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Old 01-13-2020, 10:25 PM   #41
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But what it the EOB shows that my responsibility is $100 but I only paid $85 because I called the provider and they offered me a 15% discount if I paid them that day with my credit card?
I just keep track of what I actually paid the provider.
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Old 01-14-2020, 12:23 AM   #42
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[QUOTE=candrew;2353858

In similar fashion, we will spend down our HSA's prior to RMD's.[/QUOTE]

Hi candrew. Can you (and Audrey, think you said the same) let me know the reasoning behind this strategy as far the timing?

Thanks.
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Old 01-14-2020, 06:05 AM   #43
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By spending from HSA, they have tax tree income that allows them more headroom to do Roth conversions from tIRA, the goal being to pay the least tax up front for elimination or substantial reduction of RMDs. This is a good strategy if none of your income is fixed and already puts you in a higher tax bracket. It preserves the tax advantages of LTCGs and divs, maximizing the amounts converted in the lower brackets.

My company offered HSA later in career and I did not realize the advantages to maxing it out and leaving it there for growth, until the last may e 5 years, so it is only around $60k. We plan on using it like a ROTH once our income is fully retirement sourced with medicare premiums as the baseline. We kept a few large hospital and dental receipts for use if needed.
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Old 01-14-2020, 06:56 AM   #44
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We just use ours for dental work. Last year I transferred directly to reimburse ourselves annually for the medicare part b payments we made. No paperwork required for that.
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Old 01-14-2020, 07:33 AM   #45
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Hi candrew. Can you (and Audrey, think you said the same) let me know the reasoning behind this strategy as far the timing?

Thanks.
You have to use it up sometime. Once we are Medicare eligible, we are no longer adding to the HSA. I was looking for an easy way to use it in terms of record keeping/proof, and paying regular, predictable Medicare premiums via billpay directly from the HSA seems like a good way. And we should have just enough to bridge the gap between Medicare and starting SS at 70 as planned. That seemed as good as any and don’t want to wait until older for some unpredictable medical expenses after we’re on Medicare as those should be significantly reduced.

We don’t actually need to draw from our IRAs until RMDs. Roth conversions would be the only reason.

So the practical effect for us is to increase the monthly funds available for spending as 1) we are no longer shuttling funds to the HSA Accounts from taxable accounts and b) Medicare premiums are covered until SS takes over plus no longer paying private insurance premiums except for Medigap.
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Old 01-14-2020, 08:03 AM   #46
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By spending from HSA, they have tax tree income that allows them more headroom to do Roth conversions from tIRA...
Isn't that effectively converting the HSA to a Roth IRA?
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Old 01-14-2020, 08:11 AM   #47
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I just played this out myself (much to my surprise). They offered a prompt pay discount if paid in full. Saved about $800 since she maxed out last year.

I'm going to keep the $ in the HSA, hang on to the receipts and someday "cash them out."
I was going to do that, but upon further reflection thought that DW or DD might not know that they can/should do a tax-free withdrawal if I were to pass unexpectedly. So once I get my documentation together in 2020 I will do a withdrawal for all qualified expenses from when we started our HSAs in 2010 to the end of 2019... I'll then do annual withdrawals thereafter.

Even so, our HSAs are high 5 digits and will remain there unless one of us goes into a nursing home and will pass to the surviving spouse tax-free but then be taxable once the surviving spouse dies.
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Old 01-14-2020, 08:18 AM   #48
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Isn't that effectively converting the HSA to a Roth IRA?
Nothing wrong with that.

An HSA has an advantage over a Roth when contributing, because it's a reduction of your taxable income.

Once in your account, both benefit from tax free growth. However, when you die, a Roth passes tax-free to any heir, but for a non-spouse beneficiary, an inherited HSA is taxable.
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Old 01-14-2020, 08:59 AM   #49
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I So once I get my documentation together in 2020 I will do a withdrawal for all qualified expenses from when we started our HSAs in 2010 to the end of 2019... I'll then do annual withdrawals thereafter.
Even so, our HSAs are high 5 digits and will remain there unless one of us goes into a nursing home and will pass to the surviving spouse tax-free but then be taxable once the surviving spouse dies.

Once again, I've learned something valuable from pb4uski. Just to be sure, I can keep track of all my qualified medical expenses for a few years, then collect from HSA all at once...3 years down the road? I always thought you had to collect in the year of the medical event. Our HSA is also in 5 digit territory. I'd like to let it grow, then collect later, tax free.
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Old 01-14-2020, 09:15 AM   #50
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You can go back to when you started your HSA... a lot of posters keep a running tally for what was spent and a file of receipts and can withdraw at will. Unfortunately, I'm not so organized.
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Old 01-14-2020, 09:23 AM   #51
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You have to use it up sometime. Once we are Medicare eligible, we are no longer adding to the HSA. I was looking for an easy way to use it in terms of record keeping/proof, and paying regular, predictable Medicare premiums via billpay directly from the HSA seems like a good way. And we should have just enough to bridge the gap between Medicare and starting SS at 70 as planned. That seemed as good as any and donít want to wait until older for some unpredictable medical expenses after weíre on Medicare as those should be significantly reduced.

We donít actually need to draw from our IRAs until RMDs. Roth conversions would be the only reason.

So the practical effect for us is to increase the monthly funds available for spending as 1) we are no longer shuttling funds to the HSA Accounts from taxable accounts and b) Medicare premiums are covered until SS takes over plus no longer paying private insurance premiums except for Medigap.
Ok. I was just unsure the need for that specific timing. We will probably tap ours strategically when we want some tax- free cash, but before the Roths. At least that is current thinking. We no longer contribute (no HDHP currently) but it is getting fairly large now, so probably needs a specific role in withdrawal strategy.

Thanks for the explanation.
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Old 01-14-2020, 09:32 AM   #52
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... but it is getting fairly large now, so probably needs a specific role in withdrawal strategy....
What got my attention was that if DD/DS were to inheirit it from us that it would be taxable to them so I'm trying to reduce any potential tax burden on them. We still have a healthy balance which should pay for all our Medicare Part B and D premiums, dental and vision and if needed nursing home costs for a year or so.
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Old 01-14-2020, 09:32 AM   #53
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I put all medical expenses on a reward charge card. I save all the EOBs and also the bill I received from the provider and I note the payment date and method.

Iím a spreadsheet gal so throughout the year I keep a spreadsheet showing all activity including deductible, open items, etc so I just close out that spreadsheet at the end of the year and it proves the paid medical expenses.

Iíve done HSA withdrawals just a couple of times, reimbursing us for a full previous year or a large lumpy expense. Iíve never been asked for any detail by the HSA administrator.

I start Medicare in 2.5 weeks so I canít contribute anymore but I have a couple years worth of expenses to reimburse if I want to. Will just leave it to sit and grow (Vanguard funds) for now.
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Old 01-14-2020, 11:32 AM   #54
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Nothing wrong with that.

An HSA has an advantage over a Roth when contributing, because it's a reduction of your taxable income.

Once in your account, both benefit from tax free growth. However, when you die, a Roth passes tax-free to any heir, but for a non-spouse beneficiary, an inherited HSA is taxable.
I agree it's a good idea, just a comment.
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Old 01-14-2020, 11:42 AM   #55
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I pay my bills via credit card. It has come in handy as over the years we have had a few medical providers make us pay what they thought was the co-pay before they submitted to insurance, and insurance then said we either owed nothing or less than what we were charged. If they go into the well-it-will take-60-or-more-days-to-reimburse-why-don't-you-just-leave-it-on-your-account-as-a-credit, being able to dispute the charge immediately gets us faster results.

For now we are not touching our HSA, we are still contributing to it. We save our medical bills and have all of them since the account was established, for the time when we do decide to use it.
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Old 01-14-2020, 04:23 PM   #56
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What got my attention was that if DD/DS were to inheirit it from us that it would be taxable to them so I'm trying to reduce any potential tax burden on them. We still have a healthy balance which should pay for all our Medicare Part B and D premiums, dental and vision and if needed nursing home costs for a year or so.
Sure. So you want to pull as much tax free out as you can before that point. But otherwise you want to let it grow tax free as long as you can.
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Dont use the HSA
Old 01-14-2020, 04:52 PM   #57
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Dont use the HSA

If you can afford it, pay yourself and hold the receipts. You can reimburse anytime in the future. Now is a great time to leave the HSA alone with this stock market and have it grow tax free. Sometime in the future, if you need $3000, pull it from the HSA in support of the out of pocket expenses you have receipts for. Ive been doing for several years. But you have to have the extra cash to do so.
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Old 01-17-2020, 05:43 PM   #58
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I am thinking about paying for medical expenses with a credit card to earn rewards and then reimbursing yourself from the HSA. Are there any disadvantages?
Our HSA is our only tax shelter now that we have no income (to be able to add to our iras). We pay out of pocket and leave our HSA to grow. We look at the HSA as another IRA and once we are 65, we'll use it as such.

Our HSA helps us juggle our MAGI for ACA in the meantime.

I'd pay out of pocket and keep the HSA for a rainy day.
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Old 01-17-2020, 06:51 PM   #59
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Hubby, who just retired (65), has an HSA and now an HRA funded by his employer- just $60 per month.


We always paid all medical expenses out of the HSA with the HSA Mastercard.


We are now paying his Part D premiums from there and I reimburse myself for my retiree medical insurance premiums right now as they are very expensive. Might go on an ACA plan and then continue to reimburse myself from there for those premiums.


For the HRA we will let it build up a bit as it just started and then I plan to use the money to reimburse ourselves for either some of his Medicare Premiums- part B or Plan G- or for dental visits, or out of pocket medical costs like co pays and prescriptions, etc. instead of using the HSA account as we have done in the past.


I am not sure if the money all rolls over year to year, Something I have to check into since this is new to us.
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Old 01-17-2020, 07:04 PM   #60
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For the HRA we will let it build up a bit as it just started and then I plan to use the money to reimburse ourselves for either some of his Medicare Premiums- part B or Plan G- or for dental visits, or out of pocket medical costs like co pays and prescriptions, etc. .
If I understand the regulations, you can not reimburse yourself for Medicare supplement premiums(ie: Plan G) . Someone correct me if I'm wrong.

https://www.kiplinger.com/article/re...iums-paid.html
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