Author Topic: General HSA Questions  (Read 1420 times)

JBronnier

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General HSA Questions
« on: June 15, 2016, 07:51:58 AM »
I've been studying the Investment Order tab of the CashFlow spreadsheet and had a few questions.

1. Why is an HSA so important? I haven't received medical attention in 12 years.
2. Can the money in an HSA ONLY be used for medical expenses?
3. When I inevitably start one (I'm trying to follow directions as closely as possible) where is a good place to open an account?

Thanks a million

clarkm04

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Re: General HSA Questions
« Reply #1 on: June 15, 2016, 08:01:12 AM »
1.  An HSA is also exempt from FICA, so it's the ultimate tax sheltered account.

2. The money is kept in an account you control and can be used for medical expenses for you, spouse or dependent children at any time from the money going in until you die or after 65 you can withdraw the money similar to a traditional IRA.

3. You will need a HDHP.  My wife's is through her employer.  The employer has a n HSA provider. 

In her plan, you need at least 1 K in a .25 money market plan, but the rest can be transferred to investments.

Next time your company has open enrollment determine if an option is a HDHP.

Good luck!

Spork

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Re: General HSA Questions
« Reply #2 on: June 15, 2016, 08:09:14 AM »
If you are not a big consumer of medical services... I'd say an HSA is even more in tune with your needs.  It means you have a catastrophic health care plan only.  I.e., if you need heart surgery or cancer treatment or get hit by a bus... you're covered.  If you need to go to a dermatologist to get a dohickey off, you pay out of pocket.

If you're using healthcare purchased under ACA, an HSA becomes even more awesome.  You get to put a big chunk of money into an investment account once a year.  ($6750 this year for a married couple).  That money comes directly off the top, reducing your adjusted gross income.  It might be enough to move you from one level of subsidy to the next.

Another cool side effect: You don't have to reimburse yourself.... or can delay it indefinitely.  In other words, if you break a leg and it costs you $5000, you might pay that out of pocket, keep/file the receipt and just go on your merry way.  A few years later, when you need $5000 for living expenses, you can withdraw it and use it tax free.  But in the interim, that $5000 has presumably grown.   Win-win.


JBronnier

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Re: General HSA Questions
« Reply #3 on: June 15, 2016, 12:32:20 PM »
I see now why this is such a great outlet for my money. I guess my next question would then be where do I go to start one? Does it have to be through my employer or can I get it in a similar way to an IRA account (through my bank, Vanguard, etc.)?

seattlecyclone

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Re: General HSA Questions
« Reply #4 on: June 15, 2016, 12:47:26 PM »
I see now why this is such a great outlet for my money. I guess my next question would then be where do I go to start one? Does it have to be through my employer or can I get it in a similar way to an IRA account (through my bank, Vanguard, etc.)?

If you fund it through employer payroll deductions those contributions will generally be exempt from FICA taxes. If you contribute to a different HSA this is not the case. If the HSA through your employer has terrible investment options or fees, you are allowed to move this money to an external HSA at any time after you contribute it.


Need2Save

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Re: General HSA Questions
« Reply #6 on: June 15, 2016, 06:46:53 PM »
I see now why this is such a great outlet for my money. I guess my next question would then be where do I go to start one? Does it have to be through my employer or can I get it in a similar way to an IRA account (through my bank, Vanguard, etc.)?

If you fund it through employer payroll deductions those contributions will generally be exempt from FICA taxes. If you contribute to a different HSA this is not the case. If the HSA through your employer has terrible investment options or fees, you are allowed to move this money to an external HSA at any time after you contribute it.

If you are going to earn over $118,500 this year then the Social Security tax savings disappear, but you still get Medicare tax savings (through payroll deduction of course).  I have no insight on the OP's income potential but this is hardly ever mentioned.   Also, depending on your state, you may have additional tax savings but not if you live in a state with no income tax or one of the 3 who don't permit the deductions for your contributions. 

OP - be sure to ask if your employer offers any contributions (employer seed $) to help you fund the HSA.  Not every employer does, but my company provides $1,000 for single coverage or $2,000 for all other 'family' tiers.