4 ms·

Part of that is why HSA's are heavily promoted since you get pre-tax dollars to go toward an account you can use specifically for these reasons. So in essence,

Part of that is why HSA's are heavily promoted since you get pre-tax dollars to go toward an account you can use specifically for these reasons. So in essence, that "out of pocket" money would be coming from your HSA. In practice however, that's not really the norm.

danaris 5y ago
Unfortunately, I've never been offered an HSA that's not "use it or lose it", meaning I have to know my medical expenses for the entire next year during the open enrollment period in the fall in order to properly benefit from it.
- lotsofpulp 5y ago
  HSA is legally yours, and no one can make you lose it. What you are referring to is a health FSA, which have no reason to exist anymore. Any employer that does not offer HSA eligible plans is shafting their employees. An HSA is a 401K, but better, since you can withdraw without penalty at any time for any healthcare expenses you had at any time in the past. And you can invest it into anything you want (just rollover your funds to a Fidelity HSA every year).
  - danaris 5y ago
    I mean, this was admittedly 10 years ago, but it was definitely described to me as an HSA at the time in all the literature I had access to.
  - Amezarak 5y ago
    This is great in theory, but HSAs are only offered with HDHPs, which means that every other year or so, despite contributing the IRS max, I spend out the entire account.
    - lotsofpulp 5y ago
      Assuming you have sufficient income, you should pay for expenses today with post tax dollars, and let the HSA money grow tax exempt as long as possible. The premium difference and the deductible difference between HDHP and non HDHP plan cancels out, generally. You either pay more premiums on an ongoing basis, or more at one time for the expense. Unfortunately, there is no getting around actually having a lot of healthcare expenses. But spending ~$6k out of pocket on healthcare every two years probably puts you a couple standard deviations above average spend category unless you are old.
      - Amezarak 5y ago
        Nothing too crazy. A kid one year, two minor surgeries in other years. Fortunately no ER visits. It has indeed been my experience that the cost of a non-HDHP plan is approximately the same when all is said and done, but I’ve considered going back anyway. There’s “loopholes” in the system that you end up falling through. For example: - have a kid at the beginning of the year, meet your deductible and out of pocket, drain the HSA to do so, but hey, free medical care for the rest of the year and you can build the HSA up again, right? Nope, your division gets acquired, you’re laid off and rehired, and your “new” health insurance (same carrier and deductible as the old) has a brand new unmet deductible. - providers demand prepayment. Fairly unusual, but it happens. Say you need a minor surgery. Well, the MD and hospital want prepayment. Both of them see you have 4K left on your deductible and want 4K each upfront. Don’t worry, you’ll be refunded / have a credit on your account by whoever files last whenever they file the insurance claim three or more months from now. Bonus: any doctor you visit in the meantime still sees your deductible unmet because the claims haven’t been processed. - medical billing is awful. HDHPs expose you to more of it because more of your actual cash is in okay. Providers bill the wrong amounts, fail to realize you have credits on your account, file as out of network instead of in network resulting in a different discounted cash price, etc. IME, any health problem requiring more than routine doctor visit plus xray or ultrasound is going to be many thousands of dollars. Who knows what the median is, but there’s a reason the total insurance premium for a family HDHP hovers around 20k. And yeah, I see what you’re saying, but yeah, my cash flow is not sufficient for that. Or at least, it doesn’t seem worth it for a potential payoff decades from now.
- caturopath 5y ago
  That wasn't an HSA, that was an FSA (or an HRA or something else). FSAs (other than LPFSAs) cannot be used with HDHPs, which are the plans that allow HSAs. An actual HSA is your money. If you don't spend it on medical care, you can withdraw it when you are elderly as normal money.
  - PaulDavisThe1st 5y ago
    and tax-free to boot. I have an HSA, but I'm painfully aware of how it's just another boondoggle for the wealthy. I can dump cash into it on top of the limits for my 401k and IRAs, and pull it out tax-free with no limits once I turn 65. Another good example of how an idea that sounds fairly good on paper turns out to be another benefit for the rich in real life.
    - caturopath 5y ago
      If you aren't reimbursing medical expenses, the money is taxed, even when you are 65+. (It functions sort of like a Traditional IRA in that circumstance.) The real trick is to save medical receipts for years/decades and reimburse only when you actually need the money, paying out of pocket until then.
      - PaulDavisThe1st 5y ago
        What I mean is yes, indeed, it functions like an additional traditional IRA, gains are accumulated tax free, and the balance can be withdrawn in any way you want post-65. Does that trick actually work?
        caturopath 5y ago
        > Does that trick actually work? There is no time-boxing on reimbursement, so it should. HSAs are only about a decade old, so no one has done the extreme versions of it yet, but a decent number of folks are squirreling away receipts and letting the money grow.
        5y ago
- astura 5y ago
  You're describing an FSA, not an HSA, HSAs are not use-it-or-lose-it. FSAs and HSAs are different types of tax-advantaged accounts with different rules, but both can be used to pay medical expenses. There's also HRAs too that's another different type of tax advantaged account and can also be used to pay for medical expenses. This complexity is part of the problem.

danaris 5y ago

Unfortunately, I've never been offered an HSA that's not "use it or lose it", meaning I have to know my medical expenses for the entire next year during the open enrollment period in the fall in order to properly benefit from it.

lotsofpulp 5y ago
HSA is legally yours, and no one can make you lose it. What you are referring to is a health FSA, which have no reason to exist anymore. Any employer that does not offer HSA eligible plans is shafting their employees. An HSA is a 401K, but better, since you can withdraw without penalty at any time for any healthcare expenses you had at any time in the past. And you can invest it into anything you want (just rollover your funds to a Fidelity HSA every year).
- danaris 5y ago
  I mean, this was admittedly 10 years ago, but it was definitely described to me as an HSA at the time in all the literature I had access to.
- Amezarak 5y ago
  This is great in theory, but HSAs are only offered with HDHPs, which means that every other year or so, despite contributing the IRS max, I spend out the entire account.
  - lotsofpulp 5y ago
    Assuming you have sufficient income, you should pay for expenses today with post tax dollars, and let the HSA money grow tax exempt as long as possible. The premium difference and the deductible difference between HDHP and non HDHP plan cancels out, generally. You either pay more premiums on an ongoing basis, or more at one time for the expense. Unfortunately, there is no getting around actually having a lot of healthcare expenses. But spending ~$6k out of pocket on healthcare every two years probably puts you a couple standard deviations above average spend category unless you are old.
    - Amezarak 5y ago
      Nothing too crazy. A kid one year, two minor surgeries in other years. Fortunately no ER visits. It has indeed been my experience that the cost of a non-HDHP plan is approximately the same when all is said and done, but I’ve considered going back anyway. There’s “loopholes” in the system that you end up falling through. For example: - have a kid at the beginning of the year, meet your deductible and out of pocket, drain the HSA to do so, but hey, free medical care for the rest of the year and you can build the HSA up again, right? Nope, your division gets acquired, you’re laid off and rehired, and your “new” health insurance (same carrier and deductible as the old) has a brand new unmet deductible. - providers demand prepayment. Fairly unusual, but it happens. Say you need a minor surgery. Well, the MD and hospital want prepayment. Both of them see you have 4K left on your deductible and want 4K each upfront. Don’t worry, you’ll be refunded / have a credit on your account by whoever files last whenever they file the insurance claim three or more months from now. Bonus: any doctor you visit in the meantime still sees your deductible unmet because the claims haven’t been processed. - medical billing is awful. HDHPs expose you to more of it because more of your actual cash is in okay. Providers bill the wrong amounts, fail to realize you have credits on your account, file as out of network instead of in network resulting in a different discounted cash price, etc. IME, any health problem requiring more than routine doctor visit plus xray or ultrasound is going to be many thousands of dollars. Who knows what the median is, but there’s a reason the total insurance premium for a family HDHP hovers around 20k. And yeah, I see what you’re saying, but yeah, my cash flow is not sufficient for that. Or at least, it doesn’t seem worth it for a potential payoff decades from now.
caturopath 5y ago
That wasn't an HSA, that was an FSA (or an HRA or something else). FSAs (other than LPFSAs) cannot be used with HDHPs, which are the plans that allow HSAs. An actual HSA is your money. If you don't spend it on medical care, you can withdraw it when you are elderly as normal money.
- PaulDavisThe1st 5y ago
  and tax-free to boot. I have an HSA, but I'm painfully aware of how it's just another boondoggle for the wealthy. I can dump cash into it on top of the limits for my 401k and IRAs, and pull it out tax-free with no limits once I turn 65. Another good example of how an idea that sounds fairly good on paper turns out to be another benefit for the rich in real life.
  - caturopath 5y ago
    If you aren't reimbursing medical expenses, the money is taxed, even when you are 65+. (It functions sort of like a Traditional IRA in that circumstance.) The real trick is to save medical receipts for years/decades and reimburse only when you actually need the money, paying out of pocket until then.
    - PaulDavisThe1st 5y ago
      What I mean is yes, indeed, it functions like an additional traditional IRA, gains are accumulated tax free, and the balance can be withdrawn in any way you want post-65. Does that trick actually work?
      - caturopath 5y ago
        > Does that trick actually work? There is no time-boxing on reimbursement, so it should. HSAs are only about a decade old, so no one has done the extreme versions of it yet, but a decent number of folks are squirreling away receipts and letting the money grow.
      - 5y ago
astura 5y ago
You're describing an FSA, not an HSA, HSAs are not use-it-or-lose-it. FSAs and HSAs are different types of tax-advantaged accounts with different rules, but both can be used to pay medical expenses. There's also HRAs too that's another different type of tax advantaged account and can also be used to pay for medical expenses. This complexity is part of the problem.