HSA account

[Cedar]

I'm not eager (in the 15% bracket next year) to move up to $11K out of savings and into a TIRA next year, but if needed to get our MAGI below 300% of the FPL, it's nice to have that arrow in the quiver held in reserve.

The general rule for any type of IRA contribution is that you must have earned income equal to or exceeding the amount of your IRA contribution. I just wanted to clarify that IRA Contributions can only be offset with earned income and not out of savings. HSA Contributions can come from either savings or earned income. This is how I understand the rules.

 

[Animorph]

And it will have to be a deductible tIRA contribution as well. Otherwise nothing will happen to your AGI.

 

[Alan]

The general rule for any type of IRA contribution is that you must have earned income equal to or exceeding the amount of your IRA contribution. I just wanted to clarify that IRA Contributions can only be offset with earned income and not out of savings. HSA Contributions can come from either savings or earned income. This is how I understand the rules.

I believe Ziggy's wife is still working. It is also worth noting that only one of a married couple needs to be working to allow both to contribute to an IRA

 

[47]

If you have individual (non-group) non -HSA-compliant insurance now, and plan to get into an HSA compliant insurance next year the following sounds really interesting.

If I am reading this correctly, it looks like you can switch to a HSA compliant policy just for December 2013, and contribute the full years HSA for 2013.

I always thought it is pro-rated month to month. Now it looks like it is pro-rated only if you start with being HSA-eligible and lose eligibility mid-year.

What's going on here??


from Wells Fargo HSA site:
https://www.wellsfargo.com/help/faqs/investing-hsa/

Last month rule: If you’re an eligible individual on the first day of the last month of your tax year (December 1 for most tax payers), you’re considered an eligible individual for the entire year. You’re treated as having the same HSA-qualified health plan coverage for the entire year as you had on the first day of that last month. However, the IRS requires that you maintain HSA qualified coverage through December 31 of the following year (this is referred to as the “testing period”).7

I would have thought the above post would have generated some interest in this forum. Since I have been ER'ed and am already on a HSA for a while this doesn't apply to me.

But for all those who called it quits this year and are on COBRA or other non-HSA plan and are eagerly awaiting to switch to a HSA compatible plan in the exchange for the pre-tax deduction, I thought this would be a boon.

You realistically have only about 10 days to get on an HSA starting Dec 1st -- yes there are insurance companies selling these plans just for one month -- and it appears from my reading you can take deduction for the whole of 2013 provided you maintain HSA eligibility throughout 2014.

 

[Mulligan]

I would have thought the above post would have generated some interest in this forum. Since I have been ER'ed and am already on a HSA for a while this doesn't apply to me.

But for all those who called it quits this year and are on COBRA or other non-HSA plan and are eagerly awaiting to switch to a HSA compatible plan in the exchange for the pre-tax deduction, I thought this would be a boon.

You realistically have only about 10 days to get on an HSA starting Dec 1st -- yes there are insurance companies selling these plans just for one month -- and it appears from my reading you can take deduction for the whole of 2013 provided you maintain HSA eligibility throughout 2014.

If memory serves me from several years ago, this is what I did. I got into an HSA plan and signed up for everything in November to make sure I got that years tax deduction. I do believe however if you jump out of the HSA plan before completing the 12 months (or some amount of time), you owe the government back some money.

 

[Mike1968]

If memory serves me from several years ago, this is what I did. I got into an HSA plan and signed up for everything in November to make sure I got that years tax deduction. I do believe however if you jump out of the HSA plan before completing the 12 months (or some amount of time), you owe the government back some money.

I entered an HSA a couple of years ago in April and maxed out the HSA. I understood that I would have to stay in the HSA for the entire following year otherwise I would owe or get penalize by the IRS...

Mulligan, Are you referring to the Testing Period?
Publication 969 (2012), Health Savings Accounts and Other Tax-Favored Health Plans

 

[Mulligan]

I entered an HSA a couple of years ago in April and maxed out the HSA. I understood that I would have to stay in the HSA for the entire following year otherwise I would owe or get penalize by the IRS...

Mulligan, Are you referring to the Testing Period?
Publication 969 (2012), Health Savings Accounts and Other Tax-Favored Health Plans

Mike, I was referring to the part of your above link that said you had to have the HSA set up prior to Dec. 1st to get the tax deduction. I was also thinking what you said about having it for the full year to avoid the penalty or payback. I wanted to snag that tax savings immediately when I started my HSA. I guess I will have to monitor my contribution if I ever pull out of an HSA, because I always immediately deduct it in January of each year so I am always a head of my annual completed insurance date.

 

[Animorph]

Better not have any significant December healthcare charges. I decided against an HD HSA plan from DW's employer because we were only going to have it for (hopefully only) half of 2014 before she finally retires. No way to get just half of the deductible, so it came out a little behind the other plans in terms of expected total cost for us for six months.

I assume a one month plan would leave you with the same deal, a full deductible to fill in one month if you should be so unlucky. Probably OK if you rarely utilize your insurance.

 

[frank]

does anyone know what the maximum contribution to an hsa would be for an individual in th e 15% tax bracket? thanks

 

[audreyh1]

does anyone know what the maximum contribution to an hsa would be for an individual in th e 15% tax bracket? thanks

There is no contribution limit based on income.

For 2013 it's something like $3250, regardless of income.

If you are 55 to 64 during the contribution year, you can contribute an additional $1000.

Once you reach 65, you can no longer contribute.

 

[47]

There is no contribution limit based on income.

For 2013 it's something like $3250, regardless of income.

If you are 55 to 64 during the contribution year, you can contribute an additional $1000.

Once you reach 65, you can no longer contribute.

An esoteric point. But still.. the trigger is not turning 65, but signing up for Medicare. You can delay signing up for medicare (if you are covered by some other plan; should delay both Part A and Part B) and still be HSA eligible.

Kiplinger - Interstitial

I am mentioning this only because I think (hope) that at some point in the near future, when the political climate changes, "Medicare for all" be attempted. It is reasonable to expect that it will be phased in with 55-65 crowd being covered in the first few years. This would also have the added benefit of reducing the stress on the subsidies as the older, more expensive ones are moved from private insurance to a plan that has less administrative costs (20% vs. less than 5%) -- which in turn would make the argument "young and healthy are subsidizing the old" a little bit less true.

If and when that happens the above would still be true.

 

[audreyh1]

An esoteric point. But still.. the trigger is not turning 65, but signing up for Medicare. You can delay signing up for medicare (if you are covered by some other plan; should delay both Part A and Part B) and still be HSA eligible.

Kiplinger - Interstitial

I am mentioning this only because I think (hope) that at some point in the near future, when the political climate changes, "Medicare for all" be attempted. It is reasonable to expect that it will be phased in with 55-65 crowd being covered in the first few years. This would also have the added benefit of reducing the stress on the subsidies as the older, more expensive ones are moved from private insurance to a plan that has less administrative costs (20% vs. less than 5%) -- which in turn would make the argument "young and healthy are subsidizing the old" a little bit less true.

If and when that happens the above would still be true.

Thanks - although many, many sources use the 65 number.