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Finally have access to an HSA

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  • Finally have access to an HSA

    My job announced they will offer an HSA plan for 2017. So my question is - what numbers do I need to run to see if this is the right way to go. I don't know what the premium is yet. But it's gotta be cheaper than the regular plan which was $200/month.

    Deductible is $1500 for just me.
    For the HSA - job will contribute $500 towards the HSA for individual. Job already contributes $1k extra a year towards "wellness" if we do 4 wellness pledges. So that takes care of the deductible more or less. I don't take any rx meds at the moment. Deductible doesn't apply for annual physical and annual Gyn and vaccinations.

    After deductible is met- things are pretty much 100% paid for as long as I use my health system (which I do) - including maternity. That was the sticking point for me since we are planning on kids. But does the year I have kids also bump me up to the family plan that same year meaning my deductible will then become $3000 (job contribution also goes up to $1000). Prolly still a good deal. No co-insurance just copays that are very reasonable. To none. Inpatient stays in health system covered 100% after deductible for example.

  • #2
    The premium is a factor :-) but it is hard for me to imagine that you wouldn't be better off with the HSA, especially if you are in excellent physical condition. My guess is that you are in the 33% marginal tax bracket, not counting state and federal, so let's bump it up to 40%. If you participate by 12/1, you can contribute an additional $2,850 for 2016, saving you $1,140 in taxes. This is much more than a tax deduction - unlike many other deductible expenses, the $3,350 still belongs to you and you can invest it for future growth.

    2017's limits are $3,400 single, $6,750 family.

    EDITING TO ADD: To be able to qualify under the "last month rule" (if you are eligible as of 12/1) and deduct a full year's contribution maximum, you must maintain HSA eligibility through 12/31 of 2017. Otherwise, you will have to pay tax + a 10% penalty on the over-contribution. I was just answering another HSA question and realized I hadn't added this important caveat!
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Not sure if there is a partner in the picture, but if so, any children could potentially go on your partner's insurance instead so you can keep the lower solo deductible limit if you really wanted to. Worth knowing for when you run numbers. But like Johanna said, this is coveted tax protected space that lowers your AGI. That alone might make adding children to your plan worth it, but again, you'll have to run the numbers.

      For running numbers, this thread (particularly the first response from tex) may prove insightful:

      https://www.whitecoatinvestor.com/forums/topic/hsa-or-double-insurance-coverage/

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      • #4
        Thanks for this. Waiting to get full numbers to run the healthy vs catastrophic year. Pretty sure HDHP HSA plan will win out. I don't really have co insurance once I meet deductible which is kinda crazy (in a good way, as long as I stay within the health system). I need to find out what happens if I'm out of the area and need to use health insurance (emergency situation).

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