Note that different HSA providers have different fee structures and investment options. So if you leave an employer and have an HSA that will start charging too-large fees or is otherwise undesirable, look into moving it to another HSA providers that offers a better deal.
Our HSA has a feature where HSA-eligible EOBs (but, iirc, not co-pays) show up on their web site and I can click on it and specify Save Receipt (or some such phrase). Since the Insurer has validated that expense as HSA eligible, I believe thatās all the record keeping required for eventual reimbursement.
You can pass your HSA to your spouse if you die. For nonspouse survivors, the account loses its HSA status and its fair market value becomes taxable to the beneficiary in the year you die. If your estate is the beneficiary, the accountās value is included on your final income tax return.
HSA is triple tax efficient; better than an IRA or 401k. Contributions and growth are tax free and there are no distribution requirements (although itās better to use it eventually).
As far as āgamingā the system, how so? You are using it as intended, as a way to save today for medical expenses today or tomorrow. If you die before you spend it, your spouse can use it (clearly not gaming) and if you donāt have a spouse, itās treated as income by your heirs (also not gaming).
Perfectly legit, and makes great investment sense; the HSA is considered triple-tax free. (Note, all states donāt play along.) However, I would move the HSA to a no-fee Administrator like Fidelity. Of course, the HSA can also be used to pay Medicare premiums and future medical expenses, which is what Iām planning on doing.
Hmmā¦ any time requirements on the HSA receipts? It does sound like PITA to me.
The reason this could(?) make sense if it helps them balance things in years where they do NOT want to have taxable income from selling investments.
No.
I just save EOBās, or one year, our employer plan with with Cigna (I believe) and I was able just to print off a consolidated year-end statement, which was great. OTOH, if you donāt want to save receipts, Medicare premiums will eat up at least $2k/yr.
I donāt think our plan has a super easy way to keep up with receipts but I am glad I asked about this as Iāll bet DH hasnāt set set up a beneficiary. Gotta add that to the list.
My thought (still in planning mode, but may retire soon)ā¦ use the Visa card that is tied to my HSA for non-covered medical expenses. Admittedly that idea is prompted by laziness, with the hope that this method means minimal paperwork. I did use the Visa card for a small bill a few years ago, just to prove it workd.
Things we need to do before DH retires.
- Install central air
- Get driveway repaved
- Get new carpeting upstairs (might get wood installed in master and hall)
- The stove and fridge need to die. We hate them. So they will need to be replaced. That wonāt be a huge expense.
- I would love to get my kitchen cabinets either refaced or painted white. That will happen this year, probably.
- And big wish list....redo of the two full baths...new vanities, new floors, new mirrors, new higher toilets. You know..we could actually do these ourselves...well...maybe.
Our list:
- New roof and gutters in 3-5 years.
- Deck rebuild in 2-3 years.
- Spruce up the guest bath upstairs with a new vanity and fixtures. Not sure I want to get rid of the kiddie bathtub. This we will do ourselves.
@thumper1 - I highly recommend refacing.
Already retired. Just did new washer/dryer and dishwasher, replaced carpet with wood this past year. Only thing left is refrigeratorā¦
Our list which must be done before retirement:
- redesign and rebuild the back patio, using low-maintenance materials, adding heaters and possibly fans.
- New roof for the house and (non-attached) garage
- Built a carport for our vehicle which won't fit in the garage.
- Replace our 10 year old car in 2 - 4 years.
Weāve been working on the interior for the past 5 years and finally are done with the remodeling. Weāll paint here and there of course but the big interior projects are completed.
With a high deductible plan, pretty much nothing is covered (other than a few things like annual physicals) until we reach our deductible ($3k/person and $6k family). And once we reach our deductibles (thankfully we pretty much never do and never have met family one ā though paying $23k for our insurance premiums is enough), everything is covered 100%. So we do not have $5 and $10 co-pays we need to track. Seems like everything is at least $100 and most is several hundred with some $1000 or more. About 10 sheets of paper in terms of receipts cover the entire year. Not a PITA at all. And our insurance company allows us to access totals spent by year so its easy to print that/save it to a PDF and save with tax files.
Even with a high deductible (I think ours this year went up but I have to check to what), the benefit of having insurance is that covers most of the cost of whatās charged during the annual physicals (sometimes the do an extra lab test or something that might not be covered), but one of the advantages of having the insurance, even with the high deductible, is that the docs are in network, so we get the in-network rate. Its almost akin to being instate vs OOS, and getting a different rate for the tuition.
We donāt have small copays. We have a percentage (coinsurance), after the deductible is met. So bills are usually the amount allowed that went to deductible that we have to pay, but we donāt have to pay the amount above the negotiated rate that the doctor or facility writes off.
That said, while it may be a good tax/investment plan, delaying getting reimbursed for a few years for medical expenses from an HSA seems like more of a hassle than its worth (unless we had that thing someone above had, where their plan has it saved for them.) Even soā¦ still have to remember to do it. Besides maybe a good investor could take the reimbursed $ and invest it.
As for āthings to do before retirementā, we just redid the driveway and walkway. Geez that was expensive.
We have saved a significant amount in our HSA. We reimbursed ourselves the first couple years we had an HSA, and then we stopped doing that. I am sure we will have medical expenses in future years to spend the money on, but just in case, I have saved years of medical bills we paid. I will be able to justify the withdrawals from my HSA via the bills I saved if we have to do it that way. I donāt have to submit receipts to withdraw - I just have to retain the receipts in case I am audited. I also retain copies of my tax forms indicating no HSA withdrawals in the years the receipts cover.
We were never eligible for a HSA, only used FSA (flexible spending acct) that had to be used up each year or was forfeited. It worked okāwe only did it for a few years before H retired.
If bookkeeping isnāt a big hassle and there are no or low fees for HSA, it could be a useful too, I guess.
Do a search for HSA stuff on White Coat investor and other physician and FIRE blogs, the common line is to not touch the HSA, let it grow until over age 65. I believe, if I recall accurately, that once you are over 65, it becomes usable as an IRA. I think you can take money for things other than medical, but also for your Medicare premiums.
Once you are 65 you can take it out penalty free, but if itās not being used for allowable medical expenses itās not tax free( it is taxable).
i think I will be retiring in March of 2021. I can change my mind at any point, but thatās the date Iām starting to tell people, to try it out.
I would be significantly better off financially if I wanted an additional 3 years, which would make me 62, but given several relatives have dried by 70, and even more have had dementia, I feel like itās a reasonable date.
Time to stop lurking on Bogleheads, and join that crowd I guess.
Retiring one week from today!
Congrats! Welcome to the club.