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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 ...


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 ...


18

This is a question I asked myself while considering an HSA, and I couldn't find any answers, so now that I have one, I'm answering it myself. I asked a family-friend/investment-banker about it, and he suggested you could only make distributions when on an eligible HDHP, but wasn't completely sure. I was about to post the question here to confirm or ...


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

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 ...


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.


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 ...


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

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

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 ...


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.


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 ...


10

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....


10

If you invest inside an HSA, it is very similar to investing inside an IRA. Any distributions stay in the HSA. If you sell an investment, the proceeds stay in the HSA. The only way you get any money out of an HSA without penalty before age 65 is to pay for qualified medical expenses. If you still have money in there at age 65, you can withdraw it without ...


10

What you are describing doesn't work. The reason is that when you do an excess contribution withdrawal, your HSA custodian will also send you any earnings from your excess contributions. These earnings will be listed in Box 2 of the 1099-SA form that they give you at the end of the year, and you will need to add them to your income as "other income" on ...


9

First of all, one thing that is very important: Match is always better than no match. So, you should definitely use that match on your HSA if you've already maxed out the company match on your 401(k). In fact, for most people there won't be much reason to invest in your 401(k) above the company match at all. If, for example, your company matches only up ...


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

Charlie would have to have a family or employee-plus-one HSA-compatible plan to contribute the family limit ($6550 for 2014). Importantly, those covered under his plan cannot have non-HSA-compatible coverage. From the IRS: Other health coverage. You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is ...


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 ...


9

Yes you can. You will need proof of receipt for the amount and submit it to the bank who operates your HSA account. You have to ensure that your medical expenses qualify as they would if you had paid with your HSA account.


9

Yes, the contribution limit includes anything contributed to your HSA, whether added by you or your employer. From IRS Publication 969: Employer contributions. You must reduce the amount you, or any other person, can contribute to your HSA by the amount of any contributions made by your employer that are excludable from your income. This includes ...


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