HSA funding question

[Raymond01]

I have not had an HSA before, so new to this. I am retired and receive a monthly pension payment. Out of that payment comes my healthcare premiums, state and federal taxes. The administrator for the pension says they cannot redirect just part of my remaining pension payment to an HSA account. How then do people fund their HSA? The HSA account people said I can contribute with after tax money, then deduct those contributions on my taxes. If that's the case, can I contribute say $500 monthly, then a few days later pull that money out to pay for my medical premiums? Sounds crazy but perhaps that's the game you have to play.

 

[teej1985]

I have not had an HSA before, so new to this. I am retired and receive a monthly pension payment. Out of that payment comes my healthcare premiums, state and federal taxes. The administrator for the pension says they cannot redirect just part of my remaining pension payment to an HSA account. How then do people fund their HSA? The HSA account people said I can contribute with after tax money, then deduct those contributions on my taxes. If that's the case, can I contribute say $500 monthly, then a few days later pull that money out to pay for my medical premiums? Sounds crazy but perhaps that's the game you have to play.

You can withdraw for any qualified medical expenses after the first date you are HSA eligible. I don't believe pre-65 medical premiums qualify.

 

[qwerty3656]

I don't believe pre-65 medical premiums qualify.

No age restriction *for medical expenses* - you can spend on medical expenses pre-65. You do have to have qualified health insurance (high-deductible) to contribute to HSA.

 

[qwerty3656]

I have not had an HSA before, so new to this. I am retired and receive a monthly pension payment. Out of that payment comes my healthcare premiums, state and federal taxes. The administrator for the pension says they cannot redirect just part of my remaining pension payment to an HSA account. How then do people fund their HSA? The HSA account people said I can contribute with after tax money, then deduct those contributions on my taxes. If that's the case, can I contribute say $500 monthly, then a few days later pull that money out to pay for my medical premiums? Sounds crazy but perhaps that's the game you have to play.

Yes you can fund it then use it for qualified expenses. Fidelity has a good option (free, easy to setup, easy to use).

Edit: It is self reporting on tax return. So you'll get a statement from HSA saying how much money you withdrew, and you specify how much you used on qualified expenses. You should keep receipts incase IRS asks for verification

Edit2: Sorry - I didn't read "medical premiums", I was just thinking medical expenses. As Cathy and Teej said below, you can't pay health insurance premiums from HSA.

 

[Sue J]

Yes, you can contribute an amount to the HSA and then reimburse yourself any time after that. You can only reimburse for medical expenses that occurred after your HSA is open.

The contributions are deductible on your taxes. The withdrawals are tax free.

You can open an HSA that offers investments. Fidelity does this fee free. Make your contribution and choose the investment and let it stay in the HSA while you use other funds to cover your medical expenses. The growth is tax free, like in a Roth account.

Your question sounds like you think HSAs only come from employers. It does not have to be connected to your employment or retiree pension. The only requirement is that your health insurance that is a "High Deductible Health Plan." This doesn't mean the deductible is larger than other plans. It's got specific requirements including that the plan pays for nothing except certain things that are included like vaccinations until you meet the deductible. Your insurance plan may have the "HSA" in the name or it will specify HSA eligible in the documents.

 

[cathy63]

... If that's the case, can I contribute say $500 monthly, then a few days later pull that money out to pay for my medical premiums? Sounds crazy but perhaps that's the game you have to play.

No, you cannot pay health insurance premiums other than Medicare from an HSA. You can use the money to pay for other qualified health expenses such as prescriptions, co-pays, teeth cleaning, installing grab bars in your bathroom, etc.

 

[Aerides]

You can use it for Cobra premiums, but not aca. Only for actual medical expenses.

 

[Raymond01]

Great input everyone, thanks.

 

[teej1985]

No age restriction - you can spend on medical expenses pre-65. You do have to have qualified health insurance (high-deductible) to contribute to HSA.

The age restriction is on the insurance premiums as qualfiying medical expense for HSA distribution.

From the IRS:

You can’t treat insurance premiums as qualified medical expenses unless the premiums are for any of the following:
Long-term care insurance.
Health care continuation coverage (such as coverage under COBRA).
Health care coverage while receiving unemployment compensation under federal or state law.
Medicare and other health care coverage if you were 65 or older (other than premiums for a Medicare supplemental policy, such as Medigap).

 

[plsprius]

Important reminder/note: You can not contribute to an HSA if you are on Medicare (including just Part A)!!!

Be sure to make sure you qualify before making HSA contributions.

https://www.irs.gov/publications/p969#en_US_2022_publink1000204025

Qualifying for an HSA Contribution
To be an eligible individual and qualify for an HSA contribution, you must meet the following requirements.

You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.
You have no other health coverage except what is permitted under Other health coverage, later.
You aren’t enrolled in Medicare.
You can’t be claimed as a dependent on someone else’s 2022 tax return.