Should I HSA?

[tmitchell]

Now that I’ve left my day job I’ll be going on ACA for the first time. I’m trying to sort through a couple options and could use your advice.

I plan to do Roth conversions over the next decade to lower taxes post 59.5yrs, which means I likely won’t be eligible for any ACA subsidies pre Medicare (I’m 54 now).

I’m wondering if a HSA is worth it at this juncture. I have up to now been a low user of medical care—generally preventative care or maybe some PT for sports injuries, but you never know. Here are my cost estimates for insurance:

Bronze PPO HSA $683, $7000 deductible
Gold HMO (PCP in network) $590, no deductible (silver $564/$3700 deductible)

I am currently under 4% SWR and not particularly looking to maximize savings at this point, but there seem to be good reasons to go for the HSA. is it worth it?

 

[Aerides]

is it worth it?

considering it's free (you can sign up and make an account on fidelity), and it will save you in taxes if nothing else, there's no downside. I mean sure you lock that money away for pure medical expenses, but it's there and yours forever, so it's not like it won't get used.

Of your plan choices, yes you need to have an HSA eligible plan. I would not pick an HMO myself, ever, as I like the flexibility of going to the PT or the ortho vs. going to my PCP for a referral.

 

[jollystomper]

I would recommend you do it, if you have an HSA eligible plan. The deductible can offset some of your Roth conversion income. If you do have low medical expenses invest the HSA money and it will grow tax free. Plus medical expenses can be unpredictable as you age.

There is a limited window as you cannot contribute to a HSA after age 65 once you enroll in Medicare, but at that age you can also withdraw the money for any reason (though you will have to pay regular income tax rates on the withdrawal if you do do not have past medical expenses to draw against.

I say it is worth it.

 

[Animorph]

Heck an HSA is like a tax deductible Roth contribution that doesn't require earned income. I treat our HSA's like a Roth retirement account, paying medical expenses from our taxable investments/cash.

You contribute some money from a taxable account or income into the HSA (essentially a Roth), get a tax deduction for it that increases the amount you can Roth convert by the same amount.

I found the ACA Bronze HSA-eligible plan costs were usually about the same as the low-deductible ACA plans for us in terms of max out of pocket cost. With the high deductible HSA, you may come out ahead if your expenses are less than the deductible, even without the HSA benefits. It's always been a clear financial winner for us. It looks like it might not be with the OP plan costs, but maybe the tax deduction will help.

 

[Mulligan]

Heck an HSA is like a tax deductible Roth contribution that doesn't require earned income. I treat our HSA's like a Roth retirement account, paying medical expenses from our taxable investments/cash.

You contribute some money from a taxable account or income into the HSA (essentially a Roth), get a tax deduction for it that increases the amount you can Roth convert by the same amount.

I found the ACA Bronze HSA-eligible plan costs were usually about the same as the low-deductible ACA plans for us in terms of max out of pocket cost. With the high deductible HSA, you may come out ahead if your expenses are less than the deductible, even without the HSA benefits. It's always been a clear financial winner for us. It looks like it might not be with the OP plan costs, but maybe the tax deduction will help.

Its the only triple tax break available that I am aware of. Especially if you owe income taxes. I do off my pension so I love it. I never had an HSA until I retired 10 years ago, and have turned it into $70k despite only being able to contribute 7 years or so the past 10. I remember the good old days when I first retired and my insurance was about $70 a month. The HSA deduction actually netted me a small profit from buying health insurance to get the HSA. Those days are long gone for me.