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HSA for retired folks
Old 02-21-2009, 10:21 PM   #1
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HSA for retired folks

DH and I have been on Cobra Medical since April 2006 and it expires April 1, 2009. HSA coupled with a High Deductible catastrophic policy seems to be interesting. Does anyone have experience or knowledge to pass along? Can retired folks qualify? I also have a back injury I am still being treated for. Is AARP medical insurance a better choice? We are in California.
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Old 02-22-2009, 07:11 AM   #2
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I thought you had to have EARNED income to set up a HSA. Can't answer the AARP thing but I think it is not AARP (they just sell it).
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Old 02-22-2009, 07:15 AM   #3
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I thought you had to have EARNED income to set up a HSA.
Not true. I've had no earned income for the past three years and have a HSA.

Here is a FAQ on HSA's that is worth reading: http://www.early-retirement.org/foru...hsa-30762.html and here is a nice overview of how HSA's work: HSA Primer
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Old 02-22-2009, 07:18 AM   #4
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Old 02-22-2009, 07:22 AM   #5
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HSA here for the past two years, great way to defer money from taxes and use tax free funds for qualified medical expenses. I use one debit card from the bank where my HSA is set up and get all the itemized forms at year end for tax purposes. Greatest thing since sliced bread for those with high deductible health insurance.

Earned income is not a requirement.
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Old 02-22-2009, 08:37 AM   #6
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Same here - no earned income. I use an HSA from Patelco Credit Union in San Francisco even though I'm in Michigan. It operates like a checking account. I put in money and take out money and Patelco tracks it and sends me a statement for taxes. I can basically deduct from income taxes whatever I put in, subject to an upper limit (which I forget right now - over $2000)

I've mentioned it before, but an HSA also allows one to deduct dental, eye and drug (prescription and OTC) expenses independent of one's income. If you want to use it to tax shelter additional investments, there are better choices in terms of return on investment. I just run money through mine as needed to reimburse myself. Cost is about $1 a month.
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Old 02-22-2009, 08:48 AM   #7
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U.S. Treasury - HSA Frequently Asked Questions
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Old 02-22-2009, 08:52 AM   #8
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Same here - no earned income. I use an HSA from Patelco Credit Union in San Francisco even though I'm in Michigan. It operates like a checking account. I put in money and take out money and Patelco tracks it and sends me a statement for taxes. I can basically deduct from income taxes whatever I put in, subject to an upper limit (which I forget right now - over $2000)
Unless you're over 55, the limit is $3000 for single coverage and $5950 for family coverage (for 2009). Over 55s can add an extra $1000.
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Old 02-22-2009, 11:20 AM   #9
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Thanks for all your informative replies this morning. I will check on some of those links and hopefully have some great information to report back. My biggest concern is making the right coverage and financial choice for my existing condition: 3 damaged discs that I have avoided surgery but still get procedures through a pain management doc. Those procedures could add up in a hurry.

Thanks again!
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Old 02-22-2009, 11:24 AM   #10
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Note that HSA contributions are not deductible on state returns (California, at least). That's one reason (along with education tax credits and recovery rebates) that we're getting a fed refund, but paying California income tax.
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Old 02-22-2009, 11:46 AM   #11
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You might be able to get an HSA plan with your current Health insurance as an independent plan. They're already covering you...just a thought.
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Old 02-22-2009, 01:03 PM   #12
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Good point Al.
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Old 03-05-2009, 01:30 AM   #13
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From what I can tell so far (lots more than I started this thread out with) its a plan that makes sense. Usually cant meet the over 7 1/2% of earned income rule for claiming medical expenses. If you can wrap your head around the idea of high deductibles along with the tax advantages of an HSA, it sounds great. Even if I end up on a HIPAA policy, I can still get the HDHP with an HSA. We are trying to stick with our current Blue Shield. Thanks for ALL your input.
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Old 03-05-2009, 11:16 AM   #14
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Not true. I've had no earned income for the past three years and have a HSA.
REW.... let me sidetrack the thread for just a sec......

On your high deductible plan, do you get so-called "negotiated rates" or "disocounted rates" from docs and hospitals on bills before you've met the annual deductible?
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Old 03-05-2009, 11:21 AM   #15
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REW.... let me sidetrack the thread for just a sec......

On your high deductible plan, do you get so-called "negotiated rates" or "disocounted rates" from docs and hospitals on bills before you've met the annual deductible?
I'm not REW, but I can say that yes, in my HDHP we do get the "negotiated rates" before the deductible is met. My wife had some procedures and tests done last year for which the billed amount was over $500 -- and we wound up paying the "negotiated rate" of about $80.
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Old 03-05-2009, 11:27 AM   #16
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I'm not REW, but I can say that yes, in my HDHP we do get the "negotiated rates" before the deductible is met. My wife had some procedures and tests done last year for which the billed amount was over $500 -- and we wound up paying the "negotiated rate" of about $80.
And this makes sense from a business point of view, since it makes it harder for you to reach the deductible, and therefore, reduces the amount the insurance company has to pay out. An example of how both the insurance company and the consumer can benefit.
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Old 03-05-2009, 11:32 AM   #17
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The medical folks run the bill through the insurer who whacks out the unallowed charges for services down to the negotiated rate. The medical service provider then bills you for the reduced amount. The reductions are substantial and sometimes, as in Zig's example, dramatic.

If you think about it, the insurer is acting in it's own best interest to make sure you don't pay a penny more than necessary to the provider. That makes it less likely you will meet your deductible and they will have to begin paying...

Edit: What FIRE51 said...
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Old 03-05-2009, 12:00 PM   #18
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REW, Zig, FIRE'd, thanks......
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