I'll start with the disclaimer: I am in financial kindergarten and everything below may be total and utter nonsense. This is why I need advice from full-fledged mustachians like yourselves.
I think I want to start an HSA. (?) Both my husband and I have had access to healthcare FSAs through our employers since a move/job changes a year and a half ago, but we haven't taken advantage because I'm afraid of losing what we put in. We are both very healthy so our medical expenses are usually very low, but when they're not they are hard to predict. In a normal year, we might only spend maybe $50-$100 on co-pays for checkups. In other years with mishaps (like the time I broke my knee on a trampoline!) one of us will max out a deductible. This year, my husband had to have some biopsies for cancer (all good results) and so we've spent almost a grand so far. He now needs new glasses and contacts (with a very expensive prescription). I'm kicking myself for the hundreds in tax we could have saved.
I'd be more comfortable with an HSA knowing that any contributions can roll over and grow tax free for use in the future. My employer only offers the FSA, no HSA. His offers both, but my insurance is the better deal so we are both on it and consequently can't use his HSA.
Total newbie questions:
1) I saw through Vanguard's website that I can start an HSA for us independently of either employer?
http://healthsavings.com/members/benefits-for-individuals/Am I on the right track? If I begin this now, can I use it to get back the tax on money paid for my husband's medical expenses earlier this year?
2) Which funds do you recommend?
3) (Still trying to understand what an HSA is and how it works...) Can I consider an HSA to be a better substitute for emergency savings (for medical purposes anyway)? We keep our emergency fund as low as $5k because we both have good job stability and low expenses but are behind in investing for retirement. As I understand it, an HSA kind of serves dual purpose because it is invested and earning interest but can be used for medical emergencies.
Also... and I don't even know if this is relevant... We have yet to itemize our taxes. Our property taxes, mortgage interest, etc are low enough that whenever I've itemized and compared, we've come out just barely below the standard deduction. This may change this year since I started using Mint in January and have been careful to flag everything that might be deductible.
Thanks in advance for anyone patient enough to explain to me what I don't know!