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Post Info TOPIC: HSA


RV-Dreams Community Member

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HSA


How do i open a HSA account?

My employer doesnot offer an HSA.

They have HRA and FSA accounts but i don't think those are HSA

thanks

jim



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It's been a few years since we opened ours, but first you have to have a HSA compatible health insurance policy. Ours was with BCBS FL. Then you must find a bank that has HSA bank accounts. Not all banks do. Ours is with Bank of NY Mellon. You then deposit $ in that account for which you may use to pay medical out of.

I don't know what a HRA is, but a FSA is a flexible spending account. From what I understand, if you don't spend the money deposited in the FSA within a certain time frame, you lose it. In a HSA, if you stay healthy and don't spend the money, it is yours to keep once you turn 65. You then don't have to spend it on only medical items, but you will pay taxes on the withdrawals if not for medical.



-- Edited by Dance Chick on Thursday 31st of December 2015 10:44:21 AM

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Dance Chick wrote:

It's been a few years since we opened ours, but first you have to have a HSA compatible health insurance policy. Ours was with BCBS FL. Then you must find a bank that has HSA bank accounts. Not all banks do. Ours is with Bank of NY Mellon. You then deposit $ in that account for which you may use to pay medical out of.

I don't know what a HRA is, but a FSA is a flexible spending account. From what I understand, if you don't spend the money deposited in the FSA within a certain time frame, you lose it. In a HSA, if you stay healthy and don't spend the money, it is yours to keep once you turn 65. You then don't have to spend it on only medical items, but you will pay taxes on the withdrawals if not for medical.



-- Edited by Dance Chick on Thursday 31st of December 2015 10:44:21 AM


Your saying in the USA if you put money in a savings account and don't spend it the bank takes the money? How could that be ? makes no sense  can anyone explain this situation 



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www.healthcare.gov/flexible-spending-accounts/


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The FSA account is designed to allow you to pay for certain medical expenses using pre-tax dollars. If you have routine or known upcoming expenses you could have a predetermined amount withheld from paychecks to cover those expenses. You get a smalll but nice tax benefit. It would be unwise for obvious reasons to dump large chunks into a FSA for "potential" medical problems. HSAs, if available to you, would be a better option. FSAs are usually limited in size so it's not practical to use for major medical in a given year.

It requires a certain amount of planning to successfully employ an FSA account but they do have their uses. WE use it for doctor copays, OTC medications, eyeglasses etc. Yes you could lose unused FSA money, that is why it requires some preplanning and why they are limited in size.

On edit, one of the beauties of the FSA is you have access to the full account from Jan 1st of the year in question. Say you arrange for 100 per month to be withheld from your check pre-tax. That's 1200 dollars you could theoretically use for any number of allowed medical related items right off the bat even though you will be paying for them every month for a year. Each year, you can adjust what you wish to spend in this way.

We plan what we think will need and subtract about 10% so we don't leave anything on the table at the end of the year. In our tax bracket, it's a savings of about 100 dollars a year. It takes only 5 minutes to figure it out, so the return on our time is well worth it. YMMV as they say.



-- Edited by BiggarView on Friday 1st of January 2016 09:48:48 AM

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thanks for the explanation brian would it not be easier and better to simply deduct those expense at the end of the tax year and claim a refund then?

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You could do that, but now there is a different set of rules in play. Plus a paperwork drill. Just love the US Tax Code.bleh



-- Edited by BiggarView on Thursday 31st of December 2015 12:58:00 PM

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Eligibility for an Health Savings Account (HSA)

  • First you have to have a High Deductible Health Plan (HDHP) which means a minimum annual deductible of $1,300 for single, $2,600 for family.  Those numbers are for both 2015 and 2016.
  • You can have no other health coverage.
  • You can't be enrolled in Medicare.
  • You can't be claimed as a dependent on anyone else's tax return. 

Generally, health insurance providers will indicate which of their plans are "HSA eligible", but you may have to ask.

Once you have established your HDHP, you can open an HSA at any financial institution that offers them.  As mentioned by Dance Chick, not all banks or even brokerage firms offer them.  Usually, your health insurance company will recommend or prefer that you use a bank they are affiliated with, but you are not required to use them.

Selecting the insurance plan is the more difficult process.  Once that is done and premiums are paid, the HSA part is pretty easy.

If you don't have an HDHP yet, contact our friends at RVer Insurance Exchange and they'll help walk you through the options.

For information about some of the benefits of HSAs, check out our HSA page which includes a link to the IRS publication on HSAs.  



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Not all insurance policies with a high deductible qualify for an HSA. When you get your policy, you need to confirm that it qualifies as HSA eligible. You put money into the HSA account every year (there are limits) and that lowers your taxable income. When you take the money out to reimburse yourself for medical expenses (assuming that you are under age 65), this money is "pre-tax" money. After you turn age 65, the money in the HSA becomes an IRA - you can spend it on anything; but if it is not medical, it becomes taxable income the same as a regular IRA.

Ticat900 said "would it not be easier and better to simply deduct those expense at the end of the tax year and claim a refund then?" The answer is no. In order to deduct medical expenses, you have to itemize your deductions (the most common and usually largest is mortgage interest on a primary residence). Then, the first 10% (7.5% if you are over age 65) of the medical expenses, you cannot deduct. This means that you have to have a major health problem in order to be able to itemize. Example - married couple age 60 with taxable income of $50,000. No mortgage. 2014 standard deduction for married couple filing joint was $12,400. This means that in order for medical expenses to help them, this couple would have had to have medical expenses (plus health insurance premiums) that were unreimbursed by insurance of over $17,400! (You can always take the standard deduction of $12,400 and then the first 10%-$5,000 in this case-you don't get to claim.) Now let's assume that couple was in a 10% tax bracket. The $4,000 that they actually spent on medical expenses only cost them $3,600 in "after tax" money.

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My best friend is on medicare and his wife.They pay no monthly premiums other then the 110$ each deducted form there SS
why do people keep talking about needing extra insurance when your over 65 on the medicare program
He says him and his wife are fully covered with some small small copays that he says are not even big enough to worry about
why is every persons story different in the us(65 and over) he had to go in recently because he thought he was having the big one.they did all the tests etc
and he said he never got billed for anything?

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ticat900 wrote:

My best friend is on medicare and his wife.They pay no monthly premiums other then the 110$ each deducted form there SS
why do people keep talking about needing extra insurance when your over 65 on the medicare program
He says him and his wife are fully covered with some small small copays that he says are not even big enough to worry about
why is every persons story different in the us(65 and over) he had to go in recently because he thought he was having the big one.they did all the tests etc
and he said he never got billed for anything?


 The short answer is everybody has different situations. If your best friend retired with a lucrative retirement healthcare package (typical offered by some federal, state, municiple governments, entities like schoolboards etc., or some large private entities before they started to cut back on these job perks), then they may only need the basic Medicare coverage and their "plans" covers everything else. Most people are not so lucky and the younger you are the less likely you are to get such coverage. The times, they say, are a changin'.

For you up in Canada, healthcare is universal, at least in each province, but the way you pay for it through taxes is different than in the USA, but you are still paying for it. At the risk of taking this thread off on a different tangent... I prefer the Canadian way of managing their healthcare system but there is nothing I can do about that short of moving back to Canada and that is not going to happen any time soon, if ever.

FWIW, Brian



-- Edited by BiggarView on Sunday 3rd of January 2016 07:51:41 AM

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Brian, Cindi & Josie (our fur baby)



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From what i am hearing, it is not possible for me to get a HSA, working for my particular employer.

Could another option be, i open a small business and then open an HSA for my business ....not sure if i am saying the right thing...

Worst of all, i may just have to use after tax money to pay for health expenses in the early-retirement future.
I pay around 18% in federal taxes now and during early retirement, i expect to be around 10% tax bracket
So for pretax HSA contrib of $6500/year, i am losing $520/yr for the next 6 years ie around $4000 (assuming
a 5% compounded growth). Is that correct? If so, this is not the end of the world for me.... i guess Santa will
have to offer a few less gifts to my family.



-- Edited by wannabe on Sunday 3rd of January 2016 08:43:02 AM

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RV-Dreams Family Member

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Double check with your employer. More companies are using HSA's as an option on their health insurance. I also see a lot of companies that make significant changes to their health insurance each year because of cost.

Please check with your tax advisor before you open a small business. Especially if you want to run your health insurance through it. You'll need to try to make a profit, payroll taxes need to be handled by a pro or it will cost you a fortune in penalties, additional record keeping, etc. Also, some states will not allow a business health insurance plan that covers less than a certain number of people.

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