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Posted: 9/30/2015 11:20:47 AM EDT
the thing that irks me is HSAbank charges me a few bucks a month as an account maintenance fee.
since i spend more on my family's medical each uyear than the 6K they allow me to deposit, does it even make sense to use a HSA?
i can use a specific CC for all my medical. log that and then at the end of the year deduct that
am i missing something? why do i even need a HSA if im not saving any money year to year to invest and grow tax free?
Link Posted: 9/30/2015 11:57:35 AM EDT
Ideally you would max out your contribution each year and never reimburse yourself for out of pocket medical expenses. Keep all receipts, and once you're retired, you can cash out of the HSA with all of those receipts and not pay tax on the capital gains.

(I think)

I'm no longer eligible for an HSA
Link Posted: 9/30/2015 12:03:53 PM EDT
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Quoted:
Ideally you would max out your contribution each year and never reimburse yourself for out of pocket medical expenses. Keep all receipts, and once you're retired, you can cash out of the HSA with all of those receipts and not pay tax on the capital gains.

(I think)

I'm no longer eligible for an HSA
View Quote



HSA can only be used to cash out on medical expenses though....
from what i have read
Link Posted: 9/30/2015 2:42:24 PM EDT
Quoted:
the thing that irks me is HSAbank charges me a few bucks a month as an account maintenance fee.
since i spend more on my family's medical each uyear than the 6K they allow me to deposit, does it even make sense to use a HSA?
i can use a specific CC for all my medical. log that and then at the end of the year deduct that
am i missing something? why do i even need a HSA if im not saving any money year to year to invest and grow tax free?
View Quote

Yes, it still makes sense.  Donations to your health savings account are not only exempt from income tax, they are exempt from FICA.

If you can afford to pay medical expenses out-of-pocket now it may make sense to do that and leave the HSA funds in the account to grow tax-free in investments.  You can still get reimbursed for the medical expenses in the future without paying a withdrawal penalty if you suddenly need cash.  Just make sure to keep your receipts.
Link Posted: 9/30/2015 2:49:14 PM EDT
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Quoted:

Yes, it still makes sense.  Donations to your health savings account are not only exempt from income tax, they are exempt from FICA.

If you can afford to pay medical expenses out-of-pocket now it may make sense to do that and leave the HSA funds in the account to grow tax-free in investments.  You can still get reimbursed for the medical expenses in the future without paying a withdrawal penalty if you suddenly need cash.  Just make sure to keep your receipts.
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Quoted:
Quoted:
the thing that irks me is HSAbank charges me a few bucks a month as an account maintenance fee.
since i spend more on my family's medical each uyear than the 6K they allow me to deposit, does it even make sense to use a HSA?
i can use a specific CC for all my medical. log that and then at the end of the year deduct that
am i missing something? why do i even need a HSA if im not saving any money year to year to invest and grow tax free?

Yes, it still makes sense.  Donations to your health savings account are not only exempt from income tax, they are exempt from FICA.

If you can afford to pay medical expenses out-of-pocket now it may make sense to do that and leave the HSA funds in the account to grow tax-free in investments.  You can still get reimbursed for the medical expenses in the future without paying a withdrawal penalty if you suddenly need cash.  Just make sure to keep your receipts.



so i can use the money in my HSA without penalty if i need to say buy a new roof for my house or other non medical expenses?
(i have lots of research to do still, just trying to get the basics)
if i fund my HSA every year and use all the funds though, i would be best remaining doing that as the 6K is pre tax. whereas any other additional out of pocket is not pre taxed?
Link Posted: 9/30/2015 3:18:14 PM EDT
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Quoted:
so i can use the money in my HSA without penalty if i need to say buy a new roof for my house or other non medical expenses?
(i have lots of research to do still, just trying to get the basics)
if i fund my HSA every year and use all the funds though, i would be best remaining doing that as the 6K is pre tax. whereas any other additional out of pocket is not pre taxed?
View Quote

Suppose you put $6k into it this year and you also have $6k in medical expenses.  Rather than paying with HSA funds, instead you decide to use after-tax funds from your checking account for your deductibles, copays, etc. and you leave the HSA funds alone.

In a future year you can withdraw the funds to reimburse yourself for the medical expenses incurred this year.  If you have investment gains those funds could be used to cover medical bills.

You do need to keep excellent records or risk getting hit with taxes and a stiff penalty if you can't prove you used the HSA money to reimburse yourself for a medical bill.
Link Posted: 10/1/2015 9:55:12 AM EDT
The funds must flow through the HSA to get the tax benefit.  As previously mentioned, contributions made directly from payroll not only avoid income taxes, but also FICA (Social Security/ Medicaid).

Withdrawals made for medical expenses are always tax and penalty free.
Withdrawals made after age 65 for any purpose are penalty free, but subject to income tax.

As others have mentioned, ideally you would let the funds accumulate and use the investment options to let them grow even further for as long as possible.

There is a very good write up with fact checked information on this subject at Bogelheads.org in their WIKI, I strongly encourage you to read that to see the different strategies available to you:
https://www.bogleheads.org/wiki/Health_savings_account
Link Posted: 10/1/2015 8:33:58 PM EDT
edit don't want to get in trouble for offering services
Link Posted: 10/11/2015 11:00:01 AM EDT
You still get the tax deduction, I would think even with the fees the HSA would still be a better option.
Link Posted: 10/13/2015 1:38:05 PM EDT
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edit don't want to get in trouble for offering services
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Better watch out for lurking OSJ's.
Link Posted: 11/1/2015 3:20:13 AM EDT
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Quoted:



HSA can only be used to cash out on medical expenses though....
from what i have read
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Discussion ForumsJump to Quoted PostQuote History
Quoted:
Quoted:
Ideally you would max out your contribution each year and never reimburse yourself for out of pocket medical expenses. Keep all receipts, and once you're retired, you can cash out of the HSA with all of those receipts and not pay tax on the capital gains.

(I think)

I'm no longer eligible for an HSA



HSA can only be used to cash out on medical expenses though....
from what i have read


Not exactly:

Long Term Care Insurance premiums are eligible, up to a certain dollar value.

I'm new to HSA and have no idea what exact amount is though.
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