HSA Questions

[frayne]

Just curious how many here take advantage of HSA ? They look like no brainers to me and I plan to set one up before the end of the year. I would like to hear any pros, cons or just observations concerning HSA. Who offers the best HSA with investing choice flexiability, etc., etc.?

Aprreciate any and all replies.

 

[TromboneAl]

Recommended. Do some searches on this forum.

 

[travelover]

Recommended. Do some searches on this forum.

Yes, search here and on bogleheads site for recommendations.

Guide to the Vanguard Diehards Forums

I have an HSA and it is a minimal hassle for the tax savings.

 

[mn54]

If you are eligible, an HSA is a no brainer. The money you put in is tax deductible, It grows tax deffered, any money you don't use is rolled over to the next year, and after age 65 you can take out the money for any purpose tax free. At least this is my understanding. I make the max. contribution every year and don't plan on using any if possible.

 

[2B]

I'm in one and I max out the contribution every year. I do pay my medical bills with the money in it but that's only about 1/4 of what I put into it. The "payment" is with tax free money so I figure it's probably worth more to me now than after retirement when I like to think I'll be in a lower tax rate.

 

[CybrMike]

I use HSA Bank as they can invest your money with TD Ameritrade. Better than earning a couple percent interest.

 

[maddythebeagle]

Curious why somebody would contribute to one of these in FIRE vs. just a high deductible plan? Maybe it was T-Al that looked at the costs...After you FIRE, why would there be a need to be putting money in into a tax deductible account since you are no longer saving but rather taking income from your portfolio?

 

[Martha]

If you don't use up all the money each year, its growth is tax deferred and if you use it for allowed health care costs, no tax will be due on the growth at all.

 

[maddythebeagle]

ok....I see...makes more sense...thanks...

 

[travelover]

Curious why somebody would contribute to one of these in FIRE vs. just a high deductible plan? Maybe it was T-Al that looked at the costs...After you FIRE, why would there be a need to be putting money in into a tax deductible account since you are no longer saving but rather taking income from your portfolio?

I have a high deductible health care plan provided by my former employer. I use the HSA to pay for deductibles and co-pays, providing a tax deduction.

 

[kaneohe]

Pro: One of few (perhaps only?)vehicles where you get both upfront deduction and nontaxable withdrawals (for qualifed medical expenses) as well as tax sheltered growth.
Deduction of contributions even tho you don't itemize. Some use it solely for the tax sheltered growth, paying medical expenses from outside the HSA. Apparently you can save the old medical bills since starting HSA and then, years later, use them as justification to withdraw funds from the HSA. Extra contributions allowed for older folks (>55 yrs old)

Con: Expenses can be high percentage of small accounts so need to shop around carefully. Must be used in conjunction w/ high deductible health plan so need to make sure the tax benefits of HSA outweigh the higher expenses of that HDHP

 

[TromboneAl]

After you FIRE, why would there be a need to be putting money in into a tax deductible account since you are no longer saving but rather taking income from your portfolio?

Good point, but here's why:

1. It grows (compounds) tax free

2. Although my tax and tax rate at this point are low, I still save by deducting my HSA contributions each year. At the 15% tax rate, I save $427 in taxes for each annual $2850 investment.

 

[bssc]

This year, MegaCorp offers one. We are going to contribute to the HSA and DW's FSA with an eye to taking the money out of the FSA first and keeping as much as possible in the HSA.