5 ms·
FSAs are insane, conceptually. "Guess how much money you're spending in a year on healthcare! But beee caaareful: if you guess too high, YOU LOSE IT" I still
by i80and 1y ago
FSAs are insane, conceptually.
"Guess how much money you're spending in a year on healthcare! But beee caaareful: if you guess too high, YOU LOSE IT"
I still used mine while I still had access to one, but it was grumpy-making and was usually almost more trouble than it was worth.
- lotsofpulp 1y agoI don’t understand why any decision maker in any business in the USA chooses to offer their employees (and hence themselves) health FSAs at all, especially when the much superior in every way Fidelity HSA is available.
- supportengineer 1y agoHSA requires a high deductible health plan, not everyone could afford that deductible. "To contribute to an HSA, you'll need to be enrolled in an HSA-eligible health plan, also called a high-deductible health plan (HDHP)."
- xhrpost 1y agoYup, I agree HSA is superior but depending on your situation (and plans offered), the HDHP can be much more expensive out of pocket[1], even if you're paying with after tax dollars. Sweet spot I think is using a good low deductible plan when it makes sense but having a spouse with an HSA which both spouses can use for expenses. [1]: or so it seems, I tried to figure this out earlier in the year and the data is just lacking in order to make a perfect decision.
- delecti 1y agoHSAs are only available alongside high deductible plans (HDHP), which aren't necessarily ideal in all situations. FSAs are the only option like that if you don't have an HDHP.
- fnicfnac 1y agoWhat is the point of having a low deductible when you could put the premium difference in a HSA and use it on either the deductible or something uncovered?
- hibikir 1y agoThe math on whether you are ahead with the HSA or not is non trivial, especially if you are married and neither employer offers any subsidy when you put your spouse in your plan. HSAs are often better, but it's a very unfortunate math problem, where you carry quite a bit of risk. The HSA contributions from your employer are often nowhere near enough to make it win all the time. If your employer's does, consider yourself lucky. On any given open enrollment, my household has at least 30 combinations of healthcare plans to consider, and that's ignoring dentals, visions and the like
- bobmcnamara 1y agoThere are some cases where an HSA is unavailable. I've had an employer not offer a high deductible plan. I've had an employer offer a high deductible plan, but the insurer not supply it in my home state. There are cases where it doesn't make fiscal sense. One employer covered 1x premium/employee(spouses and kids were full rate).
- lotsofpulp 1y agoSurely, that is offset by having to forfeit or waste any FSA money not needed by the end of the year. It really only makes sense if you have a minimum amount of guaranteed healthcare expenses every year.
- tpmoney 1y agoAll the FSA money in your account is available immediately at the beginning of the year. Ironically that would make it a better choice for anyone with a lot of medical expenses on an HDHP if it wasn’t for the fact that FSAs are capped by law. As someone who does deal with enough medical stuff to clear the deductible (and sometimes the OOP max) on their normal health plan annually, it’s still much more convenient, again because the money is all there at the beginning of the year when the expenses are highest
- lotsofpulp 1y agoMy HSA money is also available in the first pay period of the calendar year. It’s up to the employer to decide when they want to contribute it.
- tpmoney 1y agoThat assumes your employer does any contributions to your HSA. And if your employer is sticking you with an HDHP, that’s not always a given. Your own payroll deductions are pay-as-you-go
- firesteelrain 1y agoI think he is saying that if you want your FSA to be $5000 then it’s funded immediately but it gets taken out of your paycheck every pay period. HSA is funded as you go
- firesteelrain 1y agoFSAs are limited in scope if you have a HDHP by law. Only LPFSAs are allowed. HSAs don’t have that restriction other than you have to be on a HDHP to get it
- deathanatos 1y agoI've never seen the point of HSAs, either. The only benefit is the tax difference. There are (usually unknown, unstated upfront) plan fees that eat into that, and coupled with the higher deductibles and worse plan coverage, you're going to pay more out of pocket. It's never been clear to me if (higher OOP + plan fees) < (tax savings) is true, like they want you to believe. And it's a time suck.
- lotsofpulp 1y agoAn employer sponsored HSA is the single most tax advantaged account in the US, and Fidelity HSA have no fees. No FICA tax, no income tax going in, on investment returns, and coming out. Worth tens of thousands of dollars over 20, 30, 40+ years. If your employer is shitty and doesn’t offer Fidelity HSA, you can also easily rollover the HSA funds to Fidelity every year to avoid the fees. The coverage for HDHP plans is the same, since it’s the same insurer. The only change is deductible/copay/oop max, which is offset by lower premiums and higher cash flow for younger/healthier/higher earners shouldn’t matter.
- firesteelrain 1y agoHSAs are one of the best accounts and last until death.
- toast0 1y agoI lost some money, or at least had a hard time using it, because I was quoted a price for something, set the FSA for the next year based on that, and then the billing ended up where only some of the price was eligible for FSA. Combined with the PITA level, there's no way I'm doing it again. I can't see how it's worth my time. One of these three options is very likely: a) my income level is low, so every dollar counts, but my marginal tax rate is also low, so spending a ton of extra time on this is not worth saving ~ 15% on taxes for health care b) my income level is high, so my marginal tax rate is high, but saving 40% of taxes for health care is not worth the time, because health care is not a meaningful amount of income c) my health care spending is high relative to income, and I can deduct health care costs on my tax return. Then I can deduct a lot more than the FSA will reimburse for, and the records don't need to satisfy a third party, unless I'm audited by the IRS.
- junar 1y agoThere are a few caveats with the medical expense deduction. * It's only a deduction for income tax. FSAs let you save on FICA as well. * It's an itemized deduction. You only benefit after your total itemized deductions exceed the standard deduction. Fewer people are itemizing nowadays because the federal standard deduction is large. * There's a 7.5% of AGI floor: you can only count medical expenses that exceed this fraction of your income.
- pkaye 1y agoFSA does have the concept of rollover of up to $600 but its up to the employer to decide. I imagine that full rollover is not allowed because otherwise people would use the FSA to defer some tax payments to end of year. But there are ways they could have handled it better.
- darth_avocado 1y agoIt is a relatively easy fix tbh. You spend on medical bills through the account like you do right now, but the way you fund it is your post tax contributions. At the end of the year the account sends you a statement of what you used and you can use it to get the tax paid on the money back when you file the taxes.
- themafia 1y agoAnd if you're wrong on your medical expense paperwork it could be a felony! Why shouldn't the institutions that do this all day and claim it as their special expertise handle all of this? Why should I even be /capable/ of losing money due to my lack of experience with the system? The money is forfeited back to the employer. There should be a law that money is now taxed and forwarded to the employee in their regular payroll. This system is designed to screw over regular consumers.
- darth_avocado 1y agoLike I said, you don’t have to do anything. It’s would be like your W2 as long as you use your account.
- recursive 1y agoWhat do you mean by 'use the account'? Spend the money? That's the problem. If you don't have enough expenses you just lose the money. That's why I've never used one of these.
- lotsoweiners 1y agoIt’s not great for everyone but if you have kids with braces, family members who need yearly glasses, consistent prescription costs, etc then it is pretty easy and worthwhile.
- darth_avocado 1y agoPlease read the entire thread for the full context which you are missing.
- anonymars 1y agoCue that tuba/horn motif from "The Price is Right" (famous for "guess as close as you can without going over")
- cblum 1y ago> FSAs are insane, conceptually. Indeed. I don’t understand why they cant just make medical expenses tax-deductible up to a certain amount. The effect would be the same. Why do I need a separate account for it, and why do I have to guess how much I’ll need every year (as you pointed out)? I guess at least part of the answer is that the companies administering FSAs make money out of this system. Sigh.
- khuey 1y ago> I don’t understand why they cant just make medical expenses tax-deductible We have that, although the deduction only starts after a certain amount which makes it useless to almost everyone.
- cogman10 1y agoThe issue is that it only kicks in when you itemize your deductions and it has something like a $10k cap. The standard deduction is 15k for a single and 30k married. Unless you have a bunch of other things to deduct, it's often the right choice to just use the standard deduction.
- malfist 1y agoUnless your a homeowner with a mortgage, then it's almost always better to itemize
- vjvjvjvjghv 1y agoFSA makes no sense. The money should just go into an HSA and be available whenever needed. Nut just this year. It should just be abolished.
- bobmcnamara 1y agoFSA exists in this strange no-mans land of many insurance plans where HSAs cannot go.
- db48x 1y agoYea, FSAs are dumb. Luckily nobody forces you to have one. Just get an HSA like a sane person.
- adastra22 1y agoI’ve only used HSAs. Can you reimburse prior year expenses from an FSA? If so, allocate the amount you sent last year, reimburse on Jan 1st.
- ocdtrekkie 1y agoHSAs are your money regardless once you have it (except management fees). So you can spend it until it is gone. FSAs are a very specific set aside for a single year of billing, you can neither spend it on a bill for say, December the year before, nor use it for medical care in January the year after.
- balderdash 1y agolol totally agree. At my first job I had one, and totally misjudged. I ended up with an extra thousand dollars left and then had to read the fine print on what to spend it on - ended up buying a 10 pack of acupuncture sessions that I didn’t need but were very relaxing
- sciencesama 1y agoUnless you have an approved gym membership for which it can be used for ! With 30% discount !!
- smcin 1y agowhere "approved" means approved by the FSA plan administrator, not by your doctor, even with prescription? Which gym was this? a large chain? IME very few gyms are approved. (which is bad health policy, considering how good they are at preventative medicine.)