Need help on an HSA and FIRE

[Alex in Virginia]

I just "woke up" to the fact -- according to Kiplinger -- that an HSA (Health Savings Account) is an option for me as a retiree. And that I can even use it to pay Medicare Part B premiums, etc with tax-deductible dollars.

I couldn't find a thread on HSAs earlier than 2011 in this Forum. So I'm posting this to benefit from the experience of ER posters. What's the skinny?! How do I set up an HSA? Where / with whom can I best do that?

Thanks for the help, folks!

Alex in Virginia

 

[wallygator69]

Howdy,

Wife and I use OptumHealthBank.com - OptumHealth Bank for our HSA. We have been putting the maximum in it every year. This year we are putting in the maximum of $6450. We invest the balance in Wellington. It has grown to almost $40k in about than 5 years. They give you a debit card (master card) that we use for doctor and dentist visits. We pay for stuff at CVS out of pocket so there is no confusion as to what is a qualified expense.

My goal was to Have $100k in the account before we hit 55 years of age and we are well on our way to that.

We have a $5000 deductible via insurance through United Healthcare Golden Rule. We pay them the premium and the HSA contribution. They forward it to Optum Health bank.

All in all love the HSA.

Good luck.

Wally

I just "woke up" to the fact -- according to Kiplinger -- that an HSA (Health Savings Account) is an option for me as a retiree. And that I can even use it to pay Medicare Part B premiums, etc with tax-deductible dollars.

I couldn't find a thread on HSAs earlier than 2011 in this Forum. So I'm posting this to benefit from the experience of ER posters. What's the skinny?! How do I set up an HSA? Where / with whom can I best do that?

Thanks for the help, folks!

Alex in Virginia

 

[Brett_Cameron]

Just remember that you cannot contribute to an HSA after you enroll in Medicare Parts A and B.
Medicare Interactive - Health Savings Accounts (HSAs) and Medicare

If you enroll in Medicare Part A and/or B you can no longer contribute to your HSA. The month you enroll in Medicare (typically the month of your 65th birthday), the account overseer switches the contributing balance to your HSA to zero dollars per month. By law, people with Medicare are not allowed to put money into an HSA. This is because you generally cannot have any health coverage other than an HDHP if you are putting money into an HSA. However, you may withdraw money from your HSA after you enroll in Medicare to help pay for medical expenses (deductibles, premiums, copays or coinsurances). If you use the account for qualified medical expenses, it will continue to be tax-free.

I set up my HSA through my pre-retirement employer. When I retired, they converted my account. My insurance company, Aetna, is also the administrator of the HSA. It used to be Chase. I suggest you contact your insurance company about setting up the HSA.

 

[travelover]

...........I set up my HSA through my pre-retirement employer. When I retired, they converted my account......

Same here, except I switched providers. My initial HSA provider was a PITA, demanding and rejecting receipts for every little expense. I now use Patelco CU for my HSA and I keep all the receipts, they just provide the documents for tax time.

Patelco charges $2 a month for this service and the money is basically in a checking account. For an additional $7 a month, you can choose from funds, including some Vanguard funds, to invest in. I've just started doing this and the initial expense ratio is high, but I'm adding $4250 a year until I hit Medicare age in 5 years. With my DW doing the same (different health care) it allows us to shield over $8000 from taxes a year, essentially forever.

 

[Dave J]

I wonder why they let you pay Medicare premium with a HSA and not regular Health Insurance premiums pre-65 years old?
My cost of spousal insurance is about 3k per year and would love to pay with my HSA.
My SO is fully covered at no cost with early retirement from mega-corp.

 

[Animorph]

An HSA requires a compatible high deductible heatlh insurance plan. Just for the record. We hope to check them out when DW finally retires. Looks like early 2014 now.

 

[Dave J]

An HSA requires a compatible high deductible heatlh insurance plan. Just for the record. We hope to check them out when DW finally retires. Looks like early 2014 now.

If your answer was to me, a high deductable plan is what we are in.
Still can't pay with my HSA, as far as i know.

 

[ziggy29]

If your answer was to me, a high deductable plan is what we are in.
Still can't pay with my HSA, as far as i know.

Last I knew, you could pay COBRA premiums with HSA funds, but that was about it.

 

[Tyro]

My goal was to Have $100k in the account before we hit 55 years of age and we are well on our way to that.

What's the theory/wisdom in building up a high balance?

We're in a high deductible plan that wipes out our HSA every year, so it's pretty much a wash.

 

[REWahoo]

What's the theory/wisdom in building up a high balance?

Tax-free savings account. Not taxed going in, no tax on gains, not taxed when withdrawn = one of the best deals around.

 

[MichaelB]

Tax-free savings account. Not taxed going in, no tax on gains, not taxed when withdrawn = one of the best deals around.

Even better, the entire contribution is an above the line adjustment to income, so it is more valuable than a regular medical deduction.

 

[Gotadimple]

What's the theory/wisdom in building up a high balance?

We're in a high deductible plan that wipes out our HSA every year, so it's pretty much a wash.

The theory is to pay out of pocket medical expenses with other funds and keep the HSA funds intact. Save the explanation of benefits forms and your receipts for drugs. Then later pull the money out at age 65 based on all those years of expenses where you didn't have the HSA reimburse you.

 

[ERhoosier]

IMHO- For those with the financial flexibility, HSA is best way to deal with HI in FIRE......at least for those of us without employer-paid retiree HI.

 

[travelover]

The theory is to pay out of pocket medical expenses with other funds and keep the HSA funds intact. Save the explanation of benefits forms and your receipts for drugs. Then later pull the money out at age 65 based on all those years of expenses where you didn't have the HSA reimburse you.

Plus you can use it to pay Medicare B and D plans, I believe.

 

[ChrisC]

Plus, you can use it to pay for Long Term Health Care Insurance premiums.

 

[Alex in Virginia]

As the original poster, I want to thank everybody for all the great input.
Sad for me to realize, none of it is going to help me because I just turned 65 and went on Medicare -- which as I now understand it ends my eligibility to start and fund an HSA account.

I hope the great info on this thread does help other people who still have years ahead before 65, so they can take advantage of what seems to be one hell of a good deal.

Cheers!

Alex in Virginia

 

[wallygator69]

What's the theory/wisdom in building up a high balance?

We're in a high deductible plan that wipes out our HSA every year, so it's pretty much a wash.

I am treating it as another tax deductible IRA. After age 65 you can use the money for anything and there is no penalty. ANy distribution is taxed as ordinary income.

C ya,

W

 

[Zorba]

I thought you had to have earned income to contribute to a HSA? How does that square RE, or am I just wrong?

 

[Dave J]

I fund mine each year with no earned income.

 

[travelover]

I fund mine each year with no earned income.

Me, too. I also fund an IRA because DW is still w*rking.

 

[MooreBonds]

I thought you had to have earned income to contribute to a HSA? How does that square RE, or am I just wrong?

On the opposite end of the spectrum, another reason why it's the best deal around is that there is also no income AGI-based phase-out/limit to take the HSA deduction!

 

[Tyro]

Tax-free savings account. Not taxed going in, no tax on gains, not taxed when withdrawn = one of the best deals around.

I am treating it as another tax deductible IRA. After age 65 you can use the money for anything and there is no penalty. ANy distribution is taxed as ordinary income.

So which is it? I would think not taxed when withdrawn would only apply to using it for qualified medical expenses.

 

[Animorph]

So which is it? I would think not taxed when withdrawn would only apply to using it for qualified medical expenses.

That's my understanding. Untaxed going out only for medical expenses. But the possibilities within that restriction are so broad in scope and timing that it would be wasteful to not match up medical expenses with withdrawals.

 

[travelover]

That's my understanding. Untaxed going out only for medical expenses. But the possibilities within that restriction are so broad in scope and timing that it would be wasteful to not match up medical expenses with withdrawals.

Right. Remember it can used for dental, eye care, prescriptions, medical deductions and co-pays, Medicare parts B and D. And it doesn't have to be done in any one year, it carries forward indefinitely.

Worst case, take it out after age 65 and pay tax on it.

 

[Mulligan]

Right. Remember it can used for dental, eye care, prescriptions, medical deductions and co-pays, Medicare parts B and D. And it doesn't have to be done in any one year, it carries forward indefinitely.

Worst case, take it out after age 65 and pay tax on it.

That is my plan. I am saving all receipts for teeth cleaning, etc and if I ever want the cash way down the road, I will use those receipts to extract it tax free. Though I hope I am able to just build it up and use it to pay for my Medicare premiums, until I am dead.