How much to fund HSA?

[Yarnstormer]

I have a hi deductible ACA plan and opened a HSA to go with. Any idea what the contribution has to be? I know I can contribute $7900 as a family but is there a minimum? Does it have to be funded now? I was planning on contributing as needed as a self employed person and saving it to pay medicare 10 years from now.

 

[audreyh1]

There is no minimum. Well, you might want at least $1 because I think it does have to have a deposit for the clock to start ticking in terms of qualified medical bills. My HSA company funded it for me with $1 when I opened my HSA.

You can fund it at anytime during the year, but there is a limit to how much you can fund each year. As long as you have an HSA compatible plan all year you can fund the max amount.

 

[bingybear]

I have a hi deductible ACA plan and opened a HSA to go with. Any idea what the contribution has to be? I know I can contribute $7900 as a family but is there a minimum? Does it have to be funded now? I was planning on contributing as needed as a self employed person and saving it to pay medicare 10 years from now.

you do mean you have an HSA compatible plan. Just having high deductibles is not sufficient for funding an HSA

how much you fund it depends on what your goal is for the HSA

 

[RunningBum]

Seems crazy not to max out your HSA though, unless you are living paycheck to paycheck. It's a deduction on your taxes, pre-MAGI (so it helps with an ACA subsidy if that's a goal), and can be withdrawn tax free if used for medical expenses.

 

[Yarnstormer]

Seems crazy not to max out your HSA though, unless you are living paycheck to paycheck. It's a deduction on your taxes, pre-MAGI (so it helps with an ACA subsidy if that's a goal), and can be withdrawn tax free if used for medical expenses.

That’s my plan. I guess I was wondering if I need to be in a hurry to do so - plenty of articles listing MAX contribution but none listing minimum. I wasn’t sure if I needed to hurry up and deposit a certain amount.

 

[Yarnstormer]

how much you fund it depends on what your goal is for the HSA

My goal is to lower my magi if needed. My tax rate is pretty low so not super worried about that. I will probably do the max tho to move some of my taxable money out of harm’s way.

 

[bingybear]

partially depends on where you set it up. Some have a monthly fee. So waiting until later would mean less fees the first your. You can fund ahead with not problem (for the current year) with no problems unless you drop out of the plan early.

Make sure you put enough in to at least support the cost of the account. Or enough to make it free depending upon where you are setting it up.

? move taxable money out of harms way? I invest it in things like EM funds. Same with my roths.

 

[Yarnstormer]

Make sure you put enough in to at least support the cost of the account. Or enough to make it free depending upon where you are setting it up.

? move taxable money out of harms way? I invest it in things like EM funds. Same with my roths.

Good point! I hadn’t thought about fees.

I have a good bit in a brokerage account - much more than my iras and I’d like to shift some to tax deferred account or after tax like roth/hsa.

My earned income and self employment means my contributions are limited.
I do roth max every year and will prob max the hsa as well.

 

[Z3Dreamer]

Don't forget that over 55 spouse who can set up their own HSA account (Me!). $1,000.

 

[OHjosh]

The plan I have does not require me to put anything in. The $20 annual fee comes out in December, so I need to make sure there is $ in there for that. So what I do is pay the visit and/or copay via credit card or check, put the money into the HSA account and then write a check from that account to reimburse me. The year I had surgery, I put the max out of pocket in before going in and then did the same on the back end.

 

[RunningBum]

The plan I have does not require me to put anything in. The $20 annual fee comes out in December, so I need to make sure there is $ in there for that. So what I do is pay the visit and/or copay via credit card or check, put the money into the HSA account and then write a check from that account to reimburse me. The year I had surgery, I put the max out of pocket in before going in and then did the same on the back end.

Are you saying that if you have no medical expenses for the year, you wouldn't put anything but the $20 in there? If so, you're missing out on a great savings vehicle.

I make the max contribution in the first week of January, so that it has that full year to grow tax free. Anything you don't use this year can be used in future years. I guess if you have fees based on balance, it could work better to hold off and make a late year contribution. I have a 0 fee account at the credit union, though I only get a low fixed interest rate.

 

[bingybear]

+1

I have a small fee if I'm investing and a small fee if I don't keep enough on the bank side of the HSA.

After reaching medicare you can use the HSA for medicare insurance cost sans advantage plans. It can be used for LTC. There are so many uses. Don't under estimate the value of this tax deferred/free (depending upon use) account.

 

[sengsational]

It's a super Roth. It's far and away the best deal you're gonna get from the tax authority. Forget it has anything to do with your current health care costs. Just max it out and call it your Medicare savings account.

Oh, and find a free HSA provider. There are many. Elements financial is the one I found.

 

[jimbee]

It's a super Roth. It's far and away the best deal you're gonna get from the tax authority. Forget it has anything to do with your current health care costs. Just max it out and call it your Medicare savings account.

Oh, and find a free HSA provider. There are many. Elements financial is the one I found.

Sengstational, is the Elements Financial HSA free even when investing beyond the savings account? I haven't had much luck finding that information on their website.

 

[sengsational]

Sengstational, is the Elements Financial HSA free even when investing beyond the savings account? I haven't had much luck finding that information on their website.

It's free if you have at least $2,500 in the account, which earns 1%, not too shabby. They do have a fee to transfer funds to the associated brokerage account that's pretty high....$20 or something. And a $10 commission for your transactions in the brokerage account. But I'm not active there, so not a worry for me. Oh, and I had to join some organization and make a $5 donation in order to be eligible to join Elements in the first place.

I'd say the only reoccurring fee for me is the $20 every other year when I move the money to the brokerage account.

 

[jimbee]

It's free if you have at least $2,500 in the account, which earns 1%, not too shabby. They do have a fee to transfer funds to the associated brokerage account that's pretty high....$20 or something. And a $10 commission for your transactions in the brokerage account. But I'm not active there, so not a worry for me. Oh, and I had to join some organization and make a $5 donation in order to be eligible to join Elements in the first place.

I'd say the only reoccurring fee for me is the $20 every other year when I move the money to the brokerage account.

Thank you.

 

[OHjosh]

Well, here is another place where I need this forum to open my mind. I didn't really see it as a major tax shelter and didn't think about the Medicare aspect. (The latter didn't enter my mind because when I first had an HSA account, I was 55.) Still, the interest isn't very much, so why not wait to see what I actually needed and then max out at the end of the year. Or even the first quarter of the next?

 

[RunningBum]

Well, here is another place where I need this forum to open my mind. I didn't really see it as a major tax shelter and didn't think about the Medicare aspect. (The latter didn't enter my mind because when I first had an HSA account, I was 55.) Still, the interest isn't very much, so why not wait to see what I actually needed and then max out at the end of the year. Or even the first quarter of the next?

I'll tell you what has made it worthwhile for me, and you can see what applies to you.

I found an expense free HSA account at my credit union. It used to give 2%, now it's 1.5%. Not great, but not bad for the non-equity part of my asset allocation.

At some point when the balance gets high enough, I (may) move it to another account where I can invest in equity accounts for a fee. The balance needs to be high enough for the fee to be worthwhile. I should probably do it now, but haven't gotten around to it.

How do I get the balance up? I pay for medical expenses out of pocket, and let my HSA grow tax free. I keep the receipts so I can withdraw up to the amount of my expenses tax free at any time. This is a good emergency fund, or a way to bridge until I get more income from my SS and pension. I've only used it a little bit once. Otherwise I plan on holding it a lot longer, unless another need arises

Taking the HSA deduction gives me more room to do Roth conversions or take capital gains and still qualify for ACA deductions. This is probably the biggest benefit for me, so I definitely want to make the max contribution.

There are threads you can search for to find the best place to open an HSA tax free, or low fee with good investment options.

It's not game changing money but it's an easy benefit to take, and I'm close to $40K in my HSA now, still growing tax free.

 

[Yarnstormer]

My local banks had no investment options to speak of so I went with hsabank - can invest w ameritrade so I hope it will have some growth between now and medicare (9 years)

I was surprised to hear my accountant say that he uses his hsa money now. Hmmm

 

[4legsgood]

I'm also a fan of HSA. Mine gives me some peace of mind in that it mitigates unknown future of healthcare, health issues, and taxes. It's a great tool in the early-retired war chest (if you're healthy enough to go the high deductible route) and I wish I knew about it sooner.

 

[mpeirce]

As was mentioned in another thread today, money is fungible.

HSA is an excellent double tax advantaged place to stash as much money as you are allowed.

Keep track of eligible medical expenses and you can access fund from the HSA as needed. If you have don't have the expenses stockpiled, it defaults back to being treated as an IRA where you pay taxes when money is withdrawn.

If you are eligible for an HSA there is really no reason not to take advantage of it.

 

[sengsational]

Still, the interest isn't very much, so why not wait to see what I actually needed and then max out at the end of the year. Or even the first quarter of the next?

One of the advantages is tax-free compounding. You get that in a Roth. You get that in an HSA account. But the advantage of tax-free compounding is gone if you spend it every year. That's why many of us spend from after-tax or even tax-deferred for medical and preferentially leave the HSA and Roth accounts to compound.