Health Savings Account rant

[tynopik]

I could have sworn you could only roll over an HSA ONE time in a lifetime (according to IRS rules). Correct me if I'm wrong here.

you may be thinking of an IRA to HSA rollover

HSA to HSA rollover is limited to once every 12 months

Also, Is it possible to contribute to my HSA with already taxed money? As in, contribute to my HSA with dollars that were already taxed from my paycheck and then claim them on my tax return?

you can certainly put after-tax dollars in (although that reduces some of the HSA attractiveness), I don't know the tax implications though

 

[edro]

Also, Is it possible to contribute to my HSA with already taxed money? As in, contribute to my HSA with dollars that were already taxed from my paycheck and then claim them on my tax return?

Good question. I wonder the same.

This site says yes, but I don't know how credible it is:
http://www.conexismarketing.com/emp...avings-accounts/guidelines-for-using-your-hsa

Direct contributions. You can add after-tax dollars to your HSA, and so can your family and friends. These HSA contributions aren’t tax-free, but they can be deducted on your tax return.* Plus, if you’re making a direct contribution from your banking account, you can set it as a recurring option in your online account.

*HSA contributions are deducted before federal and most state taxes. Savings vary depending on your tax bracket. Check with your tax advisor for details regarding your state taxes and your tax savings. Also talk to your tax advisor to see if you qualify for above-the-line deductions.

 

[highland145]

Good question. I wonder the same.

This site says yes, but I don't know how credible it is:
http://www.conexismarketing.com/emp...avings-accounts/guidelines-for-using-your-hsa

I contribute directly to my HSA. The bank sends a form at the 1st of the year and I deduct the $$ from taxable income.

 

[dullard]

Also, Is it possible to contribute to my HSA with already taxed money? As in, contribute to my HSA with dollars that were already taxed from my paycheck and then claim them on my tax return?

That is how most all people do it. It reduces your AGI, meaning it can put you in a lower tax bracket, qualify you for federal programs that you may be too high of an income earner to use, AND just drop your tax.

1040 Line #25
http://pics.bbzzdd.com/users/dullard/HSA1040Line25.JPG

Form 8889 looks bad, but it only takes a few seconds to fill out if you don't withdraw in the year (which you shouldn't mathmatically):
http://www.irs.gov/pub/irs-pdf/f8889.pdf

 

[IronWing]

That is how most all people do it. It reduces your AGI, meaning it can put you in a lower tax bracket, qualify you for federal programs that you may be too high of an income earner to use, AND just drop your tax.

1040 Line #25
http://pics.bbzzdd.com/users/dullard/HSA1040Line25.JPG

Form 8889 looks bad, but it only takes a few seconds to fill out if you don't withdraw in the year (which you shouldn't mathmatically):
http://www.irs.gov/pub/irs-pdf/f8889.pdf

Form 8889 is simple but the term "distributions" is used in two different contexts on the form which can be confusing. Read the instructions carefully.

 

[ultimatebob]

God I wish I knew this

Yeah... my HSA was raping me in monthly fees, and I ended up taking the 20% hit so I wouldn't be paying them for the next 5 years.

 

[Born2bwire]

It's health insurance where instead of paying a premium (or having a reduced salary in the case of socialized medicine that you pay for via taxes) you get to keep the money tax-free and put it into a savings account to pay for your own medical expenses. But it's your money and you get to save it or use it as you wish.

Yeah, and Dullard gave some good explanations. The thing is, HSA works best as a way for offsetting your healthcare costs when you retire. It basically works like a retirement plan. My company will put money in each year, the money you put in is tax-exempt (which is taken off of your highest bracket), the money can be invested, and when you spend the money it does not contribute to your taxable income. So the best way to take advantage of this is to use the HSA to save for when you retire so that you make use of the tax advantage investments. Which is a hard way to think about the program.

Problem is that these are only eligible for high deductible plans. So you if you are consuming healthcare at the moment, it becomes very costly since you may have to spend several thousands of dollars before benefits kick in. Personally, HSA is a losing game for me because I am always hitting my maximum out of pocket expenses. So I have found that using a low deductible plan and a FSA (which lacks the investment program and does not roll over each year) is better for me.

So the way I have it right now, is that I max out my 401(k), IRA, and FSA. That pretty much keeps my cash reserves at a stable level throughout the year. So I don't have left over money for me to have invested in the HSA and pay my current medical bills. Maybe when I get married I'll have my spouse get a high deductible insurance plan and build up an HSA.