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Old 11-23-2020, 06:51 PM   #61
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^^^ Interesting use of HSA money that I had never heard of.
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Old 11-23-2020, 06:54 PM   #62
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I’ve been taking advantage of the HSA for years. Max contributions with no withdrawals so far. Account is invested in a Vanguard stock fund. Balance now well into 6 figures.
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Old 11-23-2020, 07:34 PM   #63
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Originally Posted by harllee View Post
DH and I started doing HSAs many years ago, contributed the max, invested the money. Now are HSAs are sizable. We plan to move into a Continuing Care Community (CCRC) in the near future. There is a large entry fee for the CCRC and a portion of that entry fee is considered a medical expense under the HSA rules. We plan to take money out the HSA to pay the portion of the CCRC entry fee that is considered a medical expense.
Having helped structure my mom's move into her CCRC a couple years ago, I'm somewhat informed. What you propose is certainly do-able by my read of the rules, but there is a caveat. The single year "medical cost" for a CCRC entrance fee will almost certainly be above the threshold for general destructibility of annual medical spend for that year. The beauty of the HSA is as a mechanism to make medical expenses "Tax deductible" from the first dollar. It would be a bit of a waste to use HSA money paying for the portion of annual medical expenses that are already deductible, should you potentially be able to itemize and get the deduction that way.

Likewise, the monthly rental fee for a CCRC has a component that is considered as medical cost. The same optimization between amounts above/below the deduction threshold applies. Moving into a CCRC is a good way to insure you'll have enough qualified medical expenses to utilize even a big HSA balance.
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Old 11-23-2020, 09:48 PM   #64
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I also doubt that you could find many HSA's that are all-in on TSLA or similar high-flyer stocks...
Mine is invested in high-flying stocks Not TSLA, but mostly high multiple long-term long-term secular growers.

Since it is for fast growth medical costs I figured my investments should mirror that.

I could not cash it out and buy a Porsche, tax-free, as my receipts to date are not high enough, a high quality problem.
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Old 11-24-2020, 03:10 AM   #65
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Man, you definitely have way too much time on your hands. Time to get a hobby. I am skeptical that you had this in mind when you wrote the OP. I guess we'll agree to disagree whether someone able to contribute $7,200 a year to a HSA is rich or not. I also doubt that you could find many HSA's that are all-in on TSLA or similar high-flyer stocks... or that would have $30k/year of medical expenses for 20 years in a row. But definitely a valiant attempt to rationalize any illegitimate activity that you might have had in mind when you wrote the OP.
Geez pb4. Yes, it is exactly what I had in mind. It is the reason I wrote the quoted paragraph below. I mean, word for word. Were you just trying to add to your 27,000 posts for no reason? I think we know who has to much time on their hands.

"I seem to be coming to the conclusion that HSAs are most advantageous for (probably rich) people who have large medical bills. They can effectively launder that money into a very tax advantaged account and use it to buy things later in life. If you currently have low medical expenses, then you won't be able to withdraw much tax free down the line."
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Old 11-24-2020, 04:02 AM   #66
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^^^ Interesting use of HSA money that I had never heard of.
It’s been discussed here. Just another variant of using an HSA to pay for long term care.

We didn’t want to wait that long to start to draw down our HSAs. But if we’d accumulated well over 6 figures we would have definitely considered that option. Meanwhile we have the itemized medical deductions option for the medical expense portion of CCRC fees.
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Old 11-24-2020, 04:48 AM   #67
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Itís been discussed here. Just another variant of using an HSA to pay for long term care.
Yes, this is a good one. Can you cite the source for what is considered the medical portion?
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Old 11-24-2020, 04:50 AM   #68
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Yes, this is a good one. Can you cite the source for what is considered the medical portion?
Friends who bought into a CCRC. Sorry, I don’t have a link for that.

Regardless, a simple google search provides many sources of discussion. https://www.google.com/search?q=port...&client=safari
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Old 11-24-2020, 05:33 AM   #69
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Yes, this is a good one. Can you cite the source for what is considered the medical portion?
The CCRC we are interested in gives you a letter that states the portion of the entrance fee (and annual fee) that is considered a medical expense. If I remember correctly they cite an IRS ruling that backs this up.
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Old 11-24-2020, 06:20 AM   #70
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I do not have a HSA plan.

I do not foresee ever having a HSA plan.

The US Navy provides my health care coverage.
HSA is different from health coverage. It is similar to Roth IRA account with several minor difference and you can sign up your own HSA at a broker such as HSA bank

https://www.hsabank.com/hsabank

Good FAQ for applying your own HSA account:
https://www.merrilledge.com/ask/inve...ount-on-my-own
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Old 11-24-2020, 09:40 AM   #71
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Interesting tidbit on contributions in the year one turns 65 that I was unaware of - proration of contribution:

Quote:
Loss of Eligibility in Month You Turn 65. You lose eligibility as of the first day of the month you turn 65
and enroll in Medicare.


Example. Sally turns 65 on July 21 and enrolls in Medicare. She is no longer eligible to contribute
to her HSA as of July 1. Her maximum contribution for that year would be 6/12 (she was eligible
the first 6 months of the year) times the applicable federal limit (remember to include the catch-up
amount).
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Old 11-24-2020, 09:41 AM   #72
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...I seem to be coming to the conclusion that HSAs are most advantageous for (probably rich) people who have large medical bills. They can effectively launder that money into a very tax advantaged account and use it to buy things later in life. If you currently have low medical expenses, then you won't be able to withdraw much tax free down the line.
I think you're misinformed on the last sentence. At a minimum you will each have $1,782/year in Medicare Part B premiums. Then many have Part D premiums which can vary but would likely be $10-25/month. Then add in a couple dental visits a year each and an eye exam and at a minimum you're talking at least $2k a year per person. On top of that you'll have an occasional crown or glasses or contacts so over 20 years you could easily end up spending $50k each even if you're relatively healthy.

If $7,200 a year is so much that only "rich" people can contribute to a HSA, how is it that the ~$4k a year that same couple is later withdrawing for medical expenses isn't "much"?
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How are you (yes you) taking advantage of HSA?
Old 11-24-2020, 10:26 AM   #73
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How are you (yes you) taking advantage of HSA?

if you are using the ACA for health insurance another valuable benefit of an HSA is that it reduces your ACA MAGI income which increases your subsidy. This can be substantial. For us it increased our subsidy by about 12% - 15% of the HSA contribution. The years we had an HSA plan we contributed the max amount plus the $1000 extra each for age. We both started Medicare early this year and did not have an HDHP HSA plan for those few months so we are done with contributions.

Weíve only taken withdrawals twice, when we had large medical expenses. We had already paid out of pocket and I used the withdrawn money to make the next years contribution. For now weíll let the balances stay in the HSAs as it is nicely invested and we donít need the money (isnít that a lovely concept.)

Also, for us in 2019 the HSA contribution lowered our Federal AGI, which carried over to our State AGI, which got us under the threshold for our Property Tax Homestead Exemption. This will save us $40/month on our property taxes next year. Unfortunately, thatís the only year that we will be under the threshold. Thanks, HSA!
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Old 11-24-2020, 10:51 AM   #74
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An HSA is simply a way to prepay for medical expenses, and the tax-advantage event occurs with the loading rather than with the medical event.

The added fact that your money, whilst at the HSA, could be invested and growing is irrelevant. You could have put that money in a fund anyway. The only difference is you take the tax savings with the HSA the year you make the deposit, not the year you incur the medical expense. (although of course they could be the same year).

HSAs were not designed for "rich" people. They were designed to encourage folks to save so they aren't floored when they have a big medical expense.
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Old 11-24-2020, 11:06 AM   #75
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The added fact that your money, whilst at the HSA, could be invested and growing is irrelevant. You could have put that money in a fund anyway. The only difference is you take the tax savings with the HSA the year you make the deposit, not the year you incur the medical expense. (although of course they could be the same year).
But, but... part of the "triple tax savings" is no tax on the growth of the funds, no? So isn't investing it within the HSA relevant?
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Old 11-24-2020, 11:10 AM   #76
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But, but... part of the "triple tax savings" is no tax on the growth of the funds, no? So isn't investing it within the HSA relevant?
Ok well I guess, but you could just as soon put that money into your IRA or Roth or something.

Either way, it's not a scheme to help rich people launder money or buy surreptitious porsches.
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Old 11-24-2020, 11:15 AM   #77
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Ok well I guess, but you could just as soon put that money into your IRA or Roth or something.

Either way, it's not a scheme to help rich people launder money or buy surreptitious porsches.
Oh, I agree about the Porches and rich folks. I think rich folks would see the HSA as a nit account, not worthy of worrying about. "Lost in the noise" as my BIL's brother once said about an inherited IRA.

But once you've maxed your IRAs and 401ks, the HSA is a darn nice investment container for the rest of us.
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Old 11-24-2020, 11:22 AM   #78
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But, but... part of the "triple tax savings" is no tax on the growth of the funds, no? So isn't investing it within the HSA relevant?
Yes it is. Many will have already maxed out their Roth/IRA options, or no longer have income to make such contributions.

The tax free growth is the only advantage of paying expenses out of pocket now and withdrawing later. (The tax advantage on the contribution happens whether you use your HSA for expenses now or save them for later.) Very very doubtful the tax savings on that growth is going to pay for a Porsche.

Most people here who have done an HSA for some time seem to have a balance of $50k-$100K. If half that is growth, that's $25K-$50K. Let's say 20% fed+state tax is avoided on the cap gains growth. That's $5K-$10K. Don't blow it all in one place!
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Old 11-24-2020, 11:30 AM   #79
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Most people here who have done an HSA for some time seem to have a balance of $50k-$100K. If half that is growth, that's $25K-$50K. Let's say 20% fed+state tax is avoided on the cap gains growth. That's $5K-$10K. Don't blow it all in one place!
You made me look. I wasn't paying much attention. I just crossed $40k. About 1/2 is growth.

I'm thinking a Toyota Highlander is in my near future.
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Old 11-24-2020, 11:51 AM   #80
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Some folks seem to think that an HSA is chump change but DH and I each have over $100,000 in our IRAs. This is a significant part of our planning for our retirement.
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