Update
As recommended by moderators, I searched for older articles related to HSA’s, but very few, if any of those threads cover more than 1 or 2 specific questions/area’s, & many of them are quite dated. As popular as HSA’s seem to be (especially for members of this forum) I'm thinking this might be helpful for future members as well.
I retired June 2015, & opened my HSA @ HSA Bank in late 2016. I just recently transferred it to Fidelity.
Here’s my basic understanding of HSA’s, & a few questions.
1: You can only open up & make tax deductible contributions, if you have a high deductible, HSA compatible health care plan.
True
Update: You do not need a HDHP if you only plan to fund your HSA with rollovers/transfers from an existing HSA.
*Once you turn age 65, you can no longer make contributions to an HSA.
But if funds are still available in the account, you can still use it to make tax free reimbursements to yourself for earlier medical expenses, & other things medical related. See #6 & #7
2: For 2019, the max contribution is $3,500.00 (Single) If you’re 55+ for any part of 2019, you can add another 1-k $4,500.00
$7,000.00 (Family) If you’re 55+ for any part of 2019, you can add another 1-k x 2 = $9,000.00
Correct
**They can each add a catch up contribution of $1000 only if they each have their own HSA**
4: I had a minor medical event in May of 2016. I have all the receipts for my out-of-pocket costs. I was on *Cobra* through November
of that year, & I didn't initiate my HSA until December. With that in mind, if I chose to at some later date, could I use HSA funds
to reimburse myself, even though at the time I had the illness, I had a non HD plan, & hadn’t even opened an HSA yet.
No: You can't use HSA money to pay for qualified medical costs that occurred before the account was initiated.
5: Assuming it’s all medical related, are there limits to annual distributions.
No:
6: Assuming there’s still sufficient funds in my HSA, when I turn 65 & go on Medicare, I can use money from my HSA to pay Medicare
premiums. And even though those premiums are deducted from my SS benefits, I can withdraw money from the HSA tax free to
reimburse myself for the part B premiums, & also use it to pay part D premiums, as well as premiums for Medicare advantage plans.
(but not medi-gap) True
7: As I've learned here @ ERF, it's best to contribute as much as possible each year, & let it grow tax-free as long as possible.
This is exactly what I'm going to do, as long as I’m able to do so.
Even though I've seen this question answered many times, I'll ask it again just to be absolutely sure.
Assuming the rules don't change, as long as I have the proper receipts/paperwork, 10 years from now, I could take a tax-free
distribution from my HSA, to reimburse myself for the 2 teeth cleanings I'll receive in 2019. True
8: When you take distributions from your HSA, as long as the entire amount is used for qualified medical expenses, it ‘will not’ count as income related to
your MAGI (Modified Adjusted Gross Income) FYI: This is the number the feds use to determine if you qualify for health care premium subsidies.
Thanks to circumstances beyond my control, I went over my maximum amount by $305.00 in 2018. The consequences are painful.
__________________
"No beast so fierce but knows some touch of pity, but I know none, therefore am no beast"