Health Savings Account

[cooliemae]

What happens if you never are offered an HDHP? I just ask what happens to people who are always covered by normal HMO/PPO? Then you never get to take advantaged of the HSA.

For those of us with employer sponsored health insurance (HMO/PPO), you might see if your employer offers a Flexible Spending Account. It has some of the benefits of a HSA, thought not all of them.

I didn't even know about them until last year and since then nothing but smiles. This year my wife and I are going to max out our accounts and save the taxes on $5200.00!

[Thrif-t]

If it were only me I'd jump on a high deductible plan and HSA but with a family of 5 I'm a little leery of what could go wrong with someone. My Dh has/had a condition and racks up some medical bills. So far I'm perfectly healthy and so are the kids but the unknown still scares me.

When the kids get out on their own with their first jobs I'm going to steer them into one of these plans while they're young/healthy and have years for their HSA to compound and grow.

[msomnipotent]

We had a HDHP for one year and it didn't work out for us. Not only did we meet the deductible and had nothing saved, but the employer passed the investment fees onto us. And the paperwork was a PITA to boot!

[LivingAlmostLarge]

already do the FSA but we don't spend $5k/year and it's use or lose. So a $6500 rolling over deductible would be beneficial. Of course with tax changes on the horizon who knows what will happen.

[disneysteve]

For those of us with employer sponsored health insurance (HMO/PPO), you might see if your employer offers a Flexible Spending Account. It has some of the benefits of a HSA, thought not all of them.

I didn't even know about them until last year and since then nothing but smiles. This year my wife and I are going to max out our accounts and save the taxes on $5200.00!

Remember that unlike an HSA, an FSA is use it or lose it. If you put a bunch of money in and don't spend it by the end of the year, you lose it. So you need to be really careful about how much you put in that account. If you have predictable recurring expenses (prescription meds, office copays, etc.) that's useful but if you don't, it's much riskier. We have an FSA available to us now but I haven't put any money into it yet. Our out of pocket costs are far lower with the new plan than they were with the HDHP/HSA plan so there really isn't much to be gained by taking the chance and parking money in the FSA that we might end up losing come 12/31.

[cooliemae]

Remember that unlike an HSA, an FSA is use it or lose it. If you put a bunch of money in and don't spend it by the end of the year, you lose it. So you need to be really careful about how much you put in that account.

Totally understood. Just mentioned because for those us that don't have a HSA available then the FSA is an option. There is also the ability to schedule medical procedures in order to benefit. For example, I have a surgical procedure that needs to occur and have scheduled it at the beginning of 18 in order to maximize my use of our FSA. My wife is also probably going to need a root canal and crown next year.

So like anything financial vehicle, planning is required to maximize benefits and minimize risk.

[clatoden99]

I think HSAs are one of the least appreciated retirement tools on the market. A family can contribute up to $6650 a year, in pre-tax money (like a 401K or IRA). There is a triple tax benefit for an HSA:

Money goes in pretax or contributions are tax-deductible.
Once in the account, money grows tax-free.
Money can be withdrawn tax-free to cover qualified medical expenses

And, the real kicker is, once you hit age 65, you can withdraw the money for non-medical expenses with no penalty (still have to pay taxes on earnings, though).

And, it is not subject to income limitations like IRAs, so for those who are tapping out on the limits of the other tax-advantaged retirement options (401k, IRA and Roth IRA), this is another good option for retirement investing.

[disneysteve]

I think HSAs are one of the least appreciated retirement tools on the market.

I agree. I think part of the issue is that most people just don't have access to one. Another issue is that the monthly premium on the HDHP/HSA isn't always that much lower than a traditional plan. So you don't save much by switching and it may end up costing you more out of pocket for health care costs due to the high deductible. You get to pay it with pre-tax dollars through the HSA but it is still an added expense.

[msomnipotent]

Totally understood. Just mentioned because for those us that don't have a HSA available then the FSA is an option. There is also the ability to schedule medical procedures in order to benefit. For example, I have a surgical procedure that needs to occur and have scheduled it at the beginning of 18 in order to maximize my use of our FSA. My wife is also probably going to need a root canal and crown next year.

So like anything financial vehicle, planning is required to maximize benefits and minimize risk.

So glad you mentioned the root canal! I forgot FSA covers dental. I was just told yesterday that my daughter will need a few molars extracted and probably braces. We will know for certain next week. Open enrollment starts on Monday and lasts until a few days after her appt, so we will get in just under the wire.

[Thrif-t]

So glad you mentioned the root canal! I forgot FSA covers dental. I was just told yesterday that my daughter will need a few molars extracted and probably braces. We will know for certain next week. Open enrollment starts on Monday and lasts until a few days after her appt, so we will get in just under the wire.

Research the rules with the FSA and braces. When my kids got them it was a two year process with the braces. Even though the whole cost was just say 3k for easy math, I could only claim 1500 the first year because I would only get 1500 worth of work that year.

I thought I could put the whole $3500 in the FSA and then be able to pay the ortho the 3500 and get the 3500 back from the FSA (b4 we had debit cards w/FSA).

Nope only could get reimbursed for the amount of work being done that plan year. Luckily, I had some other expenses that I used the rest of the FSA money for instead of losing it. Maybe the rules have changed? But no one ever explained that to me, so ask first!

[msomnipotent]

Research the rules with the FSA and braces. When my kids got them it was a two year process with the braces. Even though the whole cost was just say 3k for easy math, I could only claim 1500 the first year because I would only get 1500 worth of work that year.

I thought I could put the whole $3500 in the FSA and then be able to pay the ortho the 3500 and get the 3500 back from the FSA (b4 we had debit cards w/FSA).

Nope only could get reimbursed for the amount of work being done that plan year. Luckily, I had some other expenses that I used the rest of the FSA money for instead of losing it. Maybe the rules have changed? But no one ever explained that to me, so ask first!

That's a good point. Thanks for bringing it up. I probably should have known but just didn't realize that braces are not a "one and done" kind of thing. I haven't had braces before. We are normally conservative in our FSA estimates, but we have health and vision problems and blew through our $1,250 contribution in a few months this year. I'm thinking of going to $4,000 next year due to her teeth and my surgery that I have been putting off for over year but really can't put off much longer. I just don't want to have it, so I am ignoring the fact that I can't use my hand. Kinda getting tedious at this point, so I told myself it has to be done after the holidays.

It all comes down to what the Orthodontist says and what their estimate is. I might even get a second opinion if time permits. The dental hygienist just complimented my daughter on how straight her bottom teeth are and then the dentist says that she will need a full set of braces and a few extractions not 5 minutes later. She has two crooked teeth. I'm aware one is crooked because it is a baby tooth that is not coming out and the adult tooth is jammed up in her jaw, so that needs to be addressed, but I really didn't think her teeth looked that bad. I know my daughter has some strange fascination with Invisalign and has been talking to our dentist about it, so there might be some collusion going on. I left our other dentist because they really pushed unnecessary cosmetic procedures way too far. All the offices out here heavily advertise cosmetic dentistry. I'm assuming it is because we live in a HCOLA. The Orthodontist is affiliated with our current office but two towns over, so we shall see.

[MooseBucks]

I currently max out my HSA and will continue to max it for at least the foreseeable future. We have a $4500 and an out of pocket max of 8k. In the future we're going to have to get braces for the kids and my wife would love to get Lasik. I'm shooting to have 2-3 years of out of pocket max's saved up plus all the other expenses before I look at reducing my contribution. With this goal hopefully I make it some point before I retire!