You get no health insurance benefit till you use up your deductible up front, on an approved plan. I think the only time I would actually need them is if one were audited by the IRS. I knew a couple at church that owned their own business that had an hsa, they only took home around 15k / year from their business. NM!, found the answer, you cant combine limits. Would love to hear an experienced and educated response from someone on this. I don’t know, but I’d be interested to know, who gets the excess if an employee doesn’t use the full amount and “loses it” if the balance at year-end is over $500? Rather than use your HSA to pay for medical expenses, instead use your after-tax money so that you can leave your HSA money to grow tax free. Let’s not forget that in the event of death, your HSA is taxable to your heirs entirely as income at their income tax bracket. It’s a $1080 fee for the year, but with the lower deductible instead of $1000 in healthcare spending, it’s more like $350 due to the low deductible and co-insurance. The payment is discounted amount the insurance co has contracted to pay your doctor, until your deductible is met. We are strongly considering a HDHP with HSA for next year’s enrollment with my job. This administrative fee might be necessary to cover the cost of running an HSA account, but if that’s the case, is it even worth it? And the plans cover nothing till you hit the $7,500 deductible. Hope the trip is treating you well! FSAs are use it or lose it, however, there is a provision called the “uniform coverage rule” that requires the annual value of the employee’s election be available on the first day of the plan year. I prefer the HSA over the FSA but you have to have a certain amount of discretionary income to make it work. Both our jobs offer health insurance. By virtue of adstm of the Susm Ost et the D~imtrict af Colunmbia, passed In eqi nmm mumbel l'MitO. You are free to change your health plan as often as you’d like but you can only contribute to your HSA when you are enrolled in a HDHP. Thank you for getting in touch. I didn’t choose the HDHP/HSA this year, but for future reference… I’ll probably more than max out social security next year. Has anyone confirmed “officially” whether the money an employEE contributes to their HSA is exempt from FICA taxes? Husband is covered thru family plan at my employer with HDHP and contribute to family HSA. First off, great article; it pretty much was the tipping point for enrolling in my employer’s HSA plan. So, we are contributing to it with our after tax dollars. I would recommend that you always at least keep your deductible (typically $3-6K) in cash and invest amounts more than that. As far as the FSA is concerned, you can’t do both in the same year so you’re probably better off just going with the FSA, since you know you’ll have a bunch of expenses in the upcoming year. I would just file away the receipt and update my custom spreadsheet, moving the $200 from my ‘HSA’ column to my ‘HSA Withdraw Anytime’ column. In this case, the account will simply act like a Traditional IRA but with an increased distribution age (65 instead of 59.5 for a Traditional IRA). If you go to the doctor and pay him $200, you can take $200 out of your HSA at any time, tax and penalty free, to pay for that expense. Apparently this site is for those individuals that have exhausted all traditional means of savings for retirement and are looking for as you may put it “interesting loopholes” to increase their retirement savings. You pay that with in 1980 with your own post-tax money, external to your HSA in 1980. How absurd! I haven’t heard back yet. Are you saying that if we have medical expenses now that we should pay the expence from our bank account or credit card and let the money grow tax free in the HSA account. So just another way to get “bonus” money from my company above and beyond my salary. I’m wondering what Brandon and everyone thinks about maxing out my HSA instead of maxing out my 401k. An HSA you can keep forever. Hi Dan, I mentioned both the IRA aspect and the FICA avoidance aspect in the post. Joe, I’m from CA as well and I verified with my employers HSA provider that all contributions if done as a pre-tax payroll deduction are also exempt from FICA and FUTA taxes. If I could vote to eliminate them, I would. But to me the benefit of an HSA and the HSA debit card is two-fold: I keep the money if I don’t use it, and my employer also contributes money to it every year. http://www.mrmoneymustache.com/2013/03/07/how-about-that-stock-market/ If you have not maxed out all your traditional savings vehicles then go to Suze Orman and the kindergarten class before coming here. Sound intriguing, but I can find anyplace that confirms this feature. For most of the population, an HSA is simply a savings account for medical expenses that provides some tax benefits. The HSA out of pocket max is $4500, while the other plan is $3750 ($2500 of which comes from a tax free FSA.). How to reduce taxable income is slightly more complicated. Scenario A: My starting balance (year 0) is $1000. Doesn’t seem like a good deal. I’m assuming this is because it also saves them money. I am an engineer, so I do excel sheets for nearly everything, just wondering whats the best way to look at it money wise, what would be better in the long run. Would you consider ~0.5% fee investment “low cost”? It can only be used for health-related expenses and it has contribution limits that are set by the IRS. Thanks for posting! If you leave the company you get a windfall – you don’t pay it back. What makes matters worse, California (and New Jersey) doesn’t recognize the HSA at all. Our coverage year is July 1 – June 30 so I can make changes in a few months. I think the answer is obvious. He is older and planning to enroll in Social Security Income at FRA which auto enroll in Medicare Plan A. Since I am already maxing out my other tax-advantaged accounts and have ample savings, a $200 payment isn’t going to break the bank so there’s no rush to get paid back from my HSA. ( max contributions ) in cash and invest pre-tax funds to grow though your first point is actually! 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