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High Deductible Health Care
Old 11-08-2014, 05:19 PM   #1
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High Deductible Health Care

So it's time to select healthcare insurance for 2015. I have retiree insurance that pays most of mine but the wife's insurance is about $750/mo for a low deductible ($600) ppo plan. We are both a few years short of medicare. I noticed we can switch over to a High Deductible plan for the wife and I for about $550/mo with a higher($3000) deductible. This seems reasonable and then I realized I can put a deductible $7500/year into the savings account and if I choose, pay the premium from the HSA tax-free. Being retired we don't have enough healthcare deductions to meet the healthcare threshold of I think it is 10%. Has anyone been using the HSA this way to be able to deduct the entire premium for HDHC?
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Old 11-08-2014, 05:27 PM   #2
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Generally you canít use the money in your HSA to pay for medical insurance premiums. You can use it to pay for:
  • Any health care plan while receiving federal or state unemployment benefits
  • COBRA continuation coverage after leaving employment with a company that offers health insurance coverage
  • Qualified long-term care insurance
  • Premiums and out-of-pocket expenses, including deductibles, copays, and coinsurance for any part of Medicare
How to use an HSA | Health Spending Accounts | bcbsm.com
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Old 11-08-2014, 05:35 PM   #3
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Originally Posted by Bogie View Post
Being retired we don't have enough healthcare deductions to meet the healthcare threshold of I think it is 10%. Has anyone been using the HSA this way to be able to deduct the entire premium for HDHC?
Almost. Everything except the insurance premiums come out of the HSA. That's really what they were created for, not as taxfree investment vehicles. The premiums are generally not allowed from the HSA, with a few exceptions.

No penalty or taxes will apply if the money is withdrawn to pay premiums for:
  1. Qualified long-term care insurance; or
  2. Health insurance while you are receiving federal or state unemployment compensation; or
  3. Continuation of coverage plans, like COBRA, required under any federal law; or
  4. Medicare premiums.

We put the the family limit (including my top-up extra thousand for being old) into the account every year, and take that as a tax deduction. It comes right off the top on the front side of the 1040, along with IRA contributions for those that still have earned income.

Medical bills are paid with a debit card or checks linked to the account.

When I hit 65, the remaining funds in the account will be used to cover Medicare-related premiums, which IS an allowed expense.
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Old 11-08-2014, 05:37 PM   #4
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What travelover said...

I have had an HSA policy ($10K/yr deductible) for years. The money saved in the HSA account got spent quickly when I needed it 3 years in a row recently. But if not, that money can be saved and used when you get on Medicare, which you will.

Geezers spend lots of money for health, there's no way the money will go unused.
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Old 11-08-2014, 05:39 PM   #5
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I had the HDHC when I was employed and remembered that medicare premiums were ok to pay from the HSA. I foolishly assumed I could pay for premiums for non-medicare. I'm not sure why they are treated differently but the HDHC still is a no-brainer for us for until we qualify for medicare.
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