Hsa

[pancake syrup]

I am curious. For those that have an HSA, how do you use it?

Pay medical expenses right out of the HSA account?

Pay medical expenses out of pocket and keep receipts so you can have a second emergency fund by withdrawing the money out from your HSA any time tax free?

Pay out of pocket and invest all of your HSA money?

Pay some out of pocket and some from the HSA?

Pay all medical expenses from HSA and invest some of your HSA?

So many ways to use it.

We max it out but unfortunately have a low balance right now. We hope to use it to invest as another retirement vehicle.

The Mad Fientist has a game changer article about the HSA. I cannot post it since I do not have 15 posts.

[moneybags]

I pay my medical out of pocket. The HSA money is left for retirement (keeping receipts for now so we can withdraw later). It can be withdrawn tax free when I need it, which is better than my 401K.

[disneysteve]

Initially, we were using the HSA to pay expenses because we had ongoing costs that weren't covered by insurance and that allowed us to pay them tax-free (about $600/month so it was a significant savings).

Now, however, we got new insurance that covers those costs. We no longer have an HSA to contribute to but still have the existing account we can draw from. For now, it's just sitting there because our out of pocket medical expenses are minimal, about $20/month, which I am not dipping into the HSA for. I'm leaving it there to cover anything significant that comes along.

[bennkar]

I started my HSA this year and plan on paying out of pocket and using the HSA as an extra investment vehicle. I don't have the details yet on how the investments will work (fees et al.) so maybe I won't think its such a good deal. Time will tell. This Friday I hit the savings level where I am supposed to be able to start investing but I have yet to see the option appear online. I've had no expenses this year to save receipts for. I figure its not that important as when you are older there are always medical expenses, right?

PS: That article by the Mad Fientist explains the HSA extremely well. Its worth reading.

[msomnipotent]

We used to have an HSA. We had a debit card to pay for copays and prescriptions, and then we had to submit deductibles and misc expenses with paperwork. It just didn't make sense for us because I have a chronic condition, and we would drain the account every year. Our finances were not at the point where we could leave $5,500 in a medical account and pay out of pocket.

Once my husband got a new job, the math didn't support choosing the HSA option. We would come out ahead a little with their PPO option. Once we started the FSA, we were ahead a little more. Now that we could leave that money in the HSA, I find that adding more to the 401k is just easier for us.

[Hikerchic]

We've had an HSA for 5 years and used it to pay our deductible and all medical bills for 3.5 of those 5 years, before we really understood it and its advantages. Since I finally took the time to learn exactly how it works, as of last year, we began to max it out and pay out of pocket for all medical and let the HSA grow to use during our retirement years for medical payments.

I keep receipts of everything paid out of pocket in a yearly file so I have proof should we ever get audited when we reimburse ourselves later. Since we began paying out of pocket, we now allocate money each paycheck to a "medical" savings account for any out of pocket bills.

[MooseBucks]

I keep receipts of everything paid out of pocket in a yearly file so I have proof should we ever get audited when we reimburse ourselves later. Since we began paying out of pocket, we now allocate money each paycheck to a "medical" savings account for any out of pocket bills.

Don't you run a risk that in the future you won't be able to reimburse past medical expenses? Can you help me understand the financial benefit of leaving the money in the HSA vs taking it out?

[scfr]

Can you help me understand the financial benefit of leaving the money in the HSA vs taking it out?

It's truly tax-free money. The money you put in is pre-tax. Earnings are not taxed. And as long as it is used to paid qualified medical expenses, it is not taxed on withdrawal. So some people like to let the money sit and wait to use it to pay for medical expenses in retirement because earnings are not taxed.

Anyone thinking of carrying a balance in their HSA for the tax-free earnings probably will want to consider annual maintenance costs (if any).

[amarowsky]

The wife and I are reasonably young and with little medical expenses right now. So we are just investing with ours, and using it when necessary.

I think I have the threshold set up to auto invest in anything beyond $600-800 in cash. But I have been ratcheting that up every few months. So I'd like it to have a full/max annual out of pocket in cash ready when necessary (~$6k is max out of pocket).

Realistically, I should be fine with $1.5k, because that is the deductible amount per person before they start to kick in. (until I have family, then it's 3k)

[cypher1]

I use mine as primarily for paying medical expenses, investment isn't a priority. I consider myself healthy. So I barely use, unless for a copay fee or eye wear.

In another thread I mentioned considering my HSA as part of my EF for medical purposes. While I already put 15% gross towards retirement, I also contribute about 2% of my gross for HSA. While I may not need that money right now, and could be considered a drop in the bucket for a real emergency, I'd rather have a small buffer just in case.

[phantom]

I had a high deductible plan for less than 2 years, so I only have a few thousand dollars in my HSA. It's not enough money to justify the fees that banks that allow investing HSAs were charging the last time I researched it, so it's not invested. Since it's not invested, I treat it like a medical emergency fund and expect to have it drained to 0 before retirement.

My husband and I plan to get another high deductible plan after we are definitely done having kids and they all seem relatively healthy. But, it is more likely the plan will come from his employer than mine. So, it is really unlikely that we will ever contribute to my HSA again.

My vague plan is to only think of an HSA as a retirement account if either we have one that gets over $10,000 or if we max out all of our other tax advantaged retirement vehicles and feel the need to save more specifically for retirement.

[bennkar]

I had a high deductible plan for less than 2 years, so I only have a few thousand dollars in my HSA. It's not enough money to justify the fees that banks that allow investing HSAs were charging the last time I researched it, so it's not invested. Since it's not invested, I treat it like a medical emergency fund and expect to have it drained to 0 before retirement.

For anyone considering a HSA, if you have an employer sponsored plan, they may be paying any fees for you. That's my case (as far as I can tell). As I am new to this I will be checking this as time goes by to verify, but I did find a few spots they said the normal yearly fee of $24 will not be charged to our accounts. So here's hoping....

[Spiffster]

I have had an HSA plan for about four years now. We are relatively young and very healthy so the high deductible doesnt bother really us. My employer throws $100 /month into the HSA and for a while I was contributing an additional $50.
Just last year I had enough in the account to pay for Lasik surgery entirely with HSA funds. There is a $3/month "maintenance" fee... which is complete BS as nobody should have to pay for a bank to hold their money and there is literally nothing to "maintain". My employer picks up that fee but its still money wasted for no good reason.