Choosing an HSA

[robfrease]

Hi all,

My wife and I have maxed out our Traditional IRAs for 2016, but are wanting to further lower our AGI. Neither of our employers offer a 401k. We have a high deductible health care plan though, so we are looking to set-up an HSA. Any advice on a platform to use? We use Betterment for our IRAs, but they do not seem to offer an HSA.

Thanks in advance!

[Paul der Krake]

Good summary of custodians here:

https://www.bogleheads.org/wiki/Health_savings_account

You may want to call around and see who will let you open and fund the account ASAP, otherwise you will be missing out on close to $7k of tax free space for 2016 if you don't make it before the end of the year.

HSA custodians largely suck compared to IRAs.

[Lucky Recardito]

Pretty sure you have until April 15th to open and fund an HSA and still attribute it to 2016... (meaning the hurry might not be very severe...)

[Paul der Krake]

Yep, ignore what I wrote about the end of year. Plenty of time.

[letthelightin]

Did you have the HDHP for the full year? If not, your HSA contribution limit is prorated, with one exception - if you were participating in the HDHP plan on December 1st, you can make the up to the full contribution without penalty, as long as you remain HSA eligible through December 2017. If you don't remain HSA eligible for the full year, you will owe tax & penalty on any contributions you made for 2016 that exceeded the prorated limit.

Also, does your HDHP must meet the minimum/maximum deductible requirements to make you eligible for the HSA? Some plans have a deductible that is not high enough to make you HSA eligible.

More info here (IRS Pub 969 - this is the 2015 version, but it does show the 2016 limits): https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204045

[robfrease]

Thank you everyone for the responses.

We began our HDHP on June 1, 2016, after my wife quit her job (she had the health insurance). We are currently enrolled for the entirety of 2017. Since we had the plan on Dec. 1, and plan to continue to have it the entirety of 2017, I able able to fully contribute for 2016 without penalty, assuming we set up the account and contribute before April 15, correct?

Any mustachian tips on the lowest fee HSA custodian?

[wudged]

http://www.hsabank.com/ has no fees as long as you keep a minimum of $5,000 in the account, otherwise I think it is only $3 monthly.  You can also transfer to TD Ameritrade and purchase no-fee Vanguard ETFs.  (You must still maintain $5,000 at HSA Bank though to avoid the fees)

[letthelightin]

We began our HDHP on June 1, 2016, after my wife quit her job (she had the health insurance). We are currently enrolled for the entirety of 2017. Since we had the plan on Dec. 1, and plan to continue to have it the entirety of 2017, I able able to fully contribute for 2016 without penalty, assuming we set up the account and contribute before April 15, correct?

Yes, my understanding is that if you stay HSA eligible for all of 2017 (covered by a qualifying HDHP plan, and not receiving other benefits that would disqualify you for the HSA), you can contribute up to the full limit for 2016 without penalty.

I've never compared HSA providers, but my employer uses HealthEquity as our HSA provider and I've been very happy with them so far. 

HealthEquity has also published an HSA Guidebook that I've found extremely helpful with all things HSA related- maybe it will be helpful to you too- here's the link: http://healthequity.com/doclib/hsa/guidebook.pdf