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21

The big difference for me is that my contribution thorough a cafeteria plan also skips Social Security and Medicare taxes. That is a 6.2% (SS) + 1.45% (Medicare) tax on those contributions if done outside a cafeteria plan. Some companies make a contribution to a the HSA. If you handle your contributions outside of their channels they may see you as a non-...


18

Thanks for your question. Unfortunately, you're correct that these types of benefits often are not well explained. Let me apologize in advance for a long answer, but I'd like to provide the most comprehensive explanation I can. Additionally, there are a number of factors involved that weren't mentioned in your example, but that could substantially affect ...


16

There are a couple of things that are missing from the analysis. The PPO plans feature a copay for doctors visits and prescriptions. For example, if you need to see your doctor, under the PPO plans, you would pay $20 out-of-pocket. Under the HDHP plan, you would pay the negotiated price for a doctors visit. We don't know right now what this is, but let's ...


16

You should not continue contributing, as you're no longer qualified for it. You can keep it, and use the money in it toward the current medical expenses, without a problem. There are specific examples in pub 969.


13

Note that even if you are limited to the HSAs your employer provides, you can still set up your own HSA with whatever trustee you want and periodically transfer the funds from your employer sponsored HSA to your own HSA: according to IRS pub 969 "Contributions to an HSA" section: Rollovers A rollover contribution is not included in your income, is ...


9

It appears that this is the case. From IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans Qualified medical expenses are those incurred by the following persons. You and your spouse. All dependents you claim on your tax return. Any person you could have claimed as a dependent on your return except that: ...


9

The government wants to encourage everyone to buy health insurance, because with more healthy people buying health insurance, the rates can be reduced for those that are less healthy. Ask yourself this: Why does the HSA require health insurance at all? Should you be able to make use of an HSA if you don't have any health insurance? The HSA is the carrot ...


8

This really depends on your usage. I went with the High Dedux and HSA option this year... and discovered that until I'd hit the deductable, I didn't get any of the prescription drug discounts. If you're on an expensive maintenance med, that can be serious sticker shock (difference of 20 times!). Of course the HD plan also has lower premiums which more or ...


7

HSA accounts come with various rules intended to ensure that the pre-tax money you have opted to put into your HSA account is indeed used for appropriate purposes. Most employers don't handle these accounts in-house but contract with a company or bank who offers to take care of the details and the necessary accounting: the money is simply sent to the bank, ...


6

They're wrong. The IRS instructions (pub 969) specifically say: To be an eligible individual and qualify for an HSA ... You [must] have no other health coverage except what is permitted under Other health coverage, later. So no, he is not eligible for HSA if he keeps your coverage. Here's what the same IRS Publication 969 has to say about the excess ...


6

I believe the following statement by JAGAnalyst is incorrect: In your wife's case, if you have an HSA and she has traditional health benefits with an FSA, this is not considered a problem since she can only use the FSA money for expenses incurred by members of your family on her plan. Unless your FSA funds can only be used for your spouse's expenses and ...


6

Yes you are eligible even if your spouse is enrolled in Medicare. As long as YOU are not enrolled in Medicare you can contribute to an HSA. You may use the money to pay the cost of qualified medical expenses for you and your spouse. Here are some resources with additional information: HSA FAQ's HSA Resources


6

The HSA tax deduction comes when you contribute money to the HSA, not when you take money out. So you can contribute up to the max and take your maximum deduction each year, regardless of what medical expenses you have. If you have medical expenses, but no money left in your HSA, you will just have to pay for them out-of-pocket. However, in the future when ...


6

The HDHP requirement applies to your HSA contributions, but not to your HSA distributions. Once you have money in your HSA, it is yours to spend on qualified medical expenses, whether or not you remain eligible to contribute further. You can pay for any out-of-pocket medical expenses (discussed in IRS Pub 502) that were incurred on or after the date that ...


6

From the IRS: Rules for married people. If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. ... [T]he contribution limit is split equally between the spouses unless you agree on a different division. So for 2019, you and your wife have a combined HSA limit of $7,000. You can decide to split that however you ...


5

You are not considered covered by an FSA unless you pick it. Many companies offer a high deductible plan and a linked HSA, and another option that has a regular policy with a Flexible Savings account. If the presence of the FSA option disqualified all employees from the HSA, that would be a big problem. Because the HSA can't be used for dental and vision, ...


5

The big difference for me under the High deductible plan has been that instead of paying the co-pay, now I am now responsible for the negotiated rate until I reach the deductible limit. The HSA is only a way to funnel medical payments through a tax free account the insurance company and the doctor don't care about the HSA. If we go out-of-network, then I am ...


5

The FSA can only pay for expenses incurred after it was open. This also applies in case of a mid-year change in election (such as due to marriage, divorce, child birth, etc.) For example, according to this page: You can only be reimbursed for qualifying expenses, from the election that was in place at the time the expense was incurred. So, say you had $...


5

You said "you can't have an HSA if you are eligible to contribute to an FSA," but that's not quite accurate. The fact is you can have an HSA, but you can't contribute to it if you have an FSA or any health coverage besides the HDHP. However, this does not invalidate your entire year's worth of HSA contributions; the HSA contribution limits are prorated ...


5

In order: Yes, you can rollover an HSA, even if you don't have an HDHP: You can roll over amounts from Archer MSAs and other HSAs into an HSA. You don’t have to be an eligible individual to make a rollover contribution from your existing HSA to a new HSA. It looks like whether you can pay the deposit in cash or only from the account depends on the ...


5

Answers to your questions: Can I continue with my individual HDHP from my employer and change my family HSA contribution to an individual; and at the same time can my wife do the individual FSA? Would this avoid a conflict? Unfortunately, FSAs automatically cover the medical expenses of a spouse. This means that if your wife has an FSA, you are ...


4

I had an HSA for two or three years. I found very routinely that my insurance company had negotiated rates with in-network providers. So as I never hit the deductible, I always had to pay 100% of the negotiated rate, but it was still much less than the providers general rate. Sometimes dramatically so. Like I had some blood and urine tests done and the ...


4

As others have mentioned, you avoid "payroll taxes" (Medicaid, Social Security, etc) by using pre-tax money rather than post-tax money. However, there is one benefit to getting your own privately held one: you can choose the service provider. A previous employer's HSA charged $4/month, and did not allow me to invest in any funds unless I had over $4k in my ...


4

As far as taxes go: If you contribute to the HSA account through your employer pre-tax, that amount is not subject to the Social Security (6.2%) and the Medicare (1.45%) tax. If you contribute that amount post-tax, you can deduct it from your income tax at the end of the year, but the Social Security and Medicare taxes have already been paid and there's no ...


4

By adding a phrase to your statement it becomes true: I thought an HSA was something that I could open with any bank that offers one. Of course this only helps you if your employer offers the ability to direct deposit into any HSA account. Mine does, and it appears that yours does too. You'll need to shop around like you would for opening a checking or ...


4

Even if you are allowed to contribute to your existing HSA, you will receive the best tax benefit by making contributions through a payroll deduction. The IRS says that contributions to an HSA can be from the employer, from the employee through payroll deduction, or from a contribution directly to the account. Your employer is unlikely to make an HSA ...


3

Don't panic this happens all the time. I looked online for a form that can be used to redeposit funds back into the HSA. This form can be used to redeposit funds withdrawn in error and cannot be used to correct an Excess Contribution Return. Funds will be posted as a correction and not as a contribution. The deposit will be entered for the year the ...


3

The threshold question is whether you qualify. The IRS in Publication 969 on HSAs says that to qualify for tax benefits you must set up a tax-exempt trust or custodial account with an HSA trustee, such as bank, insurer, or other qualified trustee. You Qualifying for an HSA To be an eligible individual and qualify for an HSA, you must meet the ...


3

My HSA custodian allows me to write a check to myself, to reimburse eligible expenses. I am subject to audit for those expenses. Nothing I've seen in the IRS rules seems country specific: there is just a threshold for how high the deductible must be, and an exhaustive list of what's eligible for reimbursement.


3

I suppose one reason is that you could have a health care plan structured such that it is nothing more than an additional retirement plan. For example suppose a high income individual wants to save more for retirement. They could have an ultra-high deductible plan that they pay almost nothing for, but yet are able to take advantage of the triple tax ...


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