Do HSA contributions count as an expense when calculating yearly expenses?

[ron244]

DW and I are about 7 weeks from early retirement. If we opt for an HSA , do we include the $5000.00 we plan to contribute each year? According to eheathinsurance, our yearly premium would be approx. $2000.00 for a $5200.00 deductible plan. I am allowing another $2000.00/year for health costs. Isn't the HSA contribution just a transfer of money from a taxable account to a tax advantage savings account. Do I use $4000.00 as our annual health care expenses or do I use $9200.00?

Thanks, ronc.

 

[REWahoo]

Isn't the HSA contribution just a transfer of money from a taxable account to a tax advantage savings account.

That's the way I treat it.

 

[Freein05]

As I understand it money used to fund an HSA is tax deductable similar to funding an IRA. One major difference is that the money used to fund a HSA does not have to be earned income like an IRA. I would guess that when you use money from an HSA to pay medical bills the bills would not be deductable.

 

[HobbyDave]

That's the way I treat it.

Same here, I'd just treat it as transferring money from one account to another.

Just count your bills as your expenses, not the transfers.

 

[ron244]

Thanks for the responses.
I have been allowing 10k per year for health care expenses, now we will have an extra 5k to spend (or not spend). 37 days left to ER. Things just seem to keep falling in place. The road leading to our retirement home is gravel and about 3 miles long, very bumpy and dusty. Just found out that the county is going to "tar & chip" the road in August. Maybe it's an ER present for DW and I. Anyway, once we get our health ins. settled we can relax and count the days.

ronc