?

No. I'm not even totally sure I'm understanding what you're asking, but it sounds like you're considering getting health insurance you don't need in order to have access to an HSA to save $3,350 single or $6,750 family. In that case, absolutely not. Put your extra money into a taxable account, don't pay for insurance you don't need.

pminkler

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Re: To HSA or not?
« Reply #2 on: October 16, 2015, 12:57:14 PM »
it sounds like you're considering getting health insurance you don't need in order to have access to an HSA to save $3,350 single

That's exactly what I'm asking.  I thought maybe the numbers would work out though...but I think it just complicates things and wouldn't really work out in the end.

Bucksandreds

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Re: To HSA or not?
« Reply #3 on: October 16, 2015, 01:41:55 PM »
You have free health care.  Just you, senior citizens and people without jobs have free healthcare.  Not trying to be rude but forget about the HSA and feel how awesome it is to have it for $0.  Thanks for your service and Im sure you earned the healthcare.

pminkler

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Re: To HSA or not?
« Reply #4 on: October 16, 2015, 02:23:54 PM »
You have free health care.  Just you, senior citizens and people without jobs have free healthcare.  Not trying to be rude but forget about the HSA and feel how awesome it is to have it for $0.  Thanks for your service and Im sure you earned the healthcare.

Understood!