HSA worth it in this case?

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drk77
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Joined: Sun Sep 24, 2017 11:33 pm

HSA worth it in this case?

Post by drk77 » Thu Oct 26, 2017 4:17 pm

Hello all, I have already switched to the 3 fund portfolio, thank you SatuMedia :happy

Now I am looking for additional ways to tax shelter money.

I spoke with my employer HR department, and if I signup for the bronze health care plan in 2018, I would be eligible for HSA. I will have a 1000 (possibly 1500) deductible. Currently I have the gold plan.

Issue is that I know for certain that I will spend 1000-1500 on healthcare next year, due to regular scheduled appointments. Thus, does it make sense to open an HSA in such a case, or is it only useful when expected health care costs are negligible ?

Any enlightenment on this subject matter would be appreciated.....thanks.

kd2008
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Joined: Sun Feb 15, 2009 6:19 pm

Re: HSA worth it in this case?

Post by kd2008 » Thu Oct 26, 2017 4:21 pm

https://thefinancebuff.com/not-all-high ... gible.html

Please read this article first to understand what makes a HDHP plan eligible for an HSA.

Don't go by what HR says. Read your plan documents.

Per IRS Minimum annual deductible for HDHP is $1350 for 2018.

https://irs.gov/pub/irs-drop/rp-17-37.pdf

jebmke
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Re: HSA worth it in this case?

Post by jebmke » Thu Oct 26, 2017 4:46 pm

kd2008 wrote:
Thu Oct 26, 2017 4:21 pm
Don't go by what HR says. Read your plan documents.
My rule of thumb was always "if it involves numbers, stay away from HR." They couldn't even count people in my company.
When you discover that you are riding a dead horse, the best strategy is to dismount.

aristotelian
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Re: HSA worth it in this case?

Post by aristotelian » Thu Oct 26, 2017 5:40 pm

You really need to run numbers for your situation for your HDHP and the alternative. Will you receive a company contribution to the HSA? Are you already maxing other accounts or would the tax benefit be redundant? What are the premiums and deductibles?

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grabiner
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Re: HSA worth it in this case?

Post by grabiner » Thu Oct 26, 2017 9:59 pm

aristotelian wrote:
Thu Oct 26, 2017 5:40 pm
You really need to run numbers for your situation for your HDHP and the alternative. Will you receive a company contribution to the HSA? Are you already maxing other accounts or would the tax benefit be redundant? What are the premiums and deductibles?
The tax benefit from an HSA is never redundant. If you contribute money to an HSA that could have otherwise been contributed to a Roth IRA, you can contribute 33% more in a 25% tax bracket, and still get tax-free growth for money that you do not spend. If you contribute money that could have otherwise been contributed to a traditional IRA or 401(k), you get the same amount contributed, but withdrawals for medical expenses are tax-free.

The tax benefit is even greater if you contribute money that would otherwise have been invested in a taxable account, as you get the tax deduction and tax-free growth of funds which would have otherwise had taxable growth.
David Grabiner

inbox788
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Re: HSA worth it in this case?

Post by inbox788 » Thu Oct 26, 2017 10:02 pm

Most likely yes. How much will you save in premium going from gold to bronze? What changes to benefits, deductibles and copay? You can shelter and invest up to $6900 in HSA. I put 100% in TSM for health expenses in retirement.

aristotelian
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Re: HSA worth it in this case?

Post by aristotelian » Thu Oct 26, 2017 10:37 pm

grabiner wrote:
Thu Oct 26, 2017 9:59 pm
aristotelian wrote:
Thu Oct 26, 2017 5:40 pm
You really need to run numbers for your situation for your HDHP and the alternative. Will you receive a company contribution to the HSA? Are you already maxing other accounts or would the tax benefit be redundant? What are the premiums and deductibles?
The tax benefit from an HSA is never redundant. If you contribute money to an HSA that could have otherwise been contributed to a Roth IRA, you can contribute 33% more in a 25% tax bracket, and still get tax-free growth for money that you do not spend. If you contribute money that could have otherwise been contributed to a traditional IRA or 401(k), you get the same amount contributed, but withdrawals for medical expenses are tax-free.

The tax benefit is even greater if you contribute money that would otherwise have been invested in a taxable account, as you get the tax deduction and tax-free growth of funds which would have otherwise had taxable growth.
True, I should say "partially redundant". The point being, if you are not already maxing the 401k or IRA, the tax benefit is less than if the HSA gives you additional tax deferral.

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PaddyMac
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Re: HSA worth it in this case?

Post by PaddyMac » Mon Oct 30, 2017 10:59 am

Agree with above re checking with the insurer. When we buy an HSA plan on the ACA exchange, it says so right in the plan documents, as in:
HSA Eligible: Yes/No.

We've had an HSA for a number of years and have built up a medical emergency cushion. It's over $40K now. Next month I have some minor surgery so it may actually get used. So it's doing its job finally!

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