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60

The individual mandate is still in effect for 2018, which means you have to have qualifying health coverage or pay a fine--I can't find the penalties for 2018 but for 2017 it was the greater of 2.5% of your total household adjusted gross income, or $695 per adult. The new tax law does repeal the individual mandate starting in 2019. However, it would be ...


44

So who are these accounts for? What kind of person would look at an FSA or HSA account and think, "that's a great deal"? FSA: Those who have recurring expenses, or planned procedures this year. HSA: Everybody. The "use it or lose it" concept of an FSA means you probably shouldn't guess on how much you will be able to spend. Instead most ...


23

If you go the route of transferring money from your bank account to the HSA, the money will still have been taxed for FICA. The only way to skip this is to go directly from the paycheck. Another way to do handle this bill is to pay the bill, when it is due, from your bank account. Then when the balance in the HSA gets large enough, submit the Explanation of ...


22

When you put money into the HSA, you didn't pay any tax on that amount. Now that you want to take money out, if you don't have any medical expenses to offset the amount you are withdrawing, you will need to pay tax, as well as the 20% penalty if you are under age 65. You need to file a U.S. tax return in any year that you take money out of the HSA. On that ...


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-...


21

There's an annual contribution limit, for 2019 it is $3,500 single/$7,000 family. Otherwise, it's fine to match future contributions to prior or planned qualifying expenses so long as the account was established before the expenses were incurred. There is no deadline for reimbursement, so if you have the procedure done now and pay out of pocket, you can ...


20

Yes, absolutely. The HSA, when used for medical expenses, allows you to essentially pay for your medical expenses tax free. Even if you don't have extra room in your budget, you can fund the HSA as you incur medical expenses, then withdraw money to pay the expenses, and you'll see an immediate tax benefit at tax time. However, let's say that you have ...


20

Purely financially, giving up the employer match is hard to argue. It's mathematically a free 100% return, but you can't get to it for many years. So it's a great benefit for the future. On the other hand, paying off student loans gives you a return equal to your interest rate. Hopefully that's less than 100% :-), but you need to weigh that against locking ...


20

My opinion is that, in general, the HDHP+HSA is usually a better option for both the employee and employer than a traditional health plan. But of course, the details vary. Besides knowing the premium you will need to pay and the amount (if any) that your employer has decided to kick into your HSA, the details you want to look at are: The family deductible: ...


19

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 ...


19

This is referred to as an HSA Mistaken Distribution. An HSA mistaken distribution occurs when you take a distribution and later find out that it is not for a qualified medical expense. For example, this could occur if you accidentally pay for a restaurant dinner with your HSA debit card. It can also occur if you take a distribution to pay for a medical ...


18

I see this sort of misconception flying around. "Well the health insurance takes my money, makes a profit, and pays me only if I need it, otherwise I 'lose' money. Clearly, I would be better off saving my money." This sort of reasoning completely misses the point of insurance. Suppose you plan to pay $2,400 a year for either insurance or as savings in an ...


18

The HSA for most people, is a way to take pretax money and be able to use it for healthcare. No 7.5%/10% floor or need to itemize taxes in any way. It’s available based on the health plan you have, and a benefit for those who can set aside a bit of money to avoid tax. If you have zero $ out of pocket, and you plan offers no investment option, your point is ...


17

For FSA, true, only someone who is a good planner should participate. Otherwise, you run the risk of losing unused money at the end of the year. Good planners can start with health categories that are easy to predict for the upcoming year, e.g. your routine expenses for dental visits and prescriptions. Here's a planning form [PDF]. For HSA, there is no ...


16

Yes. From the IRS: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. So the key date is when you established the HSA. When it was funded is irrelevant.


14

Is it worth saving HSA funds until retirement? Yes Are there pros and cons from a tax perspective? Mostly pros. This has all of the benefits of an IRA, but if you use it for medical expenses then you get to use the money tax free on the other side. Retirement seems to be the time you are most likely to need money for medical expenses. So why wouldn't ...


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 ...


13

According to the instructions for IRS Form 8889, Expenses incurred before you establish your HSA are not qualified medical expenses. If, under the last-month rule, you are considered to be an eligible individual for the entire year for determining the contribution amount, only those expenses incurred after you actually establish your HSA are qualified ...


13

Can I pay myself back later in the year if my HSA doesn't have adequate funds earlier in the year to pay for an expense? Yes. You can request a distribution for any qualified medical expenses that were incurred any time after the HSA was established, there is no time limit. If you want to maximize tax-free growth you could pay everything out of pocket and ...


13

There are a couple of specific criteria in the HDHP / HSA relationship. You must be enrolled in an HDHP in order to contribute funds to an HSA on a tax preferred basis. You do not need to be enrolled in an HDHP to spend the HSA funds on qualified medical expenses on a tax preferred basis. One of the qualifiers for an HSA eligible medical expense is the ...


13

Broadly, it means that you'll be responsible for the first $3,000 of medical expenses that you incur over the course of the year before insurance kicks in. There may be a co-pay as well where you're responsible for some fraction of the bill once you've met your deductible up to an out-of-pocket maximum. Realistically, your plan very likely covers certain ...


13

I just want to point out that your question implies a misunderstanding, even though you didn't explicitly mention it: I had an HSA last year. This year I have health insurance through ACA. The fact that you have insurance through the ACA may not be relevant. There are many plans in the ACA that are HSA compatible. But even if you don't currently have a ...


12

The HSA contribution limits for a partial year can be very confusing. This is discussed in IRS Publication 969. There are two different ways to determine what your limits should be: the prorated limit and the last-month rule. Prorated Limit The standard way to handle the contribution limit for a partial year is to prorate the limit for the number of ...


12

Yes, you certainly can. As long as you incurred the expense while you had the HSA account in place, you can pay for the expense in any way you please, and reimburse yourself later for that expense out of your HSA. Just ask your bank/HSA custodian how to handle it, as the procedure is different with different institutions. With some, it is as simple as ...


12

Yes, you can be reimbursed through your HSA account; see for example NerdWallet's article. Best is to see your own provider's website, of course, but HSA rules in general allow for reimbursement for legitimate medical expenses.


12

If you want the tax benefits of the funds, yes, they must be used for qualified medical expenses as defined by the IRS. You can withdraw funds whenever you want, for any reason, but if they are not spent on qualified medical expenses, then there will be tax implications. If you are under 65 years old, you will pay income tax plus a penalty on any ...


12

Some institutions enforce the limits, some don’t. However, one aspect that you may not realize is that they really don’t know what your contribution limits are. Lots of things affect your contribution limits. For the HSA specifically, your limits can be reduced if you are only eligible for part of the year, or if you have another HSA account that you are ...


11

I realize this is an old question, but it is a great question, as many people don't realize the hidden benefits of the HSA. If you are eligible for an HSA, it is important to open an account before you have any medical expenses (including dental). Once the account is open every valid medical expense you incur after that (not premiums though) is eligible to ...


11

Here are the answers to your questions, from easiest to hardest. :) If I leave a HSA plan to join a PPO in the future does my saved money vanish? No, your money does not vanish. Your HSA is yours to keep. Even if you become ineligible to contribute to an HSA in the future, you keep your account, and you can withdraw on it for eligible medical expenses....


11

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 ...


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