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HSA rules?
Old 08-15-2016, 11:50 PM   #1
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HSA rules?

Our FA suggested looking into an HSA but doesn't help with details. Our tax guy doesn't seem to know either. I've tried looking it up myself but find the rules confusing/difficult to find. We have a high deductible plan that we pay for ourselves. We are about to RE. Can we set up our own HSA? Can anyone refer me to a good source for detailed rules? Thank you'


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Old 08-16-2016, 12:00 AM   #2
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Yes you can set up your own HSA (its like an IRA for Health) , I think even some banks have them.

But the catch here is your plan has to meet certain IRS guidelines to qualify for one.

Hopefully others who actually have one can answer better than me.
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Old 08-16-2016, 06:55 AM   #3
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Not all high deductible health plans are HSA eligible. If you have a copay for non-preventive care office visits and/or Rx instead of a deductible, the HDHP is not HSA eligible. If the copays only start after the deductible has been met, then it usually is HSA eligible. You can call your plan's customer service number and they can tell you if it qualifies.

For 2016, the plan's individual deductible must be $1300 or more ($2600 family). The out-of-pocket limit can not exceed $6,550 ($13,100 family). There are plans with higher OOP limits so they are also not HSA eligible.

https://www.irs.gov/publications/p969/ar02.html

First dollar benefit (copay) rules explained: White Paper Report: Most High Deductible Plans are NOT HSA-qualified
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Old 08-16-2016, 07:50 AM   #4
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Another good resource: HSACenter – Health Savings Accounts
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Old 08-16-2016, 08:06 AM   #5
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Our FA suggested looking into an HSA but doesn't help with details. Our tax guy doesn't seem to know either. ..........
That would bother me as an HSA can be a very effective way to put away money tax free and never pay taxes on it.
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Old 08-16-2016, 11:22 AM   #6
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In my experience shopping for HSA plans all the plans that are HSA eligible clearly state it. If it doesn't say anything about being HSA eligible it probably isn't.
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Old 08-16-2016, 12:02 PM   #7
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Our FA suggested looking into an HSA but doesn't help with details. Our tax guy doesn't seem to know either.
Details? Like which insurance carriers? Well to do that they each have to be licensed to sell insurance. You can do this easily by identifying the carriers in your state (see your insurance commissioner website). Then go to the web site for each carrier to determine which policies are HSA-eligible and meet your criteria.

Setting up an HSA Account is easy too. Google HSA Accounts and you'll get back lots of banks/credit unions who are ready to set up an account for you. Some charge a monthly fee on your deposits, others don't.

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Old 08-19-2016, 07:18 PM   #8
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Quote:
Originally Posted by Scuba View Post
Our FA suggested looking into an HSA but doesn't help with details. Our tax guy doesn't seem to know either. I've tried looking it up myself but find the rules confusing/difficult to find. We have a high deductible plan that we pay for ourselves. We are about to RE. Can we set up our own HSA? Can anyone refer me to a good source for detailed rules? Thank you'
OP: you didn't specifically state that you are currently covered by a high deductible health plan. If you are, then you are eligible to contribute to an HSA each year (not required, but eligible). If you aren't covered by a HDHP, then you can own an HSA (from previous periods of HDHP coverage), but you can't make new contributions during the current year.

If you tax guy doesn't understand HSAs, then it may be time to start doing your own taxes.
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Old 08-19-2016, 08:00 PM   #9
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OP: you didn't specifically state that you are currently covered by a high deductible health plan. If you are, then you are eligible to contribute to an HSA each year (not required, but eligible).
As was stated above not all HDHP's are HSA eligible.
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Old 08-19-2016, 09:34 PM   #10
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As was stated above not all HDHP's are HSA eligible.
Yes, I understand this, and as you noted that information has already been provided to the OP via an earlier post. Rather than repeat that, I was merely trying to point out to the OP that unless he/she was currently covered by a HDHP, an HSA was not even a possibility.
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Old 08-20-2016, 05:42 AM   #11
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One recent development is that more and more HDHPs are not HSA-eligible because their deductibles are TOO high. Gotta watch out for that one as well.
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Old 08-20-2016, 11:03 AM   #12
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If your tax preparer can't tell you how HSAs work from a tax perspective, including the rules regarding who qualifies etc., I would get a new tax preparer.

IRS Pub 969 is where I would start.
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Old 08-23-2016, 01:32 AM   #13
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HSAbank.com
Very easy to open an account. When you reach 10K (I think) you can transfer to TD Ameritrade account and invest in stocks.
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Old 08-23-2016, 07:41 AM   #14
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HSAbank.com
Very easy to open an account. When you reach 10K (I think) you can transfer to TD Ameritrade account and invest in stocks.


I have been very satisfied with HSA, I believe Michael routed me here as my original one was merger with another one that did not provide a brokerage link. And I like that brokerage link. Even though I only initiated HSA in 2010, I made enough profits trading this year to pay for my unsubsidized health insurance premiums. I wouldnt even care about rate increases if they would let me contribute 10k a year to my HSA.


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Old 08-23-2016, 11:07 AM   #15
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If you have an HDHP and you're socking money away in a Roth, the HSA would certainly take priority. That's a bold statement, I know. Someone who thought they weren't going to have medical expenses in the future (yeah, right), might not think it's a good idea, but otherwise, it's a slam-dunk.

HSA is a Roth on steroids... it's Roth-like in not paying tax on the gains, but even better, you get to deduct the amount of the HSA contribution from the year's earnings! The scenario I'd go with, if cash flow would allow, is to pay out of pocket for medical and let the HSA grow tax-free.

There is a limit on getting the gains out tax and penalty free (that limit being the sum total over all years of your health expenses). And you need to keep records of your health expenditures.

As to getting started, just find a cheap place to start an HSA and fill-out the paperwork. I've got mine at Elements Financial. It's cheap if you keep a balance. And you can transfer money into a brokerage account (expensive to do that, but it's not something you do often).
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Old 08-23-2016, 06:56 PM   #16
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Useless fact...I read that only between 3%-4% of people who have HSA accounts use them for investment purposes. So you are definitely in the minority if you do. I never really even considered my HSA for health expenses. It was all about the tax break and making money investing it.


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Old 08-24-2016, 01:00 AM   #17
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Thanks for all the info. We do have a HDHP but I don't think it is HSA qualified. Need to confirm that with the insurer. It is a grandfathered pre-ACA plan so we don't want to give it up. I assume we can't just fund an HSA independently of whatever insurance we have, similar to funding an IRA?


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Old 08-24-2016, 02:14 AM   #18
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Nope, must be HSA qualified. I have a friend who had been funding his HSA on a HDHP non qualified plan but stopped 3 years ago, he said tax man will never be able to track it, he switched plans every year. The government regulates it a lot more when you file now days. The HSA qualified health plan really is a great idea, but for some reason health plans and the government both hate them. CA we can't even deduct it on state income tax.
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Old 08-24-2016, 07:48 AM   #19
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We have had HDHP/HSA for years. Maxed the HSA and never have touched the balance. It is invested with a linked brokerage account at TD Ameritrade (all except $5K I keep in the cash account to avoid monthly fees). We have all the receipts if we needed to draw it, but no plans. It is with HSA Bank.
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Old 08-24-2016, 10:59 AM   #20
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Montecfo,
We do the exact same thing. Goal was 100K, but it looks we are going to fall short. I sold most stocks trying to pic the top, did not work. Darn market keeps rolling along and I am in cash.
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