Make Sure You Understand the Weaknesses of an HSA
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- เผยแพร่เมื่อ 7 มิ.ย. 2024
- Health Savings Accounts (HSA) are incredible financial tools, but they do have some challenges that keep them from being the perfect account. You'll learn about the important weaknesses of the HSA account.
If you are close to Medicare and have an HSA, you need to watch this video:
• WATCH OUT For These Me...
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Erik@TheRetirementNerds.com
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⏰ TIME CODES ⏰
0:00 HSAs are not perfect
0:15 Limited on who can have one
1:24 Watch out for fees
2:07 Penalties
3:30 Contribution limits
5:58 Don't plan nice with Medicare
7:05 Non-Spouse beneficiaries
7:27 Difference between FSA and HRA
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#medicare #theretirementnerds #hsa #retirementnerds #finance
Federal Disclaimer:
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all your options.
Quick clarification on the catch up contributions!
Each spouse can make catch up contributions as long as each spouse has their own HSA.
If only one spouse has an HSA, both spouses cannot put the $1,000 ($2,000 total) into the 1 HSA.
The spouse without an HSA can open his or her own, separate HSA and then put their $1,000 contribution in their account.
Big advantage of an HSA that doesn't get a lot of attention: you can still make deductible contributions even if you don't have income from wages (unlike IRAs)
Thank you for adding!
That's what I do.
Recently my HSA introduced a $5 per month fee, but the really evil part is that they will sell your investments to collect the fee rather than just taking it from the cash portion of the HSA. Currently looking for a new HSA provider!
Wow! That is insidious! 😡
Interesting... who is the custodian?
@@Theretirementnerds Was called Payflex, now renamed Inspira.
Can you please make a tutorial how to invest HSA? thank you. Your channel is very informative.
Great idea!
Excellent! Thanks, Erik!
Appreciate you, Tina!
Thank you for this information, great 👍
Thank you Eddie!
Regarding fees: I have seen competition start to drive down fees in my account. The custodian selected by my employer (for paycheck contributions) used to charge a monthly investment fee, but has waived it this year… And I’m assuming it’s due to many of my coworkers rolling their balances out every year to an outside custodian in order to avoid the fees.
Very true! Competition can be a good thing here. Thank you for sharing!
Thanks! I’m a little fuzzy as to why using HSA $$$ “in unqualified ways” is even a topic for discussion?
Yes, I realize that some people have tried to use HSA as a hack to create general wealth rather than using it for actual medical expenses, but why? Even the healthiest 30-year-old will almost certainly _eventually_ have substantial medical expenses valuable to start saving up for now.
This video may help answer that a bit:
th-cam.com/video/uQhDgDuewKc/w-d-xo.html
@@Theretirementnerds, thanks! That video was informative, but not of what I expected: It pointed out to me that I needed to explicitly set aside HSA funds for investment. I had not done that, until yesterday.
However, I didn’t immediately see much in there about using HSA $$$ in unqualified ways. Perhaps I just missed it…
At 1:49 Erik my friend, don't know if you have a HSA with fidelity? But I do, I'm retired with hdhp from my previous employer. Fidelity DOESN'T charge a cent for a HSA. I'm in FXIAX and that's the only fee 0.015 .
Mine is not through Fidelity, but I've looked at Fidelity's.
It's a strong offering. They have fees for certain account balances and situations. It's not a lot and it's relatively easy to meet their thresholds to get the fee waived. They do charge employers a fee as well where the employer can choose to cover it or pass it to the employee.
Sounds like you've met their thresholds for a no-fee HSA or, with it being a HDHP you still have from your former employer (am I understanding that right?) your former employer may be picking up that fee.
Either way, Fidelity is a strong option with good investment opportunities as well.
Thank you so much for sharing!!
@@Theretirementnerds Erik sorry for not being clear. I started my fidelity HSA after I retired at age 56. Still covered by former employer hdhp. When I was working up to 55 I didn't have a eligible HSA plan then. Only since retirement and I max it out each yr. Will do so until the month before my 65 bday. Then onto Medicare a&b, medical + drug plan.
My wife and I both have an HSA. My healthcare plan covers myself and kids and hers covers only herself. Can I contribute 8300 and her contribute 4150. From what I've read I don't think so but thought I would ask anyways.
Oops, didn't mean to ask that in someone else's comment.
@@dannelson3673 no worries
Small correction ... You would need to withdraw $1724 to yield $1000 in the example: (Amt x rate)/(1-rate)+Amt or (1000*0.42)/(1-0.42)+1000
Thank you!
HDHP are great if you are healthy. If you actually need to use health insurance they are horrible and will drain your HSA every year.
Is it correct to say that you can withdraw money from an HSA for a *past* year medical expense as long as you have the receipt and you were eligible for an HSA that year? For example, let's say I spent money on a new CPAP machine in 2021 and had HSA contributions that year. I can wait to withdraw the money in a *subsequent year* as long as I have the receipt and I will not incur taxes or penalty.
Correct!
Are you sure about the catch-up limit? I have read many sources that say a covered spouse can open a separate HSA to contribute their individual $1000 catch-up.
Correct! Needs to be a separate HSA! Can only make catch up contributions to an account you own.
Do most spouse who inherit hsa continue to use it as their own hsa and let it grow overtime until 65? Or do they withdraw it? The taxes on beneficiary non spouse is very bad if hsa has a high balance because it's taxed immediately unlike a 401k which has 10 years.
Don't have real data on spousal behavior, but they'd be smart to use it as an HSA rather than access funds pre-65 and get penalties and taxes.
I set up a HSA at my credit union. Easy.
I plan some day to use my HSA to pay my Medicare premiums.
Great use for those dollars!
I like these, but deductibles are often quite high. We learned to move our monies to another HSA provider, that offered better investments. Don’t do these if you are not healthy.
You are not correct about the catch up. If both spouses are insured and the correct age, they both CAN contribute BUT the spouse’s catch up must go into their own separate HSA account.
We were fortunate over the years to each have the primary account at different times, so it was easy, but it is still worth it to create a second HSA even if only for a couple thousand $.
Because we both had family accounts we are each able to use each other’s accounts for reimbursements.
Regarding catch up contributions, I think Erik said "If one spouse is eligible..." so I think he said it correctly. But I agree Erik should have mentioned that each spouse must contribute catch up contributions to their own account.
And I have to correct something you said, "Because we both had family accounts..." HSAs are individual accounts. There is no such thing as a "family account". With that said, an eligible qualifying medical expense is one that you are personally, financially liable for. Generally health insurance policies and in many cases state rules make a couple on a policy jointly responsible for the entire family's medical expenses. This generally means you can draw from your own HSA to cover expenses incurred by yourself, your spouse or any minor dependents as long as you were the one to pay for the expense. In the case of communal family assets, there's no practical distinction between whether you or your spouse paid for something as long as you don't double-dip, so in practice it makes no difference whether you or a spouse paid the bill - you can still reimburse yourself for the expense as long as the spouse doesn't use the expense to make a claim on their own HSA.
We are both wrong. Eric clearly said the spouse needed their own “plan”, not account.
I should have said we both had our own HSA’s with family coverage, meaning some years I had the insurance, and other years my wife did. So contributing the catch up was easy. As no new HSA had to be created. I was not aware that any spouse or dependent could get reimbursement if it was an employee only plan(which we had at times)
You are correct, a couple both over age 55 and both on one HSA qualifying insurance plan can contribute a total of $10,300 to their individual HSA accounts depositing $5,150 into each ( for year 2024). In my view Medicare does play nice with HSA's with part B contributions being a qualified HSA expense. Almost all couples on Medicare will rack up over $4,000 in part B HSA qualifying expenses each year.
Thank you all!
I should have been more clear.
Catch up contributions must be made to an individual's account, meaning, if each spouse has their own HSA account, they can each make the catch up contributions.
If one spouse has an account, they both cannot make the catch up contribution into the 1 account.
Oh holy h€🏒🏒! Only $1,600 as a “high” deductible? Does ANYONE have a deductible that low? I sure don’t. I have a PPO which provides copays for services from my GP or Specialiat (like $90) BUT much more than that is a $6800 deductible. On top of that, our OOP max is $9,000 so guess how much I paid (am still paying) for my hysterectomy this past January? I will check if they have an HSA, but I don’t think so.
$1,600 is the minimum for a single person.
Safe to say the vast majority of plans are not that minimum and are higher as you are experiencing
I used to work for Microsoft. When I started they had a Cadillac health insurance plan. If you went to a doctor, clinic or hospital and received a bill for service, someone had messed up because the insurance covered everything and every provider in the Puget Sound region took the coverage.
When ACA requirements kicked in, they switched to a HDHP to avoid the penalties. For a single employee, the HDHP had the lowest possible deductible and they contributed $1,000/year to your HSA to cover most of that deductible. Healthy employees effectively received a small pay bump. I usually exhausted the deductible, so it was a small pay hit. But the tax advantages of making HSA contributions made up for most of that.
Microsoft's HDHP coverage is still probably one of the best HDHPs out there.
@@Theretirementnerds I work for a small employer, and a law firm which is my biggest problem. MOST law firms are pretty stingy when it comes to what they offer their employees (staff), though it may be different for lawyers. Mine is absolutely horrible. Makes it worst that the boss is taking vacations at least every other month, is not properly staffed up and those of us putting in the work are not properly rewarded.
this is all such a racket designed to confuse people. it is ridiculous all these caveats and restrictions.