Health Savings Account Advice

[Donno]

This may be on here somewhere, but I haven't found it if is.

The backdrop is I am losing my retirement healthcare insurance effective 12/31 and have signed up for ACA coverage. The plan I signed up for is an HSA eligible plan. My question is what do I do with it, fund it immediately in January to the max or fund it every month to the max/12? Also since I've never been in a plan like this how do you go about getting money back for health care expenses? Do I fund it every month and then take money back out as I incur expenses?

I'm confused about how to use to my benefit and would appreciate some sage advice.

 

[gauss]

I would say that is conceptually similar to an IRA. You fund it when you like (subject to the annual contribution limits and your qualification to contribute to an HSA) and withdrawal funds when you like. You can generally pay with a provided debit card or use after tax funds and just reimburse yourself by requesting a check or EFT to yourself.

At the end of the tax year the HSA custodian will send you a 1099-SA forms if there were any distributions from the account during the year. You will need to keep track of which distributions were for qualified medical expenses (tax-free) and which were for other things (taxable plus possible penalty).

You don't need to submit receipts to the HSA custodian, but you do need to retain them in case of an IRS audit.

There is an IRS publication that lays all of this out, but many of the HSA providers will give high level descriptions of this in their marketing web sites.

-gauss

 

[omni550]

Donno,

You my find this old thread of use, too. I was looking to move my HSA from my former employer's custodian to minimize fees and increase my investment options.

http://www.early-retirement.org/forums/f38/hsa-seeking-low-fee-custodian-83325.html

omni

 

[broadway]

I use Lively (Livelyme.com) as my HSA custodian.
2018 is the first time I have had a HSA.
They give you a debit card.
So far this year, I have used it to pay for my semi-annual dental exams and for my eyeglasses.
I fund it every month. They take the money out of my checking account.

.

 

[Donno]

Thanks for the replies everyone. I have had an HRA (health reimbursement account) which I funded from my paycheck each month for several years until I retired this year. I had an HSA eligible option health insurance plan but when I ran the numbers it was a poor option so I never considered it.

Sounds like I need to fund one this coming year while I can. Any advice on which is the best place to go?

 

[MBSC]

My question is what do I do with it, fund it immediately in January to the max or fund it every month to the max/12?

You need to open an HSA account and fund it with at least $1 shortly after 1/1/2019. Some HSA administrators deposit $1 for you when the account is opened. This is because only those medical expenses incurred after the account is opened and funded are qualified expenses. A medical expense is incurred on the date you receive the service, not the date you get a bill.

Depending on the HSA custodian you choose, there may be monthly low balance fees so deposit enough to waive the fee. Here is a Bogleheads thread on Lively HSA: https://www.bogleheads.org/forum/viewtopic.php?f=2&t=228522

If you itemize medical deductions on the tax return, you cannot also use the HSA for those same expenses. No double dipping.

I use the HSA as an additional retirement account and will wait to claim medical expenses.

 

[travelover]

...........I'm confused about how to use to my benefit and would appreciate some sage advice.

This can be an extremely good deal. Like an IRA you can deduct any contributions in the year you make them, but unlike an IRA you never pay taxes on it if you use it for medical, eye, dental or Medicare premiums expenses. I put the max into mine then invested it in Vanguard stock funds. Currently, I pay medical expenses out of pocket and keep the receipts. At some point I'll deplete it for medical expenses, but in the meantime I let it grow.

 

[bingybear]

I don't always fund the hsa at the beginning of the year, but no real problem if you do.... unless you don't keep the hsa insurance for the full year.

I invest the hsa. I keep the receipts for health services that happened after the first hsa was opened and segregate these expenses that also have not been used on federal taxes. You can't use these expenses for hsa if they were used on your federal taxes for a itemized deduction or to overcome the standard deduction.

So the question for you is what do you want to do with the HSA?

I see mine as a way to pay medical bills as we age, LTCi, or just tax free $ by using old medical bills that have not been used.

 

[Donno]

Okay, so I'd be stupid to not fund one of these plans 100%. Just making a cursory Google search of HSA plans it seems that Health Savings Administrators seems to have one of the better options. Any opinions one way or the other on this company or a better option?

 

[RunningBum]

Since you're just starting out you don't have a lot that will be invested so you would preferably want to keep fees low or non-existent. My credit union had a fee-free HSA account that just returned 2%, which was better than paying what would've amounted to 4 or 5% in fees. See if you can find a CU that does this. Once i got enough to invest, I switched it to Further, which I thought had the best combo of investment options and low fees.

 

[Emerson11]

This may be on here somewhere, but I haven't found it if is.

I'm confused about how to use to my benefit and would appreciate some sage advice.

Since you are a saver, you could benefit by reading some articles on how to use an HSA as a super duper tax-sheltered savings vehicle. Use other money for health expenses to the extent possible and let your HSA go untouched. HSAs are as good as it gets for sheltered savings. Health Savings Administrators has extremely low fees, and offers numerous Vanguard Funds as investment choices. Here's some links:

https://www.morningstar.com/articles/887257/3-underdiscussed-ways-to-use-a-health-savings-acco.html

https://healthsavings.com/

 

[Mulligan]

If you are going to be at least 55 next year, you get to contribute an extra $1k. I use my HSA as some mentioned above as a triple tax break and have no intentions of using it for medical expenses until Medicare. But I do save my receipts though just in case.

 

[Gotadimple]

Okay, so I'd be stupid to not fund one of these plans 100%. Just making a cursory Google search of HSA plans it seems that Health Savings Administrators seems to have one of the better options. Any opinions one way or the other on this company or a better option?

Options? What about the administrative fee? It's $45 per year (see the Fees section of the web site), and there may be additional fees if you decide to invest with their partner. You can do better.
Also try HSA Bank, no fee for accounts maintaining $5000 minimum in savings, an administrative fee if you use their partner for investments. Email or phone contact is fast. I've used them for quite a while.

Like others here, I save my receipts and claim detail for disbursement at a later date. Once you hit 65 and are Medicare eligible you can no longer deposit, but you can continue to earn interest.
-Rita

 

[Willers]

I use HSA Authority. $36/ year flat fee and no requirement for a savings account minimum. Vanguard fund options. I, like others, use it as a better than Roth deferred account. It also helps us manage our MAGI since it is a reduction.

 

[Splash]

We have used Optum Bank for several years.

Savings interest rate: 0.10%
Standard Monthly Fee: $2.75 – waived if average balance is $3,000 or more.
Investment Monthly Fee: 0.03% of average daily investment balance, not to exceed $10.00.

 

[sengsational]

Elements Financial CU is free with $2500 minimum, and you get 1/2% APR on the balance. It costs $24 to wire transfer to the brokerage account, though. My transfers (to TDAmeritrade) only come once a year, so still cheap. I won't be spending out of this account for a long time, so the once a year or every other year transfer fee is the cheapest HSA solution I found.

 

[oscar1]

We use HSAbank.com and fully fund each year but in pieces as excess funds become avail. We have one family HSA account and get debit cards for each of us so it’s convenient and a single 1099-SA at the end of the year. And a single statement of all my out-of-pocket health care expenses for the year. One of us is over 55 so we put $7,900 in this year with the over 55 catch up. I used to keep my debit card in safe keeping but seem to be carrying it everywhere these days. They seem to be relaxing the rules on qualified expenses. I even used it on Bandaids at the normal Walmart self service check-out recently. It used to only work on special Point of Sale terminals back by the pharmacy. I can’t wait for the rules to change and allow us to use this tax advantaged vehicle for these crazy premiums that keep going up.

 

[gauss]

"Further" (formerly selectaccount.com)

"Further" (member.hellofurther.com , formerly selectaccount) has the best pricing and selection that I have found for an HSA with investment options -- I use the account like and IRA.

For about $30/year in admin fees, you have access to a full blown Charles Schwaab brokerage account where you can buy almost anything with no added fees. I purchase a Vanguard index fund ETF and that is it. Very cost effective and flexible.

-gauss

 

[bingybear]

We use HSAbank.com and fully fund each year but in pieces as excess funds become avail. We have one family HSA account and get debit cards for each of us so it’s convenient and a single 1099-SA at the end of the year. And a single statement of all my out-of-pocket health care expenses for the year. One of us is over 55 so we put $7,900 in this year with the over 55 catch up.

I would be a little careful with the description of how the catch up is done. Catch up HSA contributions must go into an HSA in the name of the person claiming the catch up and they must be covered by an HSA health plan (either individual or family). I would be concerned that someone reading this might put the catch up in the spouse's plan. Note there are not joint HSA accounts.

I don't expect we will ever use the debit cards. I expect we will just withdraw $ using ACH transfers to reimburse for bills we have already paid. Note that these expenses must occur after the first HSA account was established.

 

[njhowie]

Elements Financial CU is free with $2500 minimum, and you get 1/2% APR on the balance. It costs $24 to wire transfer to the brokerage account, though. My transfers (to TDAmeritrade) only come once a year, so still cheap. I won't be spending out of this account for a long time, so the once a year or every other year transfer fee is the cheapest HSA solution I found.

We went with Elements as well. My primary criteria was no fees. Most all of the HSA plans/administrators out there charge ridiculous fees. I refused to pay an annual administrative fee or anything simply for having an account...where I won't be withdrawing for at least 5 years.

I don't use the brokerage aspect, and likely won't, though it's nice that the option is there. We have two HSA accounts, max contributions annually, and no fees whatsoever. We get the income tax deduction, which is my primary objective, along with having a safe place where it will not go down in value.

Lastly, as Elements is the Eli Lilly Credit Union and has been around for almost 100 years, it's not simply a fly-by-night operation with limited history. They will be around a long time. Some of the other HSA administrators out there will not be.

 

[JoeWras]

This is a good topic. I'll need to investigate a switch.

My current administrator drops the admin fee if you hold a certain amount of cash. However, they tack on a 0.4% fee per year in investment accounts. This is above any fund fees in the account.

That adds up. Time to look around.

 

[easysurfer]

So much for a new and improved experience with the HSA Administrators website?

I tried signing on today but got a website not secure message (see attached).

Looks like the folks there are still having website growing pains . According to the message, seems their security certificate expired.

I don't have to sign into there just yet but was going to their site to look up some general HSA info.

 

[catotx]

Fidelity started offering individual HSAs on 11/15:

https://www.fidelity.com/go/hsa/why-hsa

Full investment options in a brokerage account. No AUM fee, no maintenance fees, no minimum cash requirement to maintain. This beats out all existing individual HSAs in the market.

 

[RunningBum]

Fidelity started offering individual HSAs on 11/15:

https://www.fidelity.com/go/hsa/why-hsa

Full investment options in a brokerage account. No AUM fee, no maintenance fees, no minimum cash requirement to maintain. This beats out all existing individual HSAs in the market.

Being discussed in this thread: http://www.early-retirement.org/forums/f38/fidelity-offers-individual-hsa-accounts-94781.html

 

[easysurfer]

HSA Administrators site back up and accessable .