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Message
HSA Tax Deduction
Posted on 1/11/14 at 4:08 pm
Posted on 1/11/14 at 4:08 pm
I have an HSA account set up which allows me to invest a portion of the account value. Would it be wise to contribute the maximum amount, $3250, to this account to get the maximum tax deduction? Thanks in advance for the advice.
3
Posted on 1/11/14 at 4:39 pm to RoosterCogburn585
Yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes yes
Posted on 1/11/14 at 5:00 pm to Volvagia
quote:
yes
Posted on 1/11/14 at 5:17 pm to ell_13
Thanks for the additional emphasis
On a more serious note: it allows you to put money in the market pre-tax, not pay taxes on growth, and not pay taxes on health related withdrawals.
Even if you have a really lucky life, medical care is by far the highest end of life cost
On a more serious note: it allows you to put money in the market pre-tax, not pay taxes on growth, and not pay taxes on health related withdrawals.
Even if you have a really lucky life, medical care is by far the highest end of life cost
This post was edited on 1/11/14 at 5:19 pm
Posted on 1/12/14 at 4:52 am to Volvagia
quote:
Even if you have a really lucky life, medical care is by far the highest end of life cost
No, supplement insurance is that covers what Medicare doesn't.
Cost me 4 times more then what medicare does and covers less. 
Posted on 1/13/14 at 6:21 am to RoosterCogburn585
quote:
Would it be wise to contribute the maximum amount, $3250, to this account to get the maximum tax deduction?
YES
GREAT tax shelter, maybe best available...put max in every year, invest it, and don't touch it...it will grow tax free and will be tax free withdrawal later in life when you use it...
Posted on 1/13/14 at 9:31 am to RoosterCogburn585
I put 2K in per year. This is my third year being in an HSA. With the comments I have read I am going to max it from now on.
Posted on 1/13/14 at 9:51 am to Mariner
I've maxed mine out for almost 3 years and have $6k in mine just sitting there for a rainy day. I have an employer match of $125 per month to help meet my deductible. pretty sweet.
Posted on 1/13/14 at 11:24 am to Chaplain
If I'm extremely healthy, and very rarely, if ever actually have medical expenses, why would I want excess money in my HSA?
If I need money for an emergency, I will be penalized (on top of taxed) for any money I take out for non medical expenses.
Can someone explain to me why you'd keep "rainy day" money in an HSA if you never really incur any medical expenses?
ETA: I do put money into my HSA, but I also keep a separate savings account for any non medical emergencies that may arise.
If I need money for an emergency, I will be penalized (on top of taxed) for any money I take out for non medical expenses.
Can someone explain to me why you'd keep "rainy day" money in an HSA if you never really incur any medical expenses?
ETA: I do put money into my HSA, but I also keep a separate savings account for any non medical emergencies that may arise.
This post was edited on 1/13/14 at 11:26 am
Posted on 1/13/14 at 11:32 am to dcrews
1. I don't miss the money
2. It's there when I need it for any doctors copays, prescriptions, or unexpected medical expenses.
3. I can use it for my wife or daughters medical expenses (braces are expensive)
4. I'm saving up for LASIK surgery tax free.
ETA: I'm not saying that maxing out an HSA is best for everyone, it's just the best case for my family.
2. It's there when I need it for any doctors copays, prescriptions, or unexpected medical expenses.
3. I can use it for my wife or daughters medical expenses (braces are expensive)
4. I'm saving up for LASIK surgery tax free.
ETA: I'm not saying that maxing out an HSA is best for everyone, it's just the best case for my family.
This post was edited on 1/13/14 at 11:41 am
Posted on 1/13/14 at 12:12 pm to Volvagia
quote:
Even if you have a really lucky life, medical care is by far the highest end of life cost
The vagaries of health. Went in for a continuing 90-day oncologist monitoring/workup this AM and a new doctor comes in the exam room and informs me my oncologist has cancer, is doing chemo, and might be back by the next scheduled visit. I saw him getting an infusion when leaving and went in and spoke with him, dude has lost 40 lbs in 90-days and wasn't fat to begin with. Another friend was diagnosed with t-cell lymphoma last year @ 47. The odds of needing $ for health related reasons prior to 60 are getting higher in my experience, plus ask many seniors what they are paying for Medicare supplemental and OOP costs and the HSA $ could come in very handy.
Posted on 1/13/14 at 12:31 pm to Chaplain
quote:
1. I don't miss the money
2. It's there when I need it for any doctors copays, prescriptions, or unexpected medical expenses.
3. I can use it for my wife or daughters medical expenses (braces are expensive)
4. I'm saving up for LASIK surgery tax free.
ETA: I'm not saying that maxing out an HSA is best for everyone, it's just the best case for my family.
That all makes perfect sense. I was just trying to figure out for a single, healthy, 29 year old who never goes to the doctor, nor has any prescriptions, what would be the reasoning for me to do this.
I guess for my particular situation, it doesn't seem the best option.
Posted on 1/13/14 at 1:33 pm to dcrews
Because it's the only savings vehicle that's tax advantaged on the front-end and the back-end.
You're saving and growing (brokerage option) money for health related expenses over time instead of back-loading them.
I'm in my 20's and on the HDHP with an HSA. The way I see it: (a) max out of pocket is similar so the same risk to me exists, (b) the monthly HDHP premium + the HSA contribution is similar to the monthly PPO premium so the cost is similar, (c) if the costs and risks are similar, I prefer the growth, tax deduction, and savings offset for later in life instead of the sunk cost of the PPO premium.
After age 65, you can withdraw funds for any reason without the 20% penalty (if not used for medical related expenses income taxes will apply) so it in affect becomes a way to boost traditional IRA contributions by 60.00%. I welcome the tax deduction for saving that I intended to do in the first place.
If you do use it for medical related expenses, then income taxes do not apply and the government funded 25% or 28% or 33% (or whatever tax bracket you're in) of that expense.
You're saving and growing (brokerage option) money for health related expenses over time instead of back-loading them.
I'm in my 20's and on the HDHP with an HSA. The way I see it: (a) max out of pocket is similar so the same risk to me exists, (b) the monthly HDHP premium + the HSA contribution is similar to the monthly PPO premium so the cost is similar, (c) if the costs and risks are similar, I prefer the growth, tax deduction, and savings offset for later in life instead of the sunk cost of the PPO premium.
After age 65, you can withdraw funds for any reason without the 20% penalty (if not used for medical related expenses income taxes will apply) so it in affect becomes a way to boost traditional IRA contributions by 60.00%. I welcome the tax deduction for saving that I intended to do in the first place.
If you do use it for medical related expenses, then income taxes do not apply and the government funded 25% or 28% or 33% (or whatever tax bracket you're in) of that expense.
This post was edited on 1/13/14 at 1:35 pm
Posted on 1/13/14 at 3:05 pm to Hand
quote:
Because it's the only savings vehicle that's tax advantaged on the front-end and the back-end.
You're saving and growing (brokerage option) money for health related expenses over time instead of back-loading them.
I'm in my 20's and on the HDHP with an HSA. The way I see it: (a) max out of pocket is similar so the same risk to me exists, (b) the monthly HDHP premium + the HSA contribution is similar to the monthly PPO premium so the cost is similar, (c) if the costs and risks are similar, I prefer the growth, tax deduction, and savings offset for later in life instead of the sunk cost of the PPO premium.
After age 65, you can withdraw funds for any reason without the 20% penalty (if not used for medical related expenses income taxes will apply) so it in affect becomes a way to boost traditional IRA contributions by 60.00%. I welcome the tax deduction for saving that I intended to do in the first place.
If you do use it for medical related expenses, then income taxes do not apply and the government funded 25% or 28% or 33% (or whatever tax bracket you're in) of that expense.
Makes sense.
Right now, my company fronts us roughly 35% of the HDHP deductible straight into our HSA on Jan 1st of every year. I contribute enough each month to cover the remainder of the deductible (65%) for the year.
I just would hate for me to put even more of my monthly income into the account, only to have a non medical related emergency arise and not be in a good position financially to handle it.
Once I get my vehicle paid off, I will probably do what everyone else is recommending and max it out, but for now, I think I'm comfortable with the balance of my budget that goes to HSA and the portion I keep for non medical emergencies.
Good info in this thread though.
Posted on 3/14/14 at 1:10 pm to dcrews
bump
My company is changing our insurance and one of the first changes is to our deductible. We're going from $1k to $1500 which brings us over the minimum to qualify for a HSA.
Question, our comapany is only offering a FSA, but I want an HSA. Do I still qualify for a HSA, if yes, who does the MB suggest?
TIA.
My company is changing our insurance and one of the first changes is to our deductible. We're going from $1k to $1500 which brings us over the minimum to qualify for a HSA.
Question, our comapany is only offering a FSA, but I want an HSA. Do I still qualify for a HSA, if yes, who does the MB suggest?
TIA.
Posted on 3/14/14 at 1:49 pm to Oenophile Brah
quote:
Question, our comapany is only offering a FSA, but I want an HSA. Do I still qualify for a HSA, if yes, who does the MB suggest?
How big of a company do you have? I'd go talk to your HR person or owner or somebody and see if they will offer an HSA for you. If they will do it, they can withhold the money pre-tax and send it directly to the account. They don't have to do the match. It doesn't cost the company anything except the time to send the contribution over. I know a lot of companies that do just this.
Otherwise, you can go and open up an HSA account with pretty much any major bank or brokerage. You just send them money whenever you want to, or you can set up to have them EFT it out on a regular basis if your checking account.
If you do it yourself, you are funding it with after-tax dollars. However, you will be able to take a deduction on your income tax return of whatever money you put in (up to the max).
At the end of the day you'll be in the same place financially.
Posted on 3/14/14 at 2:18 pm to LSUFanHouston
quote:
How big of a company do you have?
Fairly large. 600+ total, and about 150 in the local area.
I'll be curious to see if they will make an exception.
It seems like if I set up the account myself, I could direct HR to distribute the amount pre-tax to the HSA?
Thanks for the response
Posted on 3/14/14 at 4:18 pm to Oenophile Brah
quote:
I'll be curious to see if they will make an exception.
My guess is you aren't the only employee thinking about this. Have a few of y'all go to HR together. I'm sure the company's benefit advisor mentioned HSAs to the company when the decision to go HDHP was made.
quote:
It seems like if I set up the account myself, I could direct HR to distribute the amount pre-tax to the HSA?
Yup. As long as everyone agrees to it and the forms are all filled out right.
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