How our HSAs saved us over $10,000

[travelover]

I view contributions to our HSA the same as contributions to a Roth IRA while I was working - just a transfer of funds from taxable accounts to a tax-free account.

Yea, but the HSA contributions are pre-tax dollars.

 

[pb4uski]

Yea, but the HSA contributions are pre-tax dollars.

Yes when you are working for contributions from pay are pre-tax dollars and in a backwards way when you are retired in that you get a deduction from AGI for them.

 

[sengsational]

Great thread ... got me thinking differently. My original plan was to run medical expenses through the HSA, but not use it as an investment account. But that is wrong headed thinking! Maxing the HSA is a given. The question is how to take the most advantage of it. Say I took 7550 and put it in an HSA and took another 7550 and put it in another bank account. Now I have the choice of spending on medical from either. Do I want to keep a big balance in the regular account, and pay taxes on the interest? Or do I want to keep a big balance in the HSA account and not pay taxes on the interest? The latter, of course. As long as you non medical expenses can be managed without the assistance of the HSA funds, those funds should be spared from spending.

 

[Mulligan]

Great thread ... got me thinking differently. My original plan was to run medical expenses through the HSA, but not use it as an investment account. But that is wrong headed thinking! Maxing the HSA is a given. The question is how to take the most advantage of it. Say I took 7550 and put it in an HSA and took another 7550 and put it in another bank account. Now I have the choice of spending on medical from either. Do I want to keep a big balance in the regular account, and pay taxes on the interest? Or do I want to keep a big balance in the HSA account and not pay taxes on the interest? The latter, of course. As long as you non medical expenses can be managed without the assistance of the HSA funds, those funds should be spared from spending.

Just keep those receipts when paying out of pocket to get to the money tax free whenever needed. Already in 4 years I have probably $1000 in medical receipts from dental cleanings and a few doctor physicals. I just hope the ink doesn't fade on them, because I am not planning on taking the money out for hopefully 20 years.


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[sengsational]

...because I am not planning on taking the money out for hopefully 20 years.

The first benefit comes when the money goes in. And of course you get that whether you spend it on HC right away or not. But to get the second benefit you need to wait until you have a bunch of tax free income in the account. But like you say, you keep the receipts and you control the timing.

The bad news for me is that it complicates the 'where to spend from' decision. I have tIRA,401k, Roth, variable annuity, after tax, and now HSA. And they all have slightly different tax consequences when the funds are pulled out. Since my after tax fraction is small, I don't have anywhere near 20 years before I need to decide where to dip in. At least it's not 2014!

 

[Mulligan]

The first benefit comes when the money goes in. And of course you get that whether you spend it on HC right away or not. But to get the second benefit you need to wait until you have a bunch of tax free income in the account. But like you say, you keep the receipts and you control the timing.

The bad news for me is that it complicates the 'where to spend from' decision. I have tIRA,401k, Roth, variable annuity, after tax, and now HSA. And they all have slightly different tax consequences when the funds are pulled out. Since my after tax fraction is small, I don't have anywhere near 20 years before I need to decide where to dip in. At least it's not 2014!

Remember you can also withdraw tax free the HSA funds to pay Medicare premiums for the rest of your life. Now, you have an added reason to live a long life in retirement....efficient tax withdrawal mechanism of HSA funds. .... My taxes in retirement are basic and fixed at the top end of 25% bracket, so anything I can delay or not have to withdraw, I am not.


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[Col. Klink]

HSA Plans

Could someone please tell me... when on an HSA plan do you pay the full retail cost of each of your meds as if you had no insurance at all? If so, it seems there would be a breakeven point where it would be better to forego the HSA for a high deductible silver plan that would have e.g a $25 charge for generic perscriptions. Has anyone seen this type of analysis published or perhaps in another ACA thread here?

 

[mpeirce]

Could someone please tell me... when on an HSA plan do you pay the full retail cost of each of your meds as if you had no insurance at all? If so, it seems there would be a breakeven point where it would be better to forego the HSA for a high deductible silver plan that would have e.g a $25 charge for generic perscriptions. Has anyone seen this type of analysis published or perhaps in another ACA thread here?

With our HDHP/HSA insurance everything still gets submitted to insurance just like any other insurance. Until we reach the deductible they pass along the bill to us to pay. It's a negotiated price.

The drug portion of the insurance seems very similar to what we had when I worked for megacorp. I'm not all that familiar with the drug plan since I don't take any prescription drugs, but my DW takes one daily pill and she gets it in generic form from a mail-order vendor and it costs the same as we paid before. (I know her monthly order is only currently $11.27 for a one month supply)

Of course this plan isn't available to anyone any more, so you should really check specific plans for specific details.

 

[MichaelB]

With our HDHP/HSA insurance everything still gets submitted to insurance just like any other insurance. Until we reach the deductible they pass along the bill to us to pay. It's a negotiated price.

Our experience as well. Prescriptions must filled in network and are negotiated rates.

 

[athena53]

Now what am I going to do? I am going to have to buy some mutual funds so I don't do this buying and selling impulse thing.

I think you should start day trading in your HSA and write a book about it. ;-)

Seriously- I also got into the mindset that it's an investment account, even though I had 2 dental implants put in this year and the money would have come in handy. Since I retired mid-year (last day was last Friday but paid through 7/1), our out-of-pocket medical/dental expenses are actually going to exceed the IRS threshold for deductibility, which helps. (DH is 75 so the lower 7.5% applies.)

 

[audreyh1]

Could someone please tell me... when on an HSA plan do you pay the full retail cost of each of your meds as if you had no insurance at all? If so, it seems there would be a breakeven point where it would be better to forego the HSA for a high deductible silver plan that would have e.g a $25 charge for generic perscriptions. Has anyone seen this type of analysis published or perhaps in another ACA thread here?

The non-HSA silver plan had the same deductible. The only difference was lower doctor co-pays for just a few visits a year. I don't remember if there was a break on meds. Same negotiated rates with medical providers.

 

[iam21177]

Could someone please tell me... when on an HSA plan do you pay the full retail cost of each of your meds as if you had no insurance at all? If so, it seems there would be a breakeven point where it would be better to forego the HSA for a high deductible silver plan that would have e.g a $25 charge for generic perscriptions. Has anyone seen this type of analysis published or perhaps in another ACA thread here?

That was one of my concerns as well. I take two daily Rx (one is now free thanks to the Women's Health Care Preventative Act!). So that leaves me with a heartburn PPI med. I've asked the pharmacists what it's going to run if I don't have my nice $5 for 90 days supply perk any more. They really cannot say until I am on that insurance and they run it like normal. They did say I can shop around and look for best prices in town. Or I can find a reputable online source to see if it's lower priced online.

I'll know more in July when my HDHP kicks in finally. I don't plan on touching the HSA money though.

 

[sengsational]

That was one of my concerns as well. I take two daily Rx (one is now free thanks to the Women's Health Care Preventative Act!). So that leaves me with a heartburn PPI med. I've asked the pharmacists what it's going to run if I don't have my nice $5 for 90 days supply perk any more. They really cannot say until I am on that insurance and they run it like normal. They did say I can shop around and look for best prices in town. Or I can find a reputable online source to see if it's lower priced online.

I'll know more in July when my HDHP kicks in finally. I don't plan on touching the HSA money though.

I have found that goodrx.com is a nice source for prices, as well as discount coupons, if you don't have rx insurance. Also, I had my doc fax a prescription to a Canadian pharmacy and got the generic drug for a tiny fraction of what I would have paid for the generic here in the US. How screwed up is that, where I can get the same thing from Canada for 90% off the best US price?