Do I need access to an HSA - is IRA deferral the same?

[Yarnstormer]

I'm leaving full time work to start a part time home business and homeschool my daughter. I'm shopping for insurance - considering cobra $957/mo (750 deduct, $4000 oop each, $300 emergency copay, good pharmacy etc) and obamacare $300-500/mo? Depends on my income. Could be less. Of course none of my current doctors take the obamacare and prescription coverage is non existent. Also emergency room is subject to deductible. One trip and the "savings" of choosing that plan are wiped out.

Since I will be self employed and over 50 I may be able to divert all or much of my earned income into an IRA.
I am wondering if I should be shopping for a HSA plan - would it be necessary if I have access to an IRA?
I have cash that needs investing anyway so the earned can be saved.

There is a tax advantage to either plan but my bracket is low I might not be able to take advantage of it.

Kinda sorta excited to be kinda sorta retired

 

[travelover]

If you are eligible for an HSA plan, it is free money. Unlike an IRA, you deduct it from your income and never pay taxes on it as long as it is spend on medical or dental costs, including Medicare premiums.

 

[Yarnstormer]

If you are eligible for an HSA plan, it is free money. Unlike an IRA, you deduct it from your income and never pay taxes on it as long as it is spend on medical or dental costs, including Medicare premiums.

Good point! Any idea if the HSA plans offered thru the exchange would be something I can carry with me to different insurance companies? Can I open my own HSA account even if I cobra? That would always be useful to have!

I am not allowed to keep my FSA here so I blew it all on glasses last night.

 

[travelover]

Good point! Any idea if the HSA plans offered thru the exchange would be something I can carry with me to different insurance companies? Can I open my own HSA account even if I cobra? That would always be useful to have!

I am not allowed to keep my FSA here so I blew it all on glasses last night.

You own an HSA like you own an IRA - it moves with you. In order to be HSA eligible, it has to meet a deductible range requirement (see link). COBRA, just means you are extending your employers plan on your own dime. If that plan was HSA eligible, then you can contribute to an HSA while on it. If it is not eligible, you can't contribute to an HSA until you are on a plan that is.

https://www.bcbsil.com/country/hsa_qualifies.htm

 

[Yarnstormer]

Cobra Deductible is $750 - pretty sure that does not qualify as high.
I am amazed that I can contribute non earned income before tax but do not have to pay tax when I withdraw! For me, that makes the high deductible plan more appealing as a savings plan and would increase my subsidy as well.
At present - My only chronic condition is mild asthma which is well controlled.
Healthcare shopping sucks. It all seems like such a gamble...and I'm not a gambler by nature!

 

[karen1972]

Cobra Deductible is $750 - pretty sure that does not qualify as high.
I am amazed that I can contribute non earned income before tax but do not have to pay tax when I withdraw! For me, that makes the high deductible plan more appealing as a savings plan and would increase my subsidy as well.
At present - My only chronic condition is mild asthma which is well controlled.
Healthcare shopping sucks. It all seems like such a gamble...and I'm not a gambler by nature!

I love my HSA and socked away as much as I could while working, had an HSA plan 1 of my 3 retired years (none available on the exchange now), but it is nice to have the tax advantage and investment options. Hopefully it can keep up with my ER visits.

I don't consider health care a "gamble" but rather risk mitigation. ie when planning my budget I know the "max" I could owe and thus can plan for it. To me it is about taking the knowns and figure out which plan gives me the least out of pocket max. ie. I'm planning for the worst case, not the best case... as best case is really the gamble as it usually leads to higher costs in the end. I always end up with a different plan than my BF as he has 1 pricey drug he is guaranteed to need every month, thus drug deductibles are usually the driver and who covers his specific drug at a cheaper rate.

I always found FSAs to be gambles as I don't have any prescriptions, don't need glasses, no dental work, so guessing if I'd get sick and need anything was iffy and the first year I put in just $200 and never found a way to use it all... realizing I'd lose it was the last and only time I signed up for that.

 

[travelover]

Cobra Deductible is $750 - pretty sure that does not qualify as high. .........

Read the link I provided, it is spelled out there.

 

[Yarnstormer]

Wow! I put $1500 in my fsa every year and always run out.

 

[Yarnstormer]

There is a HSA plan available on the exchange in georgia.

 

[GTFan]

Not in my area of the ATL, no HSA exchange plans here. They are not all that common now with only a couple of insurers left.

 

[Sunset]

op - since you say you will be in lower tax brackets, you could consider a self-401K ROTH or self-401K IRA (I do both).

You get to put in: Normal 401K maximum + up to 25% of net profit, all that could equal ($59,000 for employees age 50 or older).

Then since it's a 401K, you still get to contribute to a self IRA/ROTH outside the 401K

Vanguard has zero fees for the accounts, but does charge $20 per fund per year, so I limit myself to 1 or 2 funds in each. I probably should just get a wellington fund in each instead.
Point is: this is cheap.

You have to set it up in advance of the end of the year, and it takes about a month (mailing paperwork). They help you fill it out, and it's easy. So you could do it for 2017 onwards.

here is the link:
https://investor.vanguard.com/what-we-offer/small-business/individual-401k

 

[MBSC]

Not in my area of the ATL, no HSA exchange plans here. They are not all that common now with only a couple of insurers left.

You must have had some filters set that excluded them.

8 HSA eligible plans: Forsyth and Cherokee counties
7 HSA eligible plans: Bartow county
6 HSA eligible plans: Fulton and Gwinnett counties
5 HSA eligible plans: Dekalb, Cobb, Douglass, Paulding, Hall and Walton counties

Putnam county appears to be in a rural area and has 3 HSA eligible plans.

 

[Yarnstormer]

Not in my area of the ATL, no HSA exchange plans here. They are not all that common now with only a couple of insurers left.

In the augusta area we only have BCBS left but there are hsa plans. In December one of my doctors was in the plan. Now none are. Pretty ridiculous.

 

[travelover]

In the augusta area we only have BCBS left but there are hsa plans. In December one of my doctors was in the plan. Now none are. Pretty ridiculous.

Sit tight. It is all gonna get fixed quickly.

 

[Yarnstormer]

Then since it's a 401K, you still get to contribute to a self IRA/ROTH outside the 401K

Vanguard has zero fees for the accounts, but does charge $20 per fund per year, so I limit myself to 1 or 2 funds in each. I probably should just get a wellington fund in each instead.
Point is: this is cheap.

You have to set it up in advance of the end of the year, and it takes about a month (mailing paperwork). They help you fill it out, and it's easy. So you could do it for 2017 onwards.

here is the link:
https://investor.vanguard.com/what-we-offer/small-business/individual-401k

Thanks! Interesting. No way I will earn that much this year but good to have the option - I will contribute as much as I need to.
I always do the over 50 max roth contribution.

Unfortunately I had a fsa at work in January - if I'm reading right looks like you can't have both in the same year. I did at least go on a shopping spree and blow the money.

Next year tho...hsa for sure!

 

[Yarnstormer]

Oh good news tho one of my doctors is not in the plan, someone else from the same practice is. So I'm going to check all of the providers in the groups we go to!

 

[Sunset]

Thanks! Interesting. No way I will earn that much this year but good to have the option - I will contribute as much as I need to.
I always do the over 50 max roth contribution.

Unfortunately I had a fsa at work in January - if I'm reading right looks like you can't have both in the same year. I did at least go on a shopping spree and blow the money.

Next year tho...hsa for sure!

I was just showing you the max, it's far more than a regular employee gets in a 401K that I have ever experienced.

Also note if you want the ROTH part, it can take your contribution (as employee) to the max of a 50 yr old, but the contribution (as employer) part which is the up to 25% has to go into the IRA part.