Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
To HSA or not HSA?
Old 11-19-2019, 05:56 PM   #1
Dryer sheet wannabe
 
Join Date: Mar 2018
Location: Baltimore
Posts: 17
To HSA or not HSA?

So I am faced with the decision of doing an HSA this year. (Instead of doing regular flexible spending) My standard plan is a PPO where I pay zero deductible and then co-pays for doctor visits and rx's. The HSA would have a $1500 deductible and then once met doctor visits are $0 and rx co-pays would remain the same as what I pay now. My company is providing an incentive of putting $750 into the HSA. I can do this HSA and do limited flex spending on top of it. I typically spend around $750 a year on doctors visits. It will take me little time to get to the $1500 deductible (I take expensive meds and must pay in full until I hit the deductible then the co-pay applies).

Note: I fully fund my 401K and Roth IRA every year. I have zero debt other than the mortgage and a large emergency fund.

So is it a good idea for me to do the HSA with the limited flex spending or should I just stick with the flex spending? I am just a little scared to pull the trigger. Thanks.
__________________

AreWeThereYet0 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-19-2019, 06:09 PM   #2
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky inlets
Posts: 30,327
Quote:
Originally Posted by AreWeThereYet0 View Post
So I am faced with the decision of doing an HSA this year. (Instead of doing regular flexible spending) My standard plan is a PPO where I pay zero deductible and then co-pays for doctor visits and rx's. The HSA would have a $1500 deductible and then once met doctor visits are $0 and rx co-pays would remain the same as what I pay now. My company is providing an incentive of putting $750 into the HSA. I can do this HSA and do limited flex spending on top of it. I typically spend around $750 a year on doctors visits. It will take me little time to get to the $1500 deductible (I take expensive meds and must pay in full until I hit the deductible then the co-pay applies).

Note: I fully fund my 401K and Roth IRA every year. I have zero debt other than the mortgage and a large emergency fund.

So is it a good idea for me to do the HSA with the limited flex spending or should I just stick with the flex spending? I am just a little scared to pull the trigger. Thanks.
This spreadsheet (here) was created by Anamprph, a fellow forum member. You can input premiums, cost sharing and different levels of health care spending, then compare the total cost of each option.
__________________

MichaelB is online now   Reply With Quote
Old 11-19-2019, 06:15 PM   #3
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,234
Right off the bat, a $1500 deductible plus $750 HSA employer match makes it effectively a $750 deductible.

What is your other option that isn't an HSA that has the usual FSA? Is there a difference in your premiums? Does it have a deductible? What are its copays?

Based on your description it sounds like the HSA could be a good route but more info is needed.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
ziggy29 is offline   Reply With Quote
Old 11-19-2019, 07:20 PM   #4
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 3,966
One thing I did my last few years, in addition to maxing 401k, etc., was to max out my HSA and not touch it. It's just another way to get tax-free savings, and I got about $400 in employer match every year, so I viewed that as free money and a no brainer.

When I ER'd, I had a nice little sum sitting there. Was able to use it to pay for our first year on COBRA, and still have quite a bit left.

3 years in, it's nice to know that we can use it if we have any larger expenses, since the deductibles on our ACA plan are far larger than when working.
Aerides is offline   Reply With Quote
Old 11-19-2019, 07:35 PM   #5
Recycles dryer sheets
 
Join Date: Nov 2013
Posts: 425
Our HSA is our plan for dealing with long term care if it comes to that. In 25 years (mid 80s) if we average 6% returns (who knows what to expect so just a number) we would have about $250K invested to pay for LTC.

If no LTC needs, we would use it to pay for for prior years medical expenses (keeping records) that we paid out of pocket.
jabbahop is offline   Reply With Quote
Old 11-19-2019, 07:37 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 9,938
Most of my current medical expenses are from dental and vision. So, a HSA comes in handy for them as no more employee insurance being FIRE'd and all.
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is offline   Reply With Quote
Old 11-19-2019, 07:53 PM   #7
Full time employment: Posting here.
 
Join Date: Sep 2012
Location: Albuquerque
Posts: 685
I switched to a similar HDHP less than ten years ago. My PCP was retiring anyway but I made sure that a good number of PCPs and my dermatologist, gynecologist, etc. accepted the new insurance before making the change.

The financial factors that persuaded me to convert were the $750 contribution, the HDHP was about 2/3 the cost of the PPO plan, and the tax savings. I contribute the max to the HSA, invest it, and never take it out so now have about $35K in my account. Since I was in a high tax bracket before I retired, I saved about $1K a year in taxes. Usually I barely reach the $1600 deductible.

Next year will be my last year on the HDHP as I reach Medicare age and no longer qualify for an HSA. But I've been pleased with it and now have a nice chunk of money to pay for future healthcare costs or for Part B premiums.
__________________
Retired on 9/30/2017 at age 62
ABQ2015 is offline   Reply With Quote
Old 11-19-2019, 08:03 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 4,042
The deductible sounds very low for a normal individual HSA, but I don't know the specifics of job related HSA's. If you can contribute additional money to the HSA and deduct it from your taxes that would be additional savings, like best combination of tIRA and Roth accounts.

The HSA should allow you to leave the money unspent if you don't need it, leaving it available for future years. Flexible spending accounts usually had to be drained before the end of the year. With low medical expenses I was never willing to commit to a flexible spending account. If your HSA has some investment choices, or allows you to invest in an HSA account at at Fidelity, they can make a pretty nice retirement account. Just let it accumulate and save the medical receipts you would otherwise be paying with the HSA. Then you can withdraw from the HSA, up to the value of your receipts, during retirement, before taking from a Roth account.
Animorph is offline   Reply With Quote
Old 11-19-2019, 08:14 PM   #9
Full time employment: Posting here.
 
Join Date: Jan 2019
Location: NW Ohio
Posts: 730
I wanted to do an HSA on top of my Flex spending account, while still in the PPO. HR said that being in the PPO eliminated the possibility of also being in the HSA.

An HSA is transferable from year to year, while a FSA has to be used within the calender year, or lose it.

If you have an option of using both, do it, and use the money in the FSA first
ckelly78z is offline   Reply With Quote
Old 11-19-2019, 10:50 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 8,708
I can make a $4450 HSA contribution and figure that's worth about 15%, or $682, plus if I just collect medical receipts and reimburse (years) later, it grows tax free and has an additional benefit--too hard for me to calculate so I go with $682 when evaluated it with non-HSA plans. Maybe it should be 12%--don't feel like running through that logic but it either reduces my taxes or gives me more room to do Roth conversions. I'm not that far from that being the difference between qualifying for an ACA subsidy or not, in which case the value would be in the $1000s, not $100s.

So when I compare the premium costs of all plans I'd consider and the effect of different deductibles and out of pocket maximums with various degrees of medical expenses, I subtract $682 from the cost of HSA plans.
RunningBum is offline   Reply With Quote
Old 11-20-2019, 10:28 AM   #11
Dryer sheet wannabe
 
Join Date: Apr 2019
Posts: 19
An HSA is the best investment vehicle out there: you fund it with pre-tax dollars like an IRA, and the withdrawals aren't taxed, like a Roth. The best of both worlds! If at all possible, fully fund it and then use other funds to pay for your medical expenses. As others have pointed out, keep your receipts as the HSA funds can be used anytime for current *or* past medical expenses. You can invest your HSA in stocks, bonds, EFTs, etc. Logically, your investments with the highest potential for growth should be in your HSA, as again, both the contributions *and* the gains will be tax free. Of course, those will also be your riskiest investments, so understandably not everyone is comfortable with that strategy.
Ducati52 is offline   Reply With Quote
Old 11-20-2019, 11:26 AM   #12
Dryer sheet wannabe
 
Join Date: Mar 2018
Location: Baltimore
Posts: 17
Thanks for all of your input guys. I appreciate it. I guess that what it boils down to is, it is worth it to spend that extra $750 on top of the $750 that I normally pay out of pocket on doctors just so I can hit the $1500 deductible? Because the HSA is more expensive for me. Yes, I get $750 from my employer however I do have to pay out $750 of realtime now dollars to get it. I am planning to fully fund the HSA to the max limit and use it as an investment vehicle and not touch it.
__________________

AreWeThereYet0 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Transfer HSA account to my Fidelity HSA account fh2000 FIRE and Money 4 08-12-2019 12:27 PM
What now; HSA with no available HSA Health Plan? kite_rider Health and Early Retirement 4 12-03-2016 06:23 PM
Thinking about the HSA plan but my kid also has a non-HSA plan dvalley FIRE and Money 11 11-11-2015 04:35 PM
Transferring HSA money to a new HSA account Mulligan FIRE and Money 13 06-27-2014 09:26 PM

» Quick Links

 
All times are GMT -6. The time now is 06:36 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×