Health Savings Account - Deferred tax

[LC]

Hi folks, just wanted to start a topic on the use of HSA accounts as essentially an IRA account with bonus optionality.

 

Here's a decent overview of the use case:

https://www.madfientist.com/ultimate-retirement-account/

 

Benefits:

-Pre-tax contributions reduce taxable income and are not subject to FICA taxes (SSA, Medicare)

-Tax-free withdrawals for any qualified medical expenses incurred after the date you open the HSA acct

-Account is essentially treated as a traditional IRA after 65 years of age

-Many times employers are matching or providing these contributions

 

Cons:

-Fees are murky

-HSAs accompany high-deductible insurance plans

-The hassle of saving copies of all your medical expenses

 

Not a bad way to manage a few thousand annually.

[stahleyp]

These aren't available for everyone (IRAs are available for most folks as long as you have income - whether it's deductible or not, is a different story). You have to be part of a high deductible plan.

[TwoCitiesCapital]

Hi folks, just wanted to start a topic on the use of HSA accounts as essentially an IRA account with bonus optionality.

 

Here's a decent overview of the use case:

https://www.madfientist.com/ultimate-retirement-account/

 

Benefits:

-Pre-tax contributions reduce taxable income and are not subject to FICA taxes (SSA, Medicare)

-Tax-free withdrawals for any qualified medical expenses incurred after the date you open the HSA acct

-Account is essentially treated as a traditional IRA after 65 years of age

-Many times employers are matching or providing these contributions

 

Cons:

-Fees are murky

-HSAs accompany high-deductible insurance plans

-The hassle of saving copies of all your medical expenses

 

Not a bad way to manage a few thousand annually.

 

Agreed! Best way to save money with triple tax free benefits and you can choose to not spend it on healthcare  where the benefits are basically the same as a typical IRA.

 

Agreed with above poster that it's only for those where a high-deductible health insurance plan makes sense. Maybe not worthwhile otherwise, but as a healthy young male who would be doing a high-deductible plan anyways, I take advantage and max out the HSA every year and pay health expenses out of pocket.

 

Investment options do tend to be limited at most providers, but there are a number of websites out there that exist to help you determine the pros & cons of each provider.

[Gamecock-YT]

Hi folks, just wanted to start a topic on the use of HSA accounts as essentially an IRA account with bonus optionality.

 

Here's a decent overview of the use case:

https://www.madfientist.com/ultimate-retirement-account/

 

Benefits:

-Pre-tax contributions reduce taxable income and are not subject to FICA taxes (SSA, Medicare)

-Tax-free withdrawals for any qualified medical expenses incurred after the date you open the HSA acct

-Account is essentially treated as a traditional IRA after 65 years of age

-Many times employers are matching or providing these contributions

 

Cons:

-Fees are murky

-HSAs accompany high-deductible insurance plans

-The hassle of saving copies of all your medical expenses

 

Not a bad way to manage a few thousand annually.

 

Agreed! Best way to save money with triple tax free benefits and you can choose to not spend it on healthcare  where the benefits are basically the same as a typical IRA.

 

Agreed with above poster that it's only for those where a high-deductible health insurance plan makes sense. Maybe not worthwhile otherwise, but as a healthy young male who would be doing a high-deductible plan anyways, I take advantage and max out the HSA every year and pay health expenses out of pocket.

 

Investment options do tend to be limited at most providers, but there are a number of websites out there that exist to help you determine the pros & cons of each provider.

 

Fidelity coming in is a game changer.

[rkbabang]

Hi folks, just wanted to start a topic on the use of HSA accounts as essentially an IRA account with bonus optionality.

 

Here's a decent overview of the use case:

https://www.madfientist.com/ultimate-retirement-account/

 

Benefits:

-Pre-tax contributions reduce taxable income and are not subject to FICA taxes (SSA, Medicare)

-Tax-free withdrawals for any qualified medical expenses incurred after the date you open the HSA acct

-Account is essentially treated as a traditional IRA after 65 years of age

-Many times employers are matching or providing these contributions

 

Cons:

-Fees are murky

-HSAs accompany high-deductible insurance plans

-The hassle of saving copies of all your medical expenses

 

Not a bad way to manage a few thousand annually.

 

Agreed! Best way to save money with triple tax free benefits and you can choose to not spend it on healthcare  where the benefits are basically the same as a typical IRA.

 

Agreed with above poster that it's only for those where a high-deductible health insurance plan makes sense. Maybe not worthwhile otherwise, but as a healthy young male who would be doing a high-deductible plan anyways, I take advantage and max out the HSA every year and pay health expenses out of pocket.

 

Investment options do tend to be limited at most providers, but there are a number of websites out there that exist to help you determine the pros & cons of each provider.

 

Fidelity coming in is a game changer.

 

What do you mean by Fidelity "coming in"?  I've had a Fidelity HSA for about 9-10 years now.  And the investment options are not limited in it at all.

[701 LV]

Best HSA I've found is Lively. Zero fees. Uses TD Ameritrade for investments, and you can invest every dollar - no cash holding minimum.

[Gamecock-YT]

Hi folks, just wanted to start a topic on the use of HSA accounts as essentially an IRA account with bonus optionality.

 

Here's a decent overview of the use case:

https://www.madfientist.com/ultimate-retirement-account/

 

Benefits:

-Pre-tax contributions reduce taxable income and are not subject to FICA taxes (SSA, Medicare)

-Tax-free withdrawals for any qualified medical expenses incurred after the date you open the HSA acct

-Account is essentially treated as a traditional IRA after 65 years of age

-Many times employers are matching or providing these contributions

 

Cons:

-Fees are murky

-HSAs accompany high-deductible insurance plans

-The hassle of saving copies of all your medical expenses

 

Not a bad way to manage a few thousand annually.

 

Agreed! Best way to save money with triple tax free benefits and you can choose to not spend it on healthcare  where the benefits are basically the same as a typical IRA.

 

Agreed with above poster that it's only for those where a high-deductible health insurance plan makes sense. Maybe not worthwhile otherwise, but as a healthy young male who would be doing a high-deductible plan anyways, I take advantage and max out the HSA every year and pay health expenses out of pocket.

 

Investment options do tend to be limited at most providers, but there are a number of websites out there that exist to help you determine the pros & cons of each provider.

 

Fidelity coming in is a game changer.

 

What do you mean by Fidelity "coming in"?  I've had a Fidelity HSA for about 9-10 years now.  And the investment options are not limited in it at all.

 

Having individual HSAs vs having what I'm guessing is an employer plan that you've had.

[rkbabang]

Hi folks, just wanted to start a topic on the use of HSA accounts as essentially an IRA account with bonus optionality.

 

Here's a decent overview of the use case:

https://www.madfientist.com/ultimate-retirement-account/

 

Benefits:

-Pre-tax contributions reduce taxable income and are not subject to FICA taxes (SSA, Medicare)

-Tax-free withdrawals for any qualified medical expenses incurred after the date you open the HSA acct

-Account is essentially treated as a traditional IRA after 65 years of age

-Many times employers are matching or providing these contributions

 

Cons:

-Fees are murky

-HSAs accompany high-deductible insurance plans

-The hassle of saving copies of all your medical expenses

 

Not a bad way to manage a few thousand annually.

 

Agreed! Best way to save money with triple tax free benefits and you can choose to not spend it on healthcare  where the benefits are basically the same as a typical IRA.

 

Agreed with above poster that it's only for those where a high-deductible health insurance plan makes sense. Maybe not worthwhile otherwise, but as a healthy young male who would be doing a high-deductible plan anyways, I take advantage and max out the HSA every year and pay health expenses out of pocket.

 

Investment options do tend to be limited at most providers, but there are a number of websites out there that exist to help you determine the pros & cons of each provider.

 

Fidelity coming in is a game changer.

 

What do you mean by Fidelity "coming in"?  I've had a Fidelity HSA for about 9-10 years now.  And the investment options are not limited in it at all.

 

Having individual HSAs vs having what I'm guessing is an employer plan that you've had.

 

Thanks. I didn't know individual HSA's existed until this post.  I thought this whole discussion was about the type of employer sponsored plan which I have. 

[Castanza]

I recently opened an HSA and a guy I work with was explaining to me that you can pay for a medical procedure out of pocket and get reimbursed anytime from the funds in your HSA as long as you have the receipt. So basically you could use the triple tax free advantage merely for investing. Save every receipt until you’re “pick an age” (even before retirement age) and get reimbursed tax free.

 

Now I’m not sure if there are big structural differences between HSA providers (besides the cash holding minimum for investment). Anyone with knowledge in this space?

[stahleyp]

Fidelity. No annual fees or commissions.

[TwoCitiesCapital]

I recently opened an HSA and a guy I work with was explaining to me that you can pay for a medical procedure out of pocket and get reimbursed anytime from the funds in your HSA as long as you have the receipt. So basically you could use the triple tax free advantage merely for investing. Save every receipt until you’re “pick an age” (even before retirement age) and get reimbursed tax free.

 

Now I’m not sure if there are big structural differences between HSA providers (besides the cash holding minimum for investment). Anyone with knowledge in this space?

 

Sounds like a lot of work...and I'd never trust myself to keep records that long (30+ years in my case to maximize benefit deferri).

 

I just pay for my minor medical expenses out of pocket and use my HSA for investment purposes

[fareastwarriors]

I use my HSA as an investment account.

[CorpRaider]

I reimburse myself for medical expenses when incurred.  Use payroll deductions to fund in order to get employment tax benefit. 

 

Record keeping burden for the deferred reimbursement strategy is ridiculous and risky imop (nightmares of data loss in year 20 followed by audit in year 25...when you are taking all these big suspicious $$$ amounts out).  I max it out and the account still grows nicely; probably not a great option for everyone depending on terms of the HDHP and your annual medical expenditures.

 

[Castanza]

I reimburse myself for medical expenses when incurred.  Use payroll deductions to fund in order to get employment tax benefit. 

 

Record keeping burden for the deferred reimbursement strategy is ridiculous and risky imop (nightmares of data loss in year 20 followed by audit in year 25...when you are taking all these big suspicious $$$ amounts out).  I max it out and the account still grows nicely; probably not a great option for everyone depending on terms of the HDHP and your annual medical expenditures.

 

Thanks for that. Also i guess if you live e generally healthy life and are lucky enough to avoid any significant medical expenses you wouldn't be getting reimbursed much to begin with. Does seem like pain to hold onto receipts for 20 years.