What are your current HSA plans?
I was just wondering what you guys have been doing with your HSAs (Health Spending Account), for those of you who have them. We've had one with a HDHP (High Deductible Health Plan) for 2 years now, and have maxxed it from the start and enjoy an upfront employer contribution. I do track my account on budget in YNAB, and I consider it still a work in progress so I'm not gonna go there at all in this discussion.
I know that the "best practices" à la Bogleheads and such is to just never touch it until retirement age, invest and reap the triple tax benefit (assuming it is still a law in effect by then, you never know), and until then seed your own max out-of-pocket expenses in YNAB with ordinary funds. Right? No doubt some of you manage to do that (I see you, jenmas ).
So here I sit looking at the first quarterly reimbursement of $342 for my daughter's braces, offsetting the $600 I paid for this period. I'm mulling if I should take the $258 balance from my HSA (LPFSA has already been depleted with the down payment, other adult dental work, and eye glasses for everyone). My current HSA balance is $882, with what, two more contributions this year?
I've never maintained the $2k minimum for any length of time that made it worth investing it. It just seems sad that after 2 years of max contributions by us and employer that I end up with next-to-nothing. Yet, it's really nice that our current medical/dental/vision spending is now tax deductible without having to meet a 7.5-10% income threshold.
So I'm just surveying what the rest of you in your various circumstances do, out of plain curiosity. I always want to be "responsible" with these long-term decisions, but I've found I can only make what I hope is a responsible one about once a year (this year I opened a backdoor Roth for myself!).
-
We use the HSA funds for reimbursement as we go. We're in a similar boat with the kiddo's braces. We had to pay the deposit and 4 months of payments out of the HSA because we didn't have a funded LP FSA the year they started (it caught us by surprise).
I'm a little curious though where the money is actually going if you are maxing it out. 2 years of maximum contributions is over $14k. Or are there other expenses that you didn't mention?-
nolesrule I know, you'd think we're on death's door or something. It would have been even MORE if my insurance didn't erroneously apply expenses to my deductible that I didn't owe, and no amount of communicating with them over the past 10 months has changed it, so yay, 10% and 0% coinsurance all year.
And omg I planned better than you for something! :D. I actually maxxed out the LPFSA the first year, after calling the orthodontist and asking for an ETA, and she still didn't get the braces til this year. And we STILL managed to spend the whole thing last year on glasses, the tooth extractions she needed beforehand, a lost retainer, etc...
I don't even use it for OTC stuff or even supplements which for me are medically necessary. I'm looking at the last two years in YNAB now, and it's like a credit card, all the little things add up. The only real one-off withdrawal I made was $2500 for an anesthesia fee that I paid out of pocket for, related to a documented medically necessary surgery that wasn't covered by insurance (my deductible says otherwise...). Six weeks of difficult recovery leading right into pandemic nightmare is why I took a hiatus from forum participation.
It's just always something. Some prescription that ends up way more expensive than anticipated, a husband who finally decides it's time to fix that tooth, 3 years since the little guy last had testing for learning disabilities and ADHD so better get that done before school, and out-of-network mental health expenses that have only increased this year.
-
And why can't I make a small screenshot smaller?? Ugh.
-
-
I personally have mine as a tracking account and max it out via payroll deductions. So the funds never see the budget. It’s just a once a month market changes update. I pay everything out of pocket and don’t use it for medical expenses since I can afford to do so. I have all those expenses in my back pocket that can be used to withdraw tax free in the future. However, my kids are out of the house (braces came and went) and I average very little in medical expenses. Love the triple tax benefit!
-
It's nice your company gives funds upfront, mine pays throughout the year and mine has a 1K minimum for investments.
I don't track my HSA account. What I do is pay my medical bills if I can with my income and if something comes up that costs more than I can afford then I just transfer it from my HSA and list it as Income to Be Budgeted or add it to the medical category.
I should start maxing it out but between trying to save for retirement (I tend to max this out) and other things I don't. I did up my contributions this year to my HSA though.
-
I am also aware that it may be more ideal to wait to take the money out for medical expenses in retirement, but I have not been doing that either. I've been paying current bills with my HSA money, and I'm ok with that for now.
I'm investing quite a bit in my other retirement accounts and I think I want one thing where I put tax-deductible money away and actually see the benefits before I retire. I do have enough for my deductible right now, but my deductible is only $1500, so that's not too hard. I've also maxed it out every year since I had it, and I don't have that much in it considering that (and it's not invested), but my deductible and max out of pocket used to be $3k and $6k when I was married and I got two surgeries that year that I would not have had the money to pay for outside of my HSA.
IMO it's better to max out my HSA and spend it this year than forgo other tax deductions available to me to spend post tax money on my medical expenses. I mean, I'm not going to forgo investing in my Roth or my other tax-deferred accounts that I'm not maxing out in order to spend that money on expenses that I could have used my HSA for, that just doesn't make sense to me.
A lot of the Bogleheads have high incomes and are already maxing out all their tax sheltered retirement expenses, so it can be pretty depressing to compare yourself to them...
-
PhysicsGal Yeah I wish I could max out everything but life doesn't always work that way, especially when you have a family to take care of.
-
VoltaicShock That's why I say, I try to do one "responsible" thing a year in this regard. We were contributing the 401k match (anywhere from 1-3% depending on job) for at least a decade. Last job 2 years ago, the match was just 1%, and you didn't even GET it until the end of the year anyway, so that was all we put in. Instead I kept doing max Roth contributions. I actually follow the r/personalfinance flowchart and it helps me. Baby steps! :D
-
PhysicsGal Yeah, try reading White Coat Investor... lots of really useful advice and insight, but yeah, cannot compare :).
I agree with you, I have medical expenses NOW, and I have the ability to give them favorable tax treatment so why not. It gets exhausting socking away every penny to never touch it for decades and then God knows what.
-
Yeah, avoid comparisons. Everybody is at different ages and stages. Everyone should be doing what's best for themselves at that period in time.
-
Annieland
Annieland said:
I have medical expenses NOW, and I have the ability to give them favorable tax treatment so why not.That's how I think of it. The other thing is that while it gets favorable tax treatment now, any non-spouse beneficiaries will have to pay taxes on the entire amount of the balance they receive. So it's actually entirely possible to save too much in an HSA if it ends up outlasting you. Meabwhile I don't want to deal with holding onto receipts and such long-term.
-
nolesrule Most online HSA portals allow you to upload invoices to them to keep track. The issue comes when you move HSA providers. I have started using the Android Camera app to take pictures which will in turn turn it into a PDF image and upload to Google Drive into a folder.
-
Annieland I always do the amount for my retirement to meet the match at a minimum and more if I can. If things happen I cut it down then I will put it back up when I can. I am fortunate that my company offers a pension as well so that helps to offset some of it.
-
VoltaicShock Yeah, the whole thing is a pain in the butt and not really worth the time. The money ends up in my taxable account anyway, so the tradeoff is that I have immediate access to those dollars in exchange for taxes on gains. It's not the end of the world when we're already maxing out 2 401ks and 2 IRAs. A typical year at most uses half the contributions, but often less. Braces years are a bit more expensive. So we're growing it by about a single contribution almost every year.
-
nolesrule Yeah I am paying for Invisalign right now but I charge it to my credit card for the points then if I need I will pay myself back later. I tend to pay for medical out of pocket to get the points then pay it with my HSA funds if I need them. This way I get the benefit of a tax break along with cashback :)
But yes I agree it can be a hassle doing all of this.
-
VoltaicShock We also put everything on credit cards for the points. 2% is 2%. (and the CC rewards also mostly end up in the taxable account).
Mrs. nolesrule is starting orthodontics in January. We pushed it off to next year specifically so we could use the LP FSA to cover as much as possible. Although by my calculations, the ideal starting time based on payment plan to maximize LP FSA and minimize HSA withdrawals would have been May or June 2021.
-
VoltaicShock I'm really old-school about docs in that I want them mostly on my own computer. Scanning is a quasi-religion for me. I have a database of everything scanned or downloaded, and all medical expenses parsed out. I do try to simplify, and only sort it all out a few times a year in the end. I got my medical expense tax deductions audited 15 years ago and it was right around the time I started keeping and tracking things and even though it was piles of papers strewn all over my office, at least I had my expenses recorded in an app so that I could sift around finding the back up for each one. So I became really compulsive about it after that. I don't bother with the HSA site upload stuff because as you said, as soon as you change providers... ugh.
-
nolesrule It's funny, with my daughter's braces I also tried to figure out how best to do the payment plan so that certain coverage limits (doesn't apply to adults though, I assume) and LPFSA reimbursements would coincide and diverge. In the end I was like, oh the hell with this, they said 20 payments of 200, I'll just do that, because as I said before, it's always something for us at least, that creeps up and eats away at whatever is left. But maybe you can customize a payment plan with them that would better maximize your LPFSA contributions for the year?
-
Annieland It was just a matter of the down payment plus monthly payments equalling the LP FSA maximum. The monthly payment amount is the same, so the total cost for the year is dependent on the start date of the plan.
-
Annieland Yeah I understand that. Though most places have to keep records themselves so you can always contact them and ask them what you paid. Yes, it's a hassle either way. Honestly I use it for those bills that are more than I want to shell out. For those ones that are a couple hundred or less, I don't tend to worry about.
-
-
Annieland said:
It gets exhausting socking away every penny to never touch it for decades and then God knows what.Right?! There are no guarantees we're all going to make it to that future. You've got to enjoy some along the way. There needs to be a balance.
-
Superbone And this is why I do what I can to save to have enough for retirement and the rest I enjoy and budget for a vacation every year. The kids won't be young forever and those memories will last a lifetime.
-
VoltaicShock Exactly! My experiences with my sons are some of my most cherished memories. You never know what kind of an effect it might have on them either. I took my teenage sons on a trip to NY. It had a big impact on my eldest and he now lives and works there! One of my best memories as a kid was when my grandparents funded a trip to Hawaii for all their kids and grandkids. I want to do that in the future as well.
-
-
VoltaicShock said:
Though most places have to keep records themselves so you can always contact them and ask them what you paid.I had a friend who kept nothing about anything, and I asked her once, ok so what if you sell your car and need to pass on repair and maintenance records? She said she just calls the shop if she needs to and they have the record.
She had more time to bake cookies and do laundry than I do no doubt, but I just have this mentality that I trust NO one with personal records that I might need someday. I don't judge others who do, it's just not for me. It's a mentality I definitely inherited from my parents. And adult experience has regularly reinforced it because I've saved my own behind far more times than anyone else has.
-
I am bad at this lol, though the app for my car can pull up records from multiple shops so that helps and carfax does seem to have most repairs done.
-
VoltaicShock Well that should work! Unless of course, they go belly-up, have an unrecoverable system crash, get bought out, or their data is breached and held for ransom, or.... 😜
-
-
Oh man, the girl needs 4 permanent teeth extracted next week and I just got the estimate. Thank you baby Jesus insurance is covering 80% of it and my estimate looks to be about $203. My HSA balance is now $575. So, Friday another $215 goes in and then $203 comes back out 🤦♀️.
We're so rickety and only getting ricketier. My HSA should be in Acorns or something.
