HSA = Turbo IRA?!

[longtime_lurker]

Hey all,

Open enrollment time is upon us, and while I've had an HSA for awhile, I've been looking at some of the benefits I didn't know about HSAs (no FICA taxes, no penalty on non-healthcare expenses after 65, ability to invest), and my goodness this account (if you're eligible) is amazing! If I could max my contributions, I think the order would be as follows:

1) Employer 401k up to match

2)HSA

3)Roth IRA (if income level meets guidelines)

4)Traditional IRA/401k (depending on situation)

It's pretty weird to think about an HSA as a retirement account, but I had been putting the difference between my company's "basic" medical plan premium and the HDHP - now I will be maxing it per year (currently 3,350). If someone has chronic health problems, I could see where a normal, company PPO could be better - but for most people (especially younger individuals), you still know your maximum out of pocket (in my company's case it was no lower on the basic plan), you're just liable for more upfront.

Something to think about, anyways. Would love to hear other's opinions!

[bada_bing]

I have been eligible and maxing my HSA for three years now. I agree that

HSA's are one of the under utilized accounts, maybe the most underutilized

for the benefits received. You are right on the money about an HSA being an

IRA on steroids. I max out mine and inform my coworkers of the unpublicized

benefits of the program.

The drawbacks though are eligibility & plans. My employers plan is poor on

investment options, I use a high fee index fund because that's the best it

has offered. My plan also requires a minimum $1000 cash balance remain

univested. I know you are allowed to have an HSA account at a different provider

than your employer uses, and I plan to roll all but my minimum balance over

to Fidelity next year. A lot of top tier investment firms don't do HSA's. Schwab

doesn't and they are my preferred brokerage.

I've read that the HSA isn't very popular with politicians now and they would like

to steer people's health care money in a different direction. HSA rules may be changed

or even discontinued in the future. We can't have the plebs have too much control over

their own health care finances' now can we.

Thanks for reminding me about my HSA,  I had forgotten my resolution to find a

better custodian and do a rollover in the new year.

[longtime_lurker]

---

@bada_bing wrote:

I have been eligible and maxing my HSA for three years now. I agree that

HSA's are one of the under utilized accounts, maybe the most underutilized

for the benefits received. You are right on the money about an HSA being an

IRA on steroids. I max out mine and inform my coworkers of the unpublicized

benefits of the program.

The drawbacks though are eligibility & plans. My employers plan is poor on

investment options, I use a high fee index fund because that's the best it

has offered. My plan also requires a minimum $1000 cash balance remain

univested. I know you are allowed to have an HSA account at a different provider

than your employer uses, and I plan to roll all but my minimum balance over

to Fidelity next year. A lot of top tier investment firms don't do HSA's. Schwab

doesn't and they are my preferred brokerage.

I've read that the HSA isn't very popular with politicians now and they would like

to steer people's health care money in a different direction. HSA rules may be changed

or even discontinued in the future. We can't have the plebs have too much control over

their own health care finances' now can we.

Thanks for reminding me about my HSA,  I had forgotten my resolution to find a

better custodian and do a rollover in the new year.

---

Right, those with conditions needing high maintence might not be better served on a HDHP/HSA combination.

I'm very curious (and surprised!) that politicians are unhappy with HSA's. What articles were you reading? I would love to look at this issue.

@I'm not sure my custodian is the best, but my employer uses  UMB Bank out of Kansas City, MO and I have no real complaints. Yes, there is still the $1,000 minimum @ .1%, but they do have a pretty expansive list of funds: https://hsa.umb.com/groups/public/documents/web_content/001590.pdf

[heyitsyeh]

Think about it. Obamacare is trying to get more people to pay for other people's stuff, and HSAs effectively put more of the responsibility on the individual (you pay for what you need). I can't convince you either way which approach is right, but you can see why some politicians would frown on HSAs.

For me, I own an HSA for the sole purpose of saving up for a tax-free LASIK or orthodontal procedures, neither of which are covered in most vision/dental plans.

[Anonymous]

Remember, the best thing about HSA is that you can pay for your medical expense with your CC without touching your hsa account.

You can withdrawal, the amount you paid out of pocket, from your HSA later; just save your receipt.

If your employee provides you with limited FSA use that for your LASIK. FSA is use it or lose it. Only $500 is eligible for roll over, so choose your amount carefully.

[vanillabean]

---

@heyitsyeh wrote:

Think about it. Obamacare is trying to get more people to pay for other people's stuff, and HSAs effectively put more of the responsibility on the individual (you pay for what you need). I can't convince you either way which approach is right, but you can see why some politicians would frown on HSAs.

---

Maybe those who think that "you’ve got to make sure that people can’t game the system and just wait until they get sick before they go try to buy health insurance."

Anyway, what happens if you go before your HSA money is fully used up?

[heyitsyeh]

---

@Anonymous-own-fico wrote:

---

@heyitsyeh wrote:

Think about it. Obamacare is trying to get more people to pay for other people's stuff, and HSAs effectively put more of the responsibility on the individual (you pay for what you need). I can't convince you either way which approach is right, but you can see why some politicians would frown on HSAs.

---

Maybe those who think that "you’ve got to make sure that people can’t game the system and just wait until they get sick before they go try to buy health insurance."

Anyway, what happens if you go before your HSA money is fully used up?

---

It will essentially be treated as a tax-deferred (traditional) IRA.