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Tips for maximising a health savings account HSA

6,161 Views | 48 Replies | Last: 5 yr ago by RightWingConspirator
insulator_king
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AG

I am starting a job w/ fed gov next week. Planning to go with a HDHP w. HSA.

I'm over 50 so can use the additional $1000 catch-up provision, for a total of $8000.

Any special tips on how best to maximise it?
Has anyone deliberately put too much in and then taken it out before the penalty kicks in? WOuld there be any benefit?
insulator_king
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I did find this thread.
https://texags.com/forums/57/topics/2937995/replies
aggiedata
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8000 / pay periods remaining in 2019 to determine amount of contribution per pay check.

Remember to try and not use the funds now for medical expenses. Keep receipts for future tax free distributions.

aggiedata
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I bet you can't elect more than allowed to contribute up front to avoid an overpayment. Usually at end of year the admin reconciles and send you a check for overpayments, common with 401k. There is no advantage to over pay into these accounts. A good administration system will prevent it up front.
TXTransplant
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Our employee user interface will not allow you to overcontribute to an HSA. You have to input a fixed dollar amount that's less than or equal to the max, and then that number is divided by the number of pay periods.
AggieFrog
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aggiedata said:

8000 / pay periods remaining in 2019 to determine amount of contribution per pay check.

Remember to try and not use the funds now for medical expenses. Keep receipts for future tax free distributions.



Why not use it now for medical expenses?
TXTransplant
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AggieFrog said:

aggiedata said:

8000 / pay periods remaining in 2019 to determine amount of contribution per pay check.

Remember to try and not use the funds now for medical expenses. Keep receipts for future tax free distributions.



Why not use it now for medical expenses?


Because if you invest it and let it grow, the earnings are tax-free, too. And you can use it once you are retired to pay for things like heath insurance premiums
aggiedata
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You need to think about your HSA as a retirement account. One of the best you can have where you can withdraw funds tax free by keeping receipts on medical expenses years later.

Instead of instant reimbursement, let the money remain invested over years of returns.
Shiner Bock
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Proceed however you want but GEHA medical insurance standard option has been incredible for us. We use FSAFeds in addition for our copays, Rx, etc.
AggieFrog
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aggiedata said:

You need to think about your HSA as a retirement account. One of the best you can have where you can withdraw funds tax free by keeping receipts on medical expenses years later.

Instead of instant reimbursement, let the money remain invested over years of returns.

We use it as both. Current and future expenses.

Seems foolish to only use it for future expenses when your current deductible is extremely high. We took the reduced cost of the high deductible plan and put it aside in the HSA and just use the HSA to pay all medical costs. We don't normally spend all of it so it rolls into the future.
Ragoo
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Has anyone done a HSA roll over?

I have one through my former company and now a new account through current employer.

I'd like to combine them and begin investing a portion.
tailgatetimer10
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I get why you'd use it for current expenses, but it's far from foolish to reserve it for future expenses.

It's basically the medical investment for your retirement. So if you can afford to pay out of pocket now, then it's beneficial to save it for retirement
TXTransplant
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AggieFrog said:

aggiedata said:

You need to think about your HSA as a retirement account. One of the best you can have where you can withdraw funds tax free by keeping receipts on medical expenses years later.

Instead of instant reimbursement, let the money remain invested over years of returns.

We use it as both. Current and future expenses.

Seems foolish to only use it for future expenses when your current deductible is extremely high. We took the reduced cost of the high deductible plan and put it aside in the HSA and just use the HSA to pay all medical costs. We don't normally spend all of it so it rolls into the future.


My HSA is one of several cash accounts that I have, but it's by far the account with the best tax advantages. As long as I have the cash in another account to cover what I owe, I'm going to leave the HSA funds alone and let them grow. There is no point in pulling funds out of my HSA unless I don't have enough money in my other accounts. So far, our health expenses have been manageable enough that I can do this.
aggiedata
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If you can swing it, reimburse yourself at retirement for current expenses is my point. Max it out if possible no matter what your projected medical expenses in a year.

Your $250 reimbursement today has an impact on your future balance much greater than $250. Put that into your thinking before submitting your expenses.
ac04
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max it out every year, invest it, and don't touch it.
aggiedata
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Ragoo said:

Has anyone done a HSA roll over?

I have one through my former company and now a new account through current employer.

I'd like to combine them and begin investing a portion.


Much like a 401k roll over. Start with getting forms from both entities.
insulator_king
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Wow, thanks for all the input.

So what HSA account are you using to get the best return?

I have looked at these websites to find high savings accounts, but what about other investments?
http://www.hsarates.com/
https://www.depositaccounts.com/savings/health-savings-accounts.html

I will be retiring in less than 15 years, so have limited time frame, and currently have minuscule savings, retirement and otherwise.

Will be signing up for the GEHA HDHP, self +one for those that are familiar with it.
They use HSABank.com, which has pretty miserable rates, like 0.10%.
permabull
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TXTransplant
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insulator_king said:

Wow, thanks for all the input.

So what HSA account are you using to get the best return?

I have looked at these websites to find high savings accounts, but what about other investments?
http://www.hsarates.com/
https://www.depositaccounts.com/savings/health-savings-accounts.html

I will be retiring in less than 15 years, so have limited time frame, and currently have minuscule savings, retirement and otherwise.

Will be signing up for the GEHA HDHP, self +one for those that are familiar with it.
They use HSABank.com, which has pretty miserable rates, like 0.10%.


Because mine is through my employer, it's with Fidelity (which is where our retirement accounts are, too).

Once I hit a minimum threshold amount (I think it was $2500) I was eligible to invest the funds in any number of Fidelity accounts/funds. I selected a bond fund because I don't want this account to be subjected to a lot of risk, so it's earning a few percent per year. There are funds where I could potentially earn more, but at a higher risk.
aggiedata
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insulator_king:

I doubt you will be able to pick your own HSA account. Also, the rate of return is on money sitting there and not invested. Once your balance reaches a certain level, you can invest in mutual funds more than likely.
AggieFrog
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hypeiv said:

One reason not to use it for current expenses is because there is no time limit for getting reimbursed. That means if you pay $1000 for a root canal in 2018 and keep the receipt, you can get $1000 out of your HSA in 2025 by claiming the reimbursement then.

I have a stack of receipts ready to be reimbursed if I ever need cash out of my HSA. Its nice to know that money is still growing and I have access to it penalty free if I ever need it.

Careful with that - I've had to provide more than just receipts on mine. They also required an explanation of benefits along with the receipt.
insulator_king
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aggiedata said:

insulator_king:

I doubt you will be able to pick your own HSA account. Also, the rate of return is on money sitting there and not invested. Once your balance reaches a certain level, you can invest in mutual funds more than likely.
The GEHA HDHP is set up such that For 2019, a monthly premium pass through of
$150 will be made by the HDHP directly into your HSA. That, I probably can't change.

The remaining $6200/yr I should be able to put in any HSA via payroll deduction from my federal pay. That is my hope anyway. Re-reading the plan information brochure.


TXTransplant
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AggieFrog said:

hypeiv said:

One reason not to use it for current expenses is because there is no time limit for getting reimbursed. That means if you pay $1000 for a root canal in 2018 and keep the receipt, you can get $1000 out of your HSA in 2025 by claiming the reimbursement then.

I have a stack of receipts ready to be reimbursed if I ever need cash out of my HSA. Its nice to know that money is still growing and I have access to it penalty free if I ever need it.

Careful with that - I've had to provide more than just receipts on mine. They also required an explanation of benefits along with the receipt.


Your HSA administrator requires the extra documentation? Because mine is completely hands-off. I don't have to provide any documentation and have access to my money at any time. I basically have the discretion to reimburse myself, and the onus is on me to keep receipts should I ever get audited by the IRS. I thought this was how all HSAs work.

Now, FSAs are different - most administrators will ask for some sort of medical documentation before you can be reimbursed with FSA funds.
shovel pass
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insulator_king said:

Wow, thanks for all the input.

So what HSA account are you using to get the best return?

I have looked at these websites to find high savings accounts, but what about other investments?
http://www.hsarates.com/
https://www.depositaccounts.com/savings/health-savings-accounts.html

I will be retiring in less than 15 years, so have limited time frame, and currently have minuscule savings, retirement and otherwise.

Will be signing up for the GEHA HDHP, self +one for those that are familiar with it.
They use HSABank.com, which has pretty miserable rates, like 0.10%.
Here are the investment options available through HSABank.

http://www.hsabank.com/hsabank/members/hsa-investment-options
AggieFrog
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TXTransplant said:

AggieFrog said:

hypeiv said:

One reason not to use it for current expenses is because there is no time limit for getting reimbursed. That means if you pay $1000 for a root canal in 2018 and keep the receipt, you can get $1000 out of your HSA in 2025 by claiming the reimbursement then.

I have a stack of receipts ready to be reimbursed if I ever need cash out of my HSA. Its nice to know that money is still growing and I have access to it penalty free if I ever need it.

Careful with that - I've had to provide more than just receipts on mine. They also required an explanation of benefits along with the receipt.


Your HSA administrator requires the extra documentation? Because mine is completely hands-off. I don't have to provide any documentation and have access to my money at any time. I basically have the discretion to reimburse myself, and the onus is on me to keep receipts should I ever get audited by the IRS. I thought this was how all HSAs work.

Now, FSAs are different - most administrators will ask for some sort of medical documentation before you can be reimbursed with FSA funds.

Usually not, but had one charge last year where they requested additional documentation beyond a receipt and would have had to reimburse the HSA without detailed documentation. Since then I am sure to retain any and all health documentation / bills.
insulator_king
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shovel pass said:

insulator_king said:

Wow, thanks for all the input.

So what HSA account are you using to get the best return?

I have looked at these websites to find high savings accounts, but what about other investments?
http://www.hsarates.com/
https://www.depositaccounts.com/savings/health-savings-accounts.html

I will be retiring in less than 15 years, so have limited time frame, and currently have minuscule savings, retirement and otherwise.

Will be signing up for the GEHA HDHP, self +one for those that are familiar with it.
They use HSABank.com, which has pretty miserable rates, like 0.10%.
Here are the investment options available through HSABank.

http://www.hsabank.com/hsabank/members/hsa-investment-options

For the Mutual Fund section, there is this annoying note:

The Devenir Mutual Fund Investment Account includes a 0.45% annual fee which is invoiced quarterly. The fee is calculated on a percentage basis and assessed based at the valuation on the last day of each quarter equating to 0.1125% or $1.13 per $1,000. The fee is deducted pro rata from the mutual fund account on or about the 10th business day following the end of each quarter. The fee is assessed only on the first $75,000 of the Investment Account balance. There is a minimum fee of $2.25 per quarter. Accounts opened during the quarter are assessed the full 0.1125% for that quarter. If the account balance is below $2.25 on the fee deduction date the full balance will be sold.
shovel pass
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That doesn't apply to the TD Ameritrade option HSABank offers. TD Ameritrade has many commission free mutual funds and ETFs. If you keep at least $5,000 in cash in your HSABank account they don't charge you any monthly fees. If you go to Bogleheads and search HSABank you'll find answers to probably any question you have on this topic.
Ag13
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AggieFrog said:

hypeiv said:

One reason not to use it for current expenses is because there is no time limit for getting reimbursed. That means if you pay $1000 for a root canal in 2018 and keep the receipt, you can get $1000 out of your HSA in 2025 by claiming the reimbursement then.

I have a stack of receipts ready to be reimbursed if I ever need cash out of my HSA. Its nice to know that money is still growing and I have access to it penalty free if I ever need it.

Careful with that - I've had to provide more than just receipts on mine. They also required an explanation of benefits along with the receipt.
Yikes hopefully that was easily accessible for you through your insurance portal. Who is your provider? Have you gotten more normal medical expenses that don't have an EOB reimbursed (like buying Asprin at CVS)?
AggieFrog
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Ag13 said:

AggieFrog said:

hypeiv said:

One reason not to use it for current expenses is because there is no time limit for getting reimbursed. That means if you pay $1000 for a root canal in 2018 and keep the receipt, you can get $1000 out of your HSA in 2025 by claiming the reimbursement then.

I have a stack of receipts ready to be reimbursed if I ever need cash out of my HSA. Its nice to know that money is still growing and I have access to it penalty free if I ever need it.

Careful with that - I've had to provide more than just receipts on mine. They also required an explanation of benefits along with the receipt.
Yikes hopefully that was easily accessible for you through your insurance portal. Who is your provider? Have you gotten more normal medical expenses that don't have an EOB reimbursed (like buying Asprin at CVS)?

Mine is through BenefitWallet and it was for orthodontics for one of my sons. I've never used the HSA to purchase anything over the counter - just medical / dental / prescriptions.
aggiedata
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Have you considered a limited purpose FSA for dental and vision expenses? Does not impact your HSA limits.

Waltonloads08
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IMO we are getting single payer and rationing within the next 10-15 years max, maybe sooner. I wouldn't put money in a HSA or 529.

Both are "for the rich".
AggieFrog
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aggiedata said:

Have you considered a limited purpose FSA for dental and vision expenses? Does not impact your HSA limits.



Vision is cheap regardless of insurance and dental usually is as well, other than orthodontics (but even then it's not all that bad). Not really worth it for them.
Definitely Not A Cop
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Sorry I'm kind of a novice on these, but as far as I'm aware, my HSA ends at the end of the year, and any money I've allocated to it and not used is lost at the end of the year. There is no roll over. Is this typical, and if so, how is it used as a retirement account as suggested above?
Chipotlemonger
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What you're describing is a Flex Savings Account (FSA). FSA and HSA are different in that regard.
TXTransplant
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Chipotlemonger said:

What you're describing is a Flex Savings Account (FSA). FSA and HSA are different in that regard.


To elaborate on this, you have to be enrolled in a high deductible health insurance plan (HDHP) to be eligible for an HSA and a limited purpose FSA (LPFSA) for vision and dental. HSA funds rollover year to year (and some allow you to reimburse yourself rather than request reimbursement from a fund admin). LPFSA funds do not rollover.

If you are not in an HDHP, you are eligible for an FSA - which is use it or lose it.
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