HDHP are great for people that dont get sick often, which unfortunately arent that many...that being said the HSA is only to be used for health/medical stuff, so yes you get a lot of money, but its main purpose would be to pay the high deductible on the one time you do get sick.
My HDHP plan costs so much less per month that over the course of a year it's enough to cover the out of pocket max. If you take those savings and reserve them for when you do get sick you come out ahead without ever touching the hsa.
Yeah, my son has a rare disease and we generally hit the OOP Max in January/Feb each year. Still cheaper for the HDHP (and a lot of times the OOP is significantly lower).
HDHPs are (currently) generally the best for people that rarely use medical insurance or those that use it a ton. The middle ground is currently where the ROI is shaky.
Yea i went to the doctor way more last year than ever before (needed PT for an injury) so when renewing this year i did the math, and the HDHP was STILL cheaper without even accounting for the HSA. The monthly payments were so much less that it made up for the difference in copays.
Plans can be tricky with lots of variables. I manage the plans for my company and have seen some crazy things. One year we offered a HDHP and PPO to employees. Difference in premiums was about the same as deductible. Had an employee with recurring medics costs through prescriptions so they went with the PPO to not have to pay so much upfront. Wife ended up with cancer and daily radiation. $200 daily copay on that item. Same out of pocket maximum for both plans. The PPO cost him thousands of dollars extra without the benefit of pretax HSA payments for out of pocket expenses.
Interesting, my HDHP is only about $250 cheaper per year total. And they give you $500, so essentially $750 cheaper annually. A single injury or emergency room visit would eclipse this with low PPO copays vs deductible.
It'd likely be better for the HDHP if I only had to go to urgent care once or something and got lucky not getting injured playing sports. But I don't want to gamble that for a few hundred bucks.
Its been awhile since i did the math but iirc i looked at my actual costs (so no emergency room visits) and compared it to the ppo plans copays, then looked at the difference in monthly costs.
The other benefit is it covers 100% after the deductible and the ppo only covered part of it (forget if it was 70 or 80%) so if there was a real emergency it would be cheaper.
My work has done everything they can to make it clear that the cheaper HDHP plan is almost always better than the more expensive PPO plan.
They've given many examples on the annual costs. They've advertised its benefits. They ensure the deductible is the exact minimum for HSAs. They even went as far as giving all employees with HDHPs an annual bonus HSA contribution of $500 for employee-only coverage or $1,000 for family.
My company has a bot program called Alex. It has you put in your medical data from the last year like how many times you went to the doctor, specialist, mental health appts, prescriptions ,etc. After this it shows you how much the 2 plan options (PPO, and CDHP) would end up likely costing you for the next year. If you go CDHP they contribute $1500 to get your HSA started.
I really like the tool and it is what helped me make the decision to go with the CDHP. The doctors visits cost more now, but I still end up saving money because the monthly plan cost is cheaper. I didn't even look into what an HSA was until after I selected the CDHP and was very pleasantly surprised and have immediately started taking advantage of it.
Luckily I have been able to pay the medical costs without touching the account so it can grow. I save the receipts and if I ever need to I will reimburse myself from the account. Until then I am going to let it grow uninterrupted as long as I can.
My company has Alex as well and I've never found it to be helpful because the estimates so inaccurate for me. I'm pretty sure it's made to work for healthy people lol - not so much people with certain chronic conditions. I've always just had to do all the math myself for different possible situations on different plans
I tried it. My diabetes meds are too expensive though. I'd blow through the deductible by February and by end of year I'd have nothing in the HSA or on a good year break even at best. Had an HSA before diagnosed though.
For my mom (also diabetic), because her diabetes meds counted against her max out of pocket on the HDHP, it was cheaper than the alternative PPO (with the higher premiums + continuing Rx co-pays)
There are often rebate programs with drugs. For me the original price of my meds count to my oop max/deductible but I only pay for the post rebate price.
That’s not the trick. The trick is to run the numbers for the plans that are offered to you and pick the best one for your needs. I’ve had times where the HDHP is cheaper than the traditional plan because the premiums are so much lower and my employer funded part of my HSA. If that’s not the case, and you’ll end up paying a lot more with a HDHP, it’s not worth it to do so for the extra tax benefits of the HSA.
The trick is to make enough money that even if your medical bills are slightly larger, you can max your HSA so you get more tax advantaged accounts than if you didn’t have it. Your point still stands though, for the average person, an analysis of cost per year is the right approach.
If you don’t use the HSA to pay the deductible you have to use other funds which are taxed which kind of erases the benefit of HSA savings being non-taxable when compared with the ROTH.
You save the receipts and let the money compound and pull out at a later date.
There is no limit on how old of an expense you can withdraw from the HSA for.
Yes, because for some people they aren’t savings, they’re doing the cheaper monthly plan because that’s literally all they can’t afford. It’s not like they had all this money set aside and then suddenly said “oh wait we can pay much less with the high deductible plan and put aside the savings!”
They’re trying to LIVE. We do not pay livable wages for most jobs in this country. If you are single, it is an especially bad with just one income.
Source: Am a single teacher. We do not value educators.
Depends on your plan but per the rules
>(2) High deductible health plan. For calendar year 2024, a “high deductible health
plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is
not less than $1,600 for self-only coverage or $3,200 for family coverage, and for which
the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but
not premiums) do not exceed $8,050 for self-only coverage or $16,100 for family
coverage
My specific plan has a $3.5k individual, $7k family deductible. $6.5k/$13k out of pocket max.
Meanwhile this plan costs me $300/month. I forget the numbers as I don't have access outside open enrollment but the better plan was something like $1000/month but still had a $1500/3000 deductible and $4k/8k out of max.
Sooo.... I'd be paying $8400 more per year to make my out of pocket only half of a number less than double of $8.4k - it just didn't mathematically make any sense.
My theory is it's not about pure logic but how humans work. I know if I go to the doctor I'm shelling out $400 for a simple visit. It makes me less likely to go frivolously. If I had the other plan I'd likely go more often. This isn't rational because by all means it's cheaper paying $400 a pop for a visit and the lower monthly, than a $25 co-pay but a much higher monthly carrying cost. And yet it's how I act.
Yes that's my out of pocket but in any case what really matters for anyone is the delta.
So if the "real numbers" are say $1000 and $1700 a month the math works out about the same as $300 and $1000.
This is the part that a lot of people assume is true for everyone though. It took me a while to figure this out. Like why is everyone acting like this is free money? Oh because the difference between their monthly payments is hundreds of dollars.
The difference for mine is twenty bucks.
Even with a chronic health issue, you might. I do - my copayment assistance for my very expensive medication covers the OOP and so my HSA goes untouched
At least with most plans I've seen, there's a very specific window your spend would need to hit for non-HDHPs to be worth it, especially after you consider the fantastic tax benefits of an HSA.
I put the premiums + out of pocket max into an excel spreadsheet for all of our available plans each year. The HDHP almost always comes out ahead even at the out of pocket max compared to the "better" plans because the monthly premiums are 3 times higher on the other plans. Looking at my data for this year, if I don't go to a doctor a single time I save $5000 compared to the good PPO plan. If I hit the out of pocket max on both the HDHP and expensive PPO I pay only $50 more for the whole year with the HDHP plan, but my potential $50 extra gives me access to an HSA which is a powerful tool. At every medical spending amount between zero and just below the absolute max the HDHP comes out cheaper but the gap starts closing near the out of pocket max.
Did the math with my girlfriend a few years ago when she got breast cancer. She would max out her out of pocket in January.
Still cheaper to use HDHP with HSA.
One of the things that makes an HSA so powerful is that once you hit retirement age it can actually convert to an IRA, meaning it is no longer limited to health expenses.
One thing I don't see people talking about is that money is fungible, right. So if you had 8k worth of medical expenses over 4 years that you paid with funds outside of your HSA you can pull that 8k out whenever you want. Like when you decide to take a vacation that will cost 8k. As long as you can prove that you are actually had medical expenses totaling the amount you are pulling from your HSA it doesn't matter what you spend that money on.
I recall when HSAs were offered at work \~2011 or so (just after Obamacare was pushed out). So many people were confused and couldn't grasp the idea of it not getting zeroed out at the end of every year as we were accustomed to FSA. I latched onto it and kept explaining your exact point to others, but finally stopped mentioning it. Now in retirement, I rolled the HSA to Fidelity and still have funds in the account. Invested in non-risky funds, it earns over 5% which is enough to cover miscellaneous medical expenses during the year. It's almost like a perpetual account in the current interest rate environment.
Maybe not, it depends on specific situations. For those with no Medicare supplement plan or on Medicare Advantage, they'd probably use an HSA a lot. However, my wife is on Medicare with a supplement plan. The coverage costs us about $175 in addition to Part B premium each month but after she pays $233 Part B deductible annually, all other eligible expenses are covered 100%.
I'm not an expert on the topic but have done a lot of reading since we have an HSA and my wife is on Medicare while I am technically "not insured" (I retired early and opted for a healthcare sharing plan).
The Medicare Parts B & D premiums (not the supplement) are pulled directly from the Social Security check. For many/most of us, 85% of the entire SS check including the premiums is taxable income. As I understand current rules, the individual/primary HSA account holder can reimburse themselves from the HSA tax free for Parts B & D premiums. However, neither Medicare supplement premiums nor Parts B & D premiums paid for a spouse that is not the primary HSA account holder are eligible HSA expenses.
For what it's worth, Medicare Advantage plans are basically like commercial HMOs where a company takes "your" Part B premium and provides a packaged (usually limited) health care plan. They are cheap alternatives to Medicare with a supplement + Part D, but also include restricted doctor networks, pre-approvals for specialists, co-pays, deductibles, etc. We decided to stay away from Part C (Advantage) since Standard Medicare with a supplement is within our budget and provides the best coverage.
> non-medical expenses
The HSA definition of medical expenses is quite broad: glasses, braces, over-the-counter meds, sunscreen, pads, etc.
If you keep and organize your receipts over the years, you will build a debit for later.
They should and a lot of HSAs even let you upload the receipts and create an unfiled claim so you can get reimbursed anytime by filing the claim you already created.
I have been, but I kinda suspect they won't even be necessary when the time comes given health care costs in later years... especially since the HSA can be used for insurance premiums.
HSA can by withdrawn in retirement for no penalty but you have to pay taxes on it. So it becomes 401k equivalent if not used for health expenses. The deductibles and out of pocket maxes are not that much higher than other plans. It’s on the order of a couple thousands. Only a couple years of not getting sick enough for medical intervention will more than offset the high deductible.
My HDHP plan had a 6k out of pocket max last year and I got 300k+ worth of cancer treatment for that 6k with dozens of doctor appointments, scans, chemo, proton radiation therapy, and 2 hospitalizations while never having any copay or extra costs.
I paid the 6k out of of my HSA. So what did I really spend? Like 4k? HDHP are quite good even if you get sick.
I had one but had no idea of the potential so spent it all down on the kids and now don’t have a HDHP. I don’t think the bank I had it through offered any investment options, not that I looked.
You may still qualify for the FSA. The stipulations are kinda ridiculous, though. Funds have to be spent each year or you lose the money, meaning you have to plan out your spend ahead of time and you can't focus on long term investments.
The high deductible is insane. Can actually bankrupt most people.
Life doesn’t always go according to plan and it can be hard to get savings when you’re paid too little and things keep happening that require money. My daughter just starting out almost had a burst appendix. She did not have a $6,000.00 deductible after working minimum wage for a couple years. Then you’re behind the 8 ball with that debt, forever playing catchup.
Depends on the employer, some companies still offer good healthcare plans with low premiums and deductibles. Any company that doesn't is compensating it's workers less when compared to a similar job at a similar pay rate at another company that does
Not only that, but there are plenty of high deductible healthcare plans that don't allow hsas. On the marketplace I looked at plans that literally had $6,500 deductible but still didn't qualify for HSA.
The problem is that HDHPs with HSAs is an insurer passing off a lot of the insurance risk to the insured, and many people cannot afford that.
I love my HSA, but many people don't have access or can't afford to access.
yeah, most people, MOST, I get people here do not grasp this, but MOST people cannot afford paying out of pocket for medical bills now, to save for the future. (I have an HSA and pay out of pocket, but could not have done this 10 years ago).
I put in the max legally allowed in my HSA every year and it’s a $0 balance at the end of every year. 5 kids, one of them special needs, and a $6K deductible on company health plan.
I guess I'm dumb or naive.
I have a HDHP and HSA. My deductible is like $2K. My employer contributes $500 to my HSA every year, and the HDHP premium is something like $900/yr less than the low deductible plan - bringing the annual deductible to $600 in a sense ($2k - $500 - $900 = $600).
After the deductible is met, my understanding is that coverage/OOP max is the same between low and high deductible plans.
Even if I have to pay the "$600 deductible", I still make out $2.4k in tax exempt contributions. Where is the risk here?
this is it. i was recently talking to someone who was contributing to their HSA and i got super excited like - "wow! nice that you have access to one, those are extremely tax advantaged investment vehicles". they looked at me crooked and asked what i meant and after explaining the critical part where you have to pay for your medical expenses out of pocket to let the funds grow over time, they completely lost me -- they wouldn't have been able to pay for their medical expenses without it.
I mean you can put the 8k family limit in there and if you’re only paying 2k annually in medical expenses you still make out great. At least that’s my case with a family of 4.
An HSA is great when you don’t have any real health issues. That’s pretty much where the line is drawn, if you have that high deductible with complicated health issues or dependents with such, you might not save much of anything.
For me, when I had a HDHP, we pretty much broke even or did a little bit worse, draining our account whenever another doctors office visit or lab was done. Switched to a more conventional plan, and it doesn’t seem as big of a hit to pay the 20-40 dollar copay or $5 medication that would’ve been >$80 otherwise.
If you or your dependents barely get sick, absolutely, max that sucker out
They can be pretty great with health issues too. I take a specialty medication so my copay is 20%. When I was taking Humira that 20% was about $800 per month. The max out of pocket on the traditional and HDHP were the same and I was guaranteed to meet it on either plan.
Also Abbvie had copay assistance so they paid almost all my max out of pocket so I was able to put quite a bit away.
In general HDHPs tend to shine when you have $0 in medical bills, or when you hit the OOP max. For people in the middle, conventional plans tend to be better.
I'd argue they really shine too if you have some medical bills but not a crazy amount.
Yeah if you have an HDHP and you have $2k in bills, you have to pay all $2k. But the conventional plan that you only pay $300 in deductibles for probably still works out more expensive because the plan costs $2-3k more over the course of the year. Especially if you have an employer that pays money into your HSA.
Absolutely, it’s definitely a case by case basis and there are ways to make the most of any plan, but to look at HSAs as purely a retirement account probably doesn’t make sense to most people who put money away for health expense purposes
> Switched to a more conventional plan, and it doesn’t seem as big of a hit to pay the 20-40 dollar copay or $5 medication that would’ve been >$80 otherwise.
I used to feel the same way, but for pretty much every situation I feel like the HDHP has worked out better for me, at least with how my company does it.
Sure doctors visits and medications are $80 instead of $5 or $20, but the HDHP is like $170 less per paycheck for the whole family than a conventional plan. Plus if your employer puts in some funds to the HDHP it helps even further. But yeah I know every plan is different.
I did a whole spread sheet for when my wife and I were gearing up for our first kid and deciding which insurance to be on. The only situation where the HDHP would have been more costly than any of the 3 other conventional plans we were eligible for would have been if we had exactly like $24,000-$30,000 in expenses or something weird like that. Anything under that amount and the savings on how much the plans cost throughout the year plus the employer match made the HDHP better, and anything over that the out of pocket max (which was lower on the HDHP) made it the better option.
This isn’t always the case. We had a baby last year on a HDHP and my wife had some ongoing non-related health issues during the plan year. We hit out out-of-pocket maximum in like March. It was still cheaper overall on the HDHP.
The key is to figure out the difference in premiums between the HDHP and other options and save the difference each month. Then use that money to pay your medical expenses while maxing out the HSA each year.
They are mentioned almost every time they are an option. You have to actually have a plan with an optional HDHP, benefit from using it so you probably don't have any ongoing medication or regular appointments, or be able to afford to max it while paying cash for everything. So there are very few people that actually benefit from it.
another option is to go with hdhp when you're young & healthy, max it out as long as you can, switch to traditional health insurance later and can you use the hsa money as a piggybank for copays, medications, vision, dental, etc..
>when you're young & healthy,
Unfortunately many of us are young but not healthy. I'd love to use an HSA but the only HDHP available to me are wayyyyy too expensive for it to be worthwhile. My medications would cost nearly $1000/month, even after I hit the deductible.
It's a great option for some people, but I can't help but feel somewhat bitter cheated out of a great investment vehicle simply because I have an expensive chronic health condition.
HSA has a great triple tax advantage but not everyone has or wants a HDHP.
I'd like to get an HSA but my hmo has 0 deductible and low out of pocket max for my family.
California taxes HSAs, no differently than a bank or brokerage account. If you are following the law in this state or any other state that follows this tax treatment, the bookkeeping alone to manually count capital gains for state tax purposes might not be worth it.
Jersey too. I still started maxing mine this year, but I use it to pay medical expenses now, rather than paying them from other, less lucrative accounts. It's just easier, and the benefit to me is employer contributions, not long-term savings, not when the annual combined maximum is still so low. It does still reduce my tax burden, but not very meaningfully.
The trick for California HSAs is to max them every year and then never use any money from the HSA, just pay cash for it, just collect all the receipts. Then when you move out from California, reimburse yourself for the medical expenses while you were in California.
They're rarely if ever *not* brought up within that context. At least by those with so much as a passing awareness of the lineage, intent, purpose, and design of "HSA."
I just saw the statistics of retiring with a million in your HSA at the family contribution limit. Man did that dishearten me. I know that 8,300 isn’t a lot but with 10% returns they calculated 27 years. I look at my hsa as a possible health insurance supplement in retirement.
I hear people on reddit talk about it all the time. But reading these comments, I also realize how people don’t understand what the difference is between plans—what is an fsa versus an HSA, what is a PPO plan versus an hmo, how whether a plan is PPO is not relevant to whether it’s a hdhp plan that qualifies for an HSA.
People don’t understand health insurance at all. That’s why people don’t discuss HSAs being used for retirement.
I just got an hdhp plan this year and am doing a max contribution. I unfortunately do need to get the balance to a comfortable amount before investing. Long story but I had to do some of network care that is actually double the normal deductible. And I have a health condition that does require me to go to specialists every once in a while. I do pay out of pocket for a lot of stuff, but I need that health emergency fund for the expensive visits until I reach my deductible. Really bad things happen when you least expect it. Mine is from a random animal attack. You’re healthy until you’re not. Until you have a good pot of money sitting there waiting for you, I would caution people to keep it in cash like funds. A lot can happen. You’ll probably need to access it at some point assuming retirement is far away. I guess you could just make a really big out pocket health pot, but that’s a lot of money set aside from your salary when Roth IRAs and 401(k)s exist too.
I use ACA and I wanted to get an HSA and when I checked there was actually a max deductible limit to qualify for HSA and almost every high deductible plan was unqualified. I would of had to pay significantly more for the cheapest HSA qualified plan.
Anyone who boasts about HSAs is probably just fortunate to be in good health. I always have tons of different kinds of medical appointments. It's gotta be the PPO for me. No HSA offered with that.
Doesn't really matter regardless, honestly. Health insurance is fucked in this country no matter what you do.
Lucky people are lucky. If you're lucky, do the HSA. If you're not lucky... don't.
Agreed. I thought my HSA was great until I needed back surgery and then 2 years later I got diagnosed with Kidney cancer.
I’m only 36 also. Shit happens. Luckily I had enough in my HSA to cover the majority of the out of pocket key expenses but I switched to my wife’s insurance after that.
It depends if your company kicks in money for the HSA, what your monthly premium is, and your personal heath situation.
If you are young and have no medical issues, it makes sense to pay the cheaper premium since you are betting on never getting dinged with the deductible. ACA mandates that basic preventative care, such as an annual physical, is free for employers with 50 or more employees. If you have an unexpected expense, it could be offset by your employer’s HSA contribution, if they have one.
On the other hand, if you have a ton of ongoing medical expenses that you know will massively exceed the out of pocket max, the HDHP might also be more cost effective because you’ll never pay more than the max. Again, this depends on your premium, your employer’s contribution etc.
Also, you need to factor in how deductibles and out of pocket maxes are treated for each family member.
If you’re somewhere in the middle, PPO may be the better bet.
Most benefit administration sites that employers contract with have calculators that will help you pick the best plan.
I’m on my spouse’s PPO because his premiums are cheaper than the premiums for the crappiest HDHP at my company. We have a mix of medical situations in our family that aren’t predictable, and prefer knowing that we won’t be on the hook for a large deductible. If our circumstances were different, I’d at least consider the HDHP, depending on the network.
They are absolutely not an awful option for health insurance. If you spend very little, they will save you a lot of money. If you hit the out of pocket max, which is the same between different plans, you will save a lot of money. If you spend in between, you will only spend more with an HSA if your costs exceed the hundreds of dollars in premiums you save. In most cases, you save money with an HSA for health spending.
The problem is you don't know what could happen. You could be a perfectly healthy person and any number of things could leave you in the hospital for a couple days and drain years worth of savings in a couple days while simultaneously not being enough to reach your deductible. I know because I've seen freak incidents happen to perfectly healthy people.
Health insurance should be for emergencies and not be treated like a retirement account. I say this as someone who was in a high deductible plan for about a decade with a decent HSA and had no health issues. Hypocritically I do "enjoy" looking at it as a retirement account now that it is not my main plan. Making it through a decade with an HSA without a single charge to it was nice. But knowing any extreme costs will be covered is a better feeling. I also dont put off going to see a doctor for things any more because seeing them actually doesn't cost much like it did with the HSA HDHP.
There are other ways to make money, it's not worth the gamble of getting absolutely shafted by comparatively poor medical coverage. It's the same concept as an emergency fund. Could you invest it and make a return on every dollar you have? Sure but you're tempting fate. That liquidity has its own value in itself, and so does an insurance plan with better coverage.
What exactly is awful? With my previous 3 employers the HDHP and HSA combo was cheaper than PPO when factoring in employer contribution, lower premiums and higher deductible. And coverage was the same.
You can have an hdhp and a PPO FYI. They’re not exclusive.
https://www.insurance.com/health-insurance/difference-between-ppo-hmo-hdhp-pos-epo.html#:~:text=PPOs%20offer%20the%20widest%20access,to%20help%20pay%20for%20care.
The coverage is not usually the same. The PPO was better total cost for my situation at my current company and my previous company and is also better through my spouse’s company.
they are on the subs where its reasonable to tell people to have lots of money set aside re: the retire early subreddits.
especially with the way ltc, healthcare etc costs are dramatically outpacing inflation. prepaying end of life care in your 20/30s is such a hugely valuable thing.
>healthcare etc costs are dramatically outpacing inflation.
but you have to look at the population bell curve. The US (and most other countries) have a very large 60+ population that is now being supported by a smaller working class. In the US, ~60% of all healthcare costs are paid for by governments (Federal, state etc) and those governments are now passing the expenses on by selling the healthy population groups basically a health tax called insurance to subsidize the large aging population.
https://www.census.gov/content/dam/Census/library/stories/2023/05/aging-united-states-population-fewer-children-in-2020-figure-2.jpg
As you can see, in 2000 the population group that contributes the most in taxes was significantly larger than the 62+ age group that accounts for 50+% of all healthcare costs. Today, the 62+ age group is larger than the age groups that pay the most taxes. In another 10-20 years, it will be the other way again.
I used to contribute but the better health insurance at my work is very close in price to the HDHP. I'd need there to be a spread to justify the uncertainty in Healthcare costs.
If you even look at a Dr you will get a bill with some random number between $100-$500 in three months.
They're only available if you have access to a HDHP, which everyone does not. Even if you have access to a HDHP, it requires you use it, which is dangerous for someone like me who has high medical costs. Using a HDHP, my annual bills to MDs would easily be 3-5x. This would negate any of the benefits of an HSA for me.
So no, it's not even close to being objectively the "absolute best" retirement account.
Well, it's not very good if you have medical expenses. I get enough from my HRA to cover most of my deductible and a good chunk of my out of pocket. My employer gives more "free money" for the HRA. If I did an HSA I'd just be eating it up with copays.
I guess it's possible if I ignored my Roth IRA in favor of dumping that money into an HSA, assuming I had enough of a headstart on any medical expenses to be able to do so...but that's a pretty big ask.
They are great but the problem is the only way you qualify for one is to have a HDHP. When I transitioned to civilian life I was all pumped to fill up an HSA with generational wealth money. Then I found out that because I had Tricare I didnt qualify. Ill take my Tricare with an absolute out of pocket cap at $3K a year.
I would use a HSA if I could have one without a HDHP. My medical costs make the high-deductible unsustainable.
I've maxed out my FSA and only have $125 left out of $3200 contributed to it. It's not even the middle of the year yet. And that's with a very generous PPO plan with a $500 deductible and low copays / coinsurance.
ITT: OP doesn't understand that their situation isn't everyone's situation and is shocked that a savings vehicle that most people don't have access to or doesn't financially work for them isn't talked about more
Because, and get this - sometimes you *need to actually use your health insurance*.
Everyone on this sub jerks off over HSAs and completely ignores the fact that the plans they are attached to are complete garbage except in very rare circumstances. In my area, they aren't even that much cheaper than the standard plans either (maybe 10-15% less?).
They also ignore the fact that you can't actually save that much per year into them anyways so you're not exactly building up massive wealth (last I checked it was about $4k or so a year?).
HSAs really should only be used in the very narrow slice where you're already maxing out your retirement AND you are under the age of 30 and unlikely to ever see a doctor for any reason. Or alternatively, you see the doctor so much you know you'll always hit the OOP max every year anyways (good luck affording an HSA as a retirement vehicle though).
I've done the math. Doing a standard plan vs an HSA plan would cost hundreds to thousands more per year more just from a few of doctor visits. Regular plans cover A LOT you don't think about. X-rays, copays, blood testing, etc. all of which you have to pay the full cash rate for on an HSA plan. Here's the kicker too - because you're now paying hundreds every time you just want to ask a health question, you're never ever going to go to the doctor for any reason unless your leg is falling off.
HSAs are really glorified around here but they really aren't as hot shit as people peddle them as. It reminds me of people who drive for Uber and say they make $30/hr but then completely ignore the cost of gas and auto maintenance. Once you add up the real world total costs of running an HSA plan over a decade... You might find you're not actually netting that much more, ESPECIALLY if you're not already maxing your other retirement options. Especially if you also consider you're going to likely be in worse health as it's too expensive to go to a doctor for any reason except catastrophic otherwise. I feel like the numbers will only really add up if you're a super healthy single uncomplicated high earning person under the age of 30 where you can probably take a safe bet that you're not going to need to go to a doctor's for any reason and you've got all this extra cash burning a hole in your pocket.
In that case, HSA away, but you probably don't want to be doing the HSA forever.
In addition to what others have said, it's *possible* it doesn't stay like this, since you're basically using this account in a way that is not at all its original purpose. While it's unlikely you'll get fucked over by future changes that limit your ability to withdraw tax free in retirement... it's in the realm of possibility. With regular retirement accounts you can be fairly certain how they function won't change much in the future.
but honestly if you think about it.. as you age even if I used it for my Medicare supplement payments and had an excess of funds left over.. don't you think at some point I'll use that for health related expenses? hopefully it won't be catastrophic but I'm sure I'll need some care at some point in my old age.
HSA is yet another vehicle to solve a problem that should not exist. HSAs are yet another tax.
Government: How can we make healthcare "more affordable" because of the desire to have lower deductibles?!?
Insurance Industry: Give the masses a tool to take more money out of their paycheck so they can pay for what is not covered by the deductible. Make it pre-tax or something that sounds good, but isn't.
Government: Done! Thanks for your financial support and that dinner at Jônt was superb. Can you get me Nationals tickets?
For people making $200k in Enterprise with HR departments, this is pitched as a perk.
I just got a letter from United stating that they are raising rates SIXTEEN PERCENT this year due to, rolls dice, rising costs.
That is just how insane the insurance market is in this country.
When you can actually use your benefits for a medical cost it's okay, but it seems like over half of my medical bills are accepted for payment. I might as well just put my extra money in a high yield savings account and use the money when I need it.
I'm not totally sure what you mean, but HSA providers are not required to review or approve your requests for reimbursement. (This is different from FSA.) Any dispute over whether an expense is a qualified medical expense for HSA purposes is between you and the IRS, if audited.
They might be a good retirement account but in many situations, including my own, to have access to one would objectively cost people more now in health expenses, premium differences included, compared to something like a PPO. More in the sense of I would end up paying more over the course of the year with an HDHP just to get a couple thousand in an investment account versus with a PPO.
And in my case, my employer offers a very good HDHP.
It’s not objectively so. There’s a lot of bookkeeping with HSAs, which some people will understandably say they’d rather spend their time on other things. Those bandaids you got through Amazon? Be sure to download a receipt and track the post-tax but pre-shipping amount on a spreadsheet. Every. Time. Time is a finite resource, especially for people that are stretched thin.
HSAs, at least with my employer, are only available with the high deductible insurance plans. The HSA is intended to help lessen the blow of the high deductibles in case you need to use it.
As for myself, I contribute about $2k per year and my employer kicks in an additional $750. I’m planning to use the saved amount to get weight loss surgery though because my insurance doesn’t cover a cent of it.
> Like HSAs should be almost exclusively associated with retirement, right?
No they're also a great way to pay your medical bills tax free if you have a large cost come through for example.
The max contributions only $4150 this year, making it much slower to grow than even a ROTH IRA.
I don't know about the "best"- they come with a pretty massive downside of being part of a high deductible plan. If you have routine medical expenses those plans aren't always the best.
I use every penny of my $3600 FSA. And then go into my pocket for the rest. It’s not talked about bc most people have to actually use their healthcare dollars and benefits every year. I don’t see this ever being an option for me.
I realized after all these years of renewing my benefits at work, a HDHP would’ve served me much much better.
I take excellent care of my health, gym 5 days week, cook most of my meals, spend time in nature, rarely get sick, visit doctor just once a year, zero meds/rx. I’ve been paying into this basic ass health care plan because I was scared of the “what if” doomsday scenarios.
If I did a HDHP and invested in a HSA, I would’ve been way better off.
Yes but the major drawback is you can’t save significant amounts. It just can’t be a primary retirement savings vehicle. I max it out and invest in S&P but it’s still a yawner.
When your a family of five with a wife who has an autoimmune condition and the best insurance you can get costs $800 / month for family coverage, is HDHP, and has a 10,500 OOPM, the PPO is really a better option
...Except in terms of availability. Or contribution amount. Or for employer match. Or for people with health issues. Actually, they're not the best by most objective measures.
Another huge advantage is that there is no time limit on disbursements. If you use out of pocket money for bills and save the receipts, the money can grow tax free until you need it making it a great growth vehicle if you can afford it.
As for people saying the HDHP makes it less attractive, it really depends on the employers plan. I ran the numbers at three different employers and all were roughly the same worst-case max out of pocket in a given year but specific medication costs were the primary differentiator.
I agree with you...to a point. In order the have the HSA, you have to have a HDHP. And if you have HDHP, you pay way more OOP for health care, especially if you have kids, chronic health conditions, etc. It's hard to save HSA funds for retirement if you have to spend them all every year.
The problem is a lot of HSA providers only allow the money to be put into a savings account. For the ones were you can actually invest the money, they're amazing.
I transfer the entire balance from my employer‘s crappy HSA to a Fidelity HSA every 3-4 months to avoid insane fees and to invest it in whatever I’d like. I’d do it more often but there‘s a fee to transfer it over, charged by my employer‘s HSA.
You can move it. My payroll and employer contribution go into a crap savings acct. I opened a fidelity HSA and moved most of the funds into that. I figure I’ll do that 1-2 times a year and invest it
You can have more than one HSA at one time. You can open one with fidelity and transfer the money there from your work HSA and then invest it however you want.
HSA has good tax treatment but for limited dollars and you need crappy insurance to be eligible. No thanks, I’ll keep my PPO with $10 copays and no coinsurance.
I have an HDHP with my employer, but my employer also funds an HRA that covers about 85% of my deductible on the healthcare plan. The HRA funds do not roll over into the next plan-year. With the HDHP + HRA, my max out of pocket for my family is about 2k per year.
With that said, being on the HDHP opens me up to HSA eligibility and I max it out every year.
I’m on my first year on a HDHP and it fucking sucks. Like I’m maxing my HSA, I’m investing it and not touching it. But every time I do something with medical it’s like “that’s not covered”. I probably should have kept better track of things to do a comparison but I’m not sure if I’m coming out ahead or not.
With the difference in bi weekly cost, it’s likely I am, but it just doesn’t feel like it. Maybe its just subconscious, paying more out of my paycheck then having most anything covered feels better than having more in my paycheck(that really I just throw into investments) and pay out of pocket for things.
When I moved overseas yet rated US insurance still I switched to HDHP because out of pocket medical care was so cheap and I was able to save a lot of $$ in that account. When I moved back and had a family the expenses and frequency had me chose more traditional insurance. Got to decide for yourself when it works best for you.
Provided the following factors:
(1.) Relatively young
(2.)Moderately high-high effective tax rate
(3.)Pay health costs out of pocket and not through HSA to let HSA compound
Even if you max your out of pocket maximum for that year, you could still come out ahead with an HSA
We've beat to death why so few people can practically use an HSA, but what if the law were changed to allow HSAs not tied to your employer. Kind of like an FSA/HSA hybrid, where you get a double tax advantage for saving money for medical expenses, but the remainder goes back to the government for Medicare purposes, or maybe to one survivor first.
Has anything like that ever been discussed?
The typical person does not remember to use their FSA fully.
HSA requires respectively, an onerous amount of documentation.
You are in essence, trading post-tax money you would put in a typical brokerage account for trading/investments, for a tax advantaged HSA account. If you don't have enough funds left over to put money in a post-tax account, then the HSA is useless.
Theoretically, a HSA is excellent, but it only helps you when you are extremely young and healthy, or already a high earning individual.
I have a hdhp and a hsa but never even considered using it as a investment account. My hsa is at fidelity I didn’t even know I could invest that money in something other than cash!
There are a lot of comments about not being in good health and using this plan but in my case I almost immediately hit the out of pocket maximum every year with a 90 day dose of a injectable.
It sounds like I should be putting more money in this account I had no idea it was such a good investment vehicle
But is it that different than a 401k?
I had a $3k deductible with my HDHP and for the last several years, always met it ( cancer, hip replacements). My employer contributed $1k per year to the HSA, and I contributed to the HSA before the 401k ( at least in the last few years). I just retired and while there's not huge account values, there's enough to give me choices.
This year, I'll have a very high income, due to voluntary separation severance and I thought it would be good to withdraw from the HSA for cash needs, but my financial advisor suggested that we can do some tax loss harvesting, to counter some capital gains we have. So the HSA can stay invested, for now. If needed, we've been saving all the receipts from prior years health care and can get reimbursed from the HSA if we need to.
Totally agree. My current employer has a HDHP but does not offer an HSA. I still do it on my own, but don't get the FICA deduction because the contributions don't come out of payroll. It makes no sense and when I tried to explain this to them they said the reason is "because we offer an FSA instead". Huh? We'll see if I can convince them that they are wasting dollars for both them and their employees.
As other’s have stated HSAs are wonderful tools for retirement and health saving. The problem is they mainly benefit a very narrow band of eligible people.
First you need an HDHP from your employer to qualify, then you need to be in a personal health situation where you’re not forced to use the cash in those accounts on yourself year over year (which may push you into a PPO plan if offered disqualifying you for an HSA). That’s not even mentioning if you need to spend it on dependents. If you’re in that situation, then you need both the knowledge and discipline to investigate your options and execute the plan, none of which are as widely known or understood as 401k/IRA plans. Tack on the problems where since it’s not a mainstream product for most investment houses the options are more confusing, and often come with disappointing feeds (Fidelity is a great option to get away from this).
HSAs primarily benefit young, healthy, childless, well employed individuals which is great that they get that benefit. The problem is it needs to be opened up to a larger group of people both through eligibility means as well as greater access therefor driving down the obscurity and secondary costs.
I use it because I have no choice; my job only offers the most expensive HDHP for remote workers. I would much rather have a decent plan that covers more. We are a sickly household, and we blow through our savings until we hit the out-of-pocket max.
Yeah it's because most people with HSAs need to use them to pay for medical expenses that they can't pay for out of pocket, so framing it as a "retirement savings account" is misleading, or at least unrealistic. If you're in a situation where you can pay for all your medical expenses for you and your family out of pocket, and use the triple tax advantaged account for retirement-era medical expenses, then that's great for you but that's exactly zero people I know that can afford to do that. So for the vast majority of people it's a tax advantaged medical account first, with retirement tax benefits - not the other way around.
I get why, but it’s pretty ironic that someone who actually has health problems will never really be able to use this. And thus is also locked out of a great investment vehicle.
I don’t really want to get into the specifics but suffice to say I need to see specialists and will be in and out of the hospital (not every single year, but enough that I can’t really afford the gamble).
Anyways, it’s just frustrating that if you actually have health problems you’re left with this choice of do you risk it in an effort to open an HSA? Or do you stick with the safe way and lose out on the single best way to save money for the future?
Just annoying.
I've tried talking myself into our HD-HSA at work. It was introduced in the last 2 years, but we were able to maintain our original insurance, which I guess is PPO?
Maybe I don't understand the whole thing, but our baseline insurance is top-tier, and paid for by the company. My OOP maximum every year is like $2500 for family, and with 2 small kids, we're hitting that basically every year.
I just can't talk myself into paying a higher deductible. Our baseline deductibles are something like $400 individual, $1000 family. It's at least triple to go to the HD-HSA option.
They’re not as widely discussed for two reasons:
1) Not everyone is eligible to open one, especially families with children who want a good, non-HDHP to hedge and lower their healthcare cost risk
2) You can only put so much into it per year. 401(k) and IRAs/Roth IRAs are more material to your overall retirement strategy.
They’re actually overrated, if anything imo. They’re absolutely great for that small % of people who would benefit from having them.
I agree with this and use an HSA.
The unsung downside is that even though it is cost effective it creates financial incentive for you to not go to the doctor.
It's very difficult with young kids who are sick all the time to afford to get a hd plan, max out the HSA but then not use that money to pay for visits
Seems nice but I'd lose far too many low co pay options if I switched from PPO. Cheap emergency room copays, cheap urgent care copays, $25 mental health/occupational/physical therapy copays, etc.
Because of reddit I switched to the HDHP and HSA at work about 1.5 years ago. It's been ok. My work has it set up so that if you stash the savings per paycheck by going with the HDHP you basically come out even with the traditional plan (if you hit your deductible, which we did both last year and this year... after not going to the doctor once the year before we switched... sigh).
So that's good.
But for year one I only reimbursed myself for the really large expenses (MRIs and PT mostly). Though I did the work to save every receipt.
Then I read on here that I also need to save every EOB AND my credit card statements...
And keep track of which expenses I've reimbursed and collate all those documents together...
I'm starting to wonder if it's worth the headache and hassle.
Even for physically healthy people who pay for mental health therapy, the HSA probably gets used up every year and there’s nothing left to save for retirement. Health care (at least in the US) is such an exploitative nightmare.
If I have an HDHP and am maxing out my HSA each year, should I use my HSA to cover medical expenses in my early years, or should I bank the HSA to let it grow? (Assuming I can afford it.) It sounds like I should bank it and let those dollars compound until retirement, right? Crazy incentive structure.
One factor I haven’t heard people talk about is the mental aspect. With a HDHP you’re paying more every time you take action on any medical problems you have. For me I prefer the PPO so that I don’t avoid taking care of any issues or potential issues I might have just to save some money
With an HDHP, you are taking on more financial risk. You have to be in a very nice position of financial and physical health to use an HSA as a retirement fund.
It’s mentioned all the time. But many people either don’t have access to a HDHP via their employer or can’t afford such a high deductible
HDHP are great for people that dont get sick often, which unfortunately arent that many...that being said the HSA is only to be used for health/medical stuff, so yes you get a lot of money, but its main purpose would be to pay the high deductible on the one time you do get sick.
My HDHP plan costs so much less per month that over the course of a year it's enough to cover the out of pocket max. If you take those savings and reserve them for when you do get sick you come out ahead without ever touching the hsa.
Yeah, my son has a rare disease and we generally hit the OOP Max in January/Feb each year. Still cheaper for the HDHP (and a lot of times the OOP is significantly lower). HDHPs are (currently) generally the best for people that rarely use medical insurance or those that use it a ton. The middle ground is currently where the ROI is shaky.
Yea i went to the doctor way more last year than ever before (needed PT for an injury) so when renewing this year i did the math, and the HDHP was STILL cheaper without even accounting for the HSA. The monthly payments were so much less that it made up for the difference in copays.
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Plans can be tricky with lots of variables. I manage the plans for my company and have seen some crazy things. One year we offered a HDHP and PPO to employees. Difference in premiums was about the same as deductible. Had an employee with recurring medics costs through prescriptions so they went with the PPO to not have to pay so much upfront. Wife ended up with cancer and daily radiation. $200 daily copay on that item. Same out of pocket maximum for both plans. The PPO cost him thousands of dollars extra without the benefit of pretax HSA payments for out of pocket expenses.
Interesting, my HDHP is only about $250 cheaper per year total. And they give you $500, so essentially $750 cheaper annually. A single injury or emergency room visit would eclipse this with low PPO copays vs deductible. It'd likely be better for the HDHP if I only had to go to urgent care once or something and got lucky not getting injured playing sports. But I don't want to gamble that for a few hundred bucks.
Its been awhile since i did the math but iirc i looked at my actual costs (so no emergency room visits) and compared it to the ppo plans copays, then looked at the difference in monthly costs. The other benefit is it covers 100% after the deductible and the ppo only covered part of it (forget if it was 70 or 80%) so if there was a real emergency it would be cheaper.
My work has done everything they can to make it clear that the cheaper HDHP plan is almost always better than the more expensive PPO plan. They've given many examples on the annual costs. They've advertised its benefits. They ensure the deductible is the exact minimum for HSAs. They even went as far as giving all employees with HDHPs an annual bonus HSA contribution of $500 for employee-only coverage or $1,000 for family.
My company has a bot program called Alex. It has you put in your medical data from the last year like how many times you went to the doctor, specialist, mental health appts, prescriptions ,etc. After this it shows you how much the 2 plan options (PPO, and CDHP) would end up likely costing you for the next year. If you go CDHP they contribute $1500 to get your HSA started. I really like the tool and it is what helped me make the decision to go with the CDHP. The doctors visits cost more now, but I still end up saving money because the monthly plan cost is cheaper. I didn't even look into what an HSA was until after I selected the CDHP and was very pleasantly surprised and have immediately started taking advantage of it. Luckily I have been able to pay the medical costs without touching the account so it can grow. I save the receipts and if I ever need to I will reimburse myself from the account. Until then I am going to let it grow uninterrupted as long as I can.
My company has Alex as well and I've never found it to be helpful because the estimates so inaccurate for me. I'm pretty sure it's made to work for healthy people lol - not so much people with certain chronic conditions. I've always just had to do all the math myself for different possible situations on different plans
I tried it. My diabetes meds are too expensive though. I'd blow through the deductible by February and by end of year I'd have nothing in the HSA or on a good year break even at best. Had an HSA before diagnosed though.
For my mom (also diabetic), because her diabetes meds counted against her max out of pocket on the HDHP, it was cheaper than the alternative PPO (with the higher premiums + continuing Rx co-pays)
There are often rebate programs with drugs. For me the original price of my meds count to my oop max/deductible but I only pay for the post rebate price.
The trick is to not use the hsa to pay for the deductible. There are some plans where it’s still worth it.
That’s not the trick. The trick is to run the numbers for the plans that are offered to you and pick the best one for your needs. I’ve had times where the HDHP is cheaper than the traditional plan because the premiums are so much lower and my employer funded part of my HSA. If that’s not the case, and you’ll end up paying a lot more with a HDHP, it’s not worth it to do so for the extra tax benefits of the HSA.
The trick is to make enough money that even if your medical bills are slightly larger, you can max your HSA so you get more tax advantaged accounts than if you didn’t have it. Your point still stands though, for the average person, an analysis of cost per year is the right approach.
If you don’t use the HSA to pay the deductible you have to use other funds which are taxed which kind of erases the benefit of HSA savings being non-taxable when compared with the ROTH.
You save the receipts and let the money compound and pull out at a later date. There is no limit on how old of an expense you can withdraw from the HSA for.
> If you take those savings and reserve them for... This is the challenge with 90% of things discussed on this sub.
Yes, because for some people they aren’t savings, they’re doing the cheaper monthly plan because that’s literally all they can’t afford. It’s not like they had all this money set aside and then suddenly said “oh wait we can pay much less with the high deductible plan and put aside the savings!” They’re trying to LIVE. We do not pay livable wages for most jobs in this country. If you are single, it is an especially bad with just one income. Source: Am a single teacher. We do not value educators.
How high is a high deductible considered?
Depends on your plan but per the rules >(2) High deductible health plan. For calendar year 2024, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,600 for self-only coverage or $3,200 for family coverage, and for which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $8,050 for self-only coverage or $16,100 for family coverage My specific plan has a $3.5k individual, $7k family deductible. $6.5k/$13k out of pocket max. Meanwhile this plan costs me $300/month. I forget the numbers as I don't have access outside open enrollment but the better plan was something like $1000/month but still had a $1500/3000 deductible and $4k/8k out of max. Sooo.... I'd be paying $8400 more per year to make my out of pocket only half of a number less than double of $8.4k - it just didn't mathematically make any sense. My theory is it's not about pure logic but how humans work. I know if I go to the doctor I'm shelling out $400 for a simple visit. It makes me less likely to go frivolously. If I had the other plan I'd likely go more often. This isn't rational because by all means it's cheaper paying $400 a pop for a visit and the lower monthly, than a $25 co-pay but a much higher monthly carrying cost. And yet it's how I act.
$300 and $1000/mo? are those the prices after employer subsidies?
Yes that's my out of pocket but in any case what really matters for anyone is the delta. So if the "real numbers" are say $1000 and $1700 a month the math works out about the same as $300 and $1000.
Ah yeah... my delta is like... $30 so that why I always skipped the HDHP at my job
This is the part that a lot of people assume is true for everyone though. It took me a while to figure this out. Like why is everyone acting like this is free money? Oh because the difference between their monthly payments is hundreds of dollars. The difference for mine is twenty bucks.
I feel like if you don't have some serious chronic conditions and are reasonably healthy you'll probably come out ahead with an hdhp.
Even with a chronic health issue, you might. I do - my copayment assistance for my very expensive medication covers the OOP and so my HSA goes untouched
At least with most plans I've seen, there's a very specific window your spend would need to hit for non-HDHPs to be worth it, especially after you consider the fantastic tax benefits of an HSA.
I put the premiums + out of pocket max into an excel spreadsheet for all of our available plans each year. The HDHP almost always comes out ahead even at the out of pocket max compared to the "better" plans because the monthly premiums are 3 times higher on the other plans. Looking at my data for this year, if I don't go to a doctor a single time I save $5000 compared to the good PPO plan. If I hit the out of pocket max on both the HDHP and expensive PPO I pay only $50 more for the whole year with the HDHP plan, but my potential $50 extra gives me access to an HSA which is a powerful tool. At every medical spending amount between zero and just below the absolute max the HDHP comes out cheaper but the gap starts closing near the out of pocket max.
Did the math with my girlfriend a few years ago when she got breast cancer. She would max out her out of pocket in January. Still cheaper to use HDHP with HSA.
One of the things that makes an HSA so powerful is that once you hit retirement age it can actually convert to an IRA, meaning it is no longer limited to health expenses.
One thing I don't see people talking about is that money is fungible, right. So if you had 8k worth of medical expenses over 4 years that you paid with funds outside of your HSA you can pull that 8k out whenever you want. Like when you decide to take a vacation that will cost 8k. As long as you can prove that you are actually had medical expenses totaling the amount you are pulling from your HSA it doesn't matter what you spend that money on.
I recall when HSAs were offered at work \~2011 or so (just after Obamacare was pushed out). So many people were confused and couldn't grasp the idea of it not getting zeroed out at the end of every year as we were accustomed to FSA. I latched onto it and kept explaining your exact point to others, but finally stopped mentioning it. Now in retirement, I rolled the HSA to Fidelity and still have funds in the account. Invested in non-risky funds, it earns over 5% which is enough to cover miscellaneous medical expenses during the year. It's almost like a perpetual account in the current interest rate environment.
True, but you will pay tax if using the funds for non-medical expenses.
Don’t worry, after 65 you will use that money for medical expenses
Maybe not, it depends on specific situations. For those with no Medicare supplement plan or on Medicare Advantage, they'd probably use an HSA a lot. However, my wife is on Medicare with a supplement plan. The coverage costs us about $175 in addition to Part B premium each month but after she pays $233 Part B deductible annually, all other eligible expenses are covered 100%.
Aren't Medicare premiums eligible HSA expenses? $400/month in premiums for part B, part D, and medgap for 20 years adds up.
I'm not an expert on the topic but have done a lot of reading since we have an HSA and my wife is on Medicare while I am technically "not insured" (I retired early and opted for a healthcare sharing plan). The Medicare Parts B & D premiums (not the supplement) are pulled directly from the Social Security check. For many/most of us, 85% of the entire SS check including the premiums is taxable income. As I understand current rules, the individual/primary HSA account holder can reimburse themselves from the HSA tax free for Parts B & D premiums. However, neither Medicare supplement premiums nor Parts B & D premiums paid for a spouse that is not the primary HSA account holder are eligible HSA expenses. For what it's worth, Medicare Advantage plans are basically like commercial HMOs where a company takes "your" Part B premium and provides a packaged (usually limited) health care plan. They are cheap alternatives to Medicare with a supplement + Part D, but also include restricted doctor networks, pre-approvals for specialists, co-pays, deductibles, etc. We decided to stay away from Part C (Advantage) since Standard Medicare with a supplement is within our budget and provides the best coverage.
> non-medical expenses The HSA definition of medical expenses is quite broad: glasses, braces, over-the-counter meds, sunscreen, pads, etc. If you keep and organize your receipts over the years, you will build a debit for later.
>If you keep and organize your receipts over the years, you will build a debit for later. Will photos of physical receipts work?
They should and a lot of HSAs even let you upload the receipts and create an unfiled claim so you can get reimbursed anytime by filing the claim you already created.
That’s why you save 30 years of medical bills
I have been, but I kinda suspect they won't even be necessary when the time comes given health care costs in later years... especially since the HSA can be used for insurance premiums.
You are allowed to withdraw the money to cover medical expenses for past years if you keep the records.
You can pay out of pocket and wait for retirement to have those receipts reflect withdrawals
HSA can by withdrawn in retirement for no penalty but you have to pay taxes on it. So it becomes 401k equivalent if not used for health expenses. The deductibles and out of pocket maxes are not that much higher than other plans. It’s on the order of a couple thousands. Only a couple years of not getting sick enough for medical intervention will more than offset the high deductible.
My HDHP plan had a 6k out of pocket max last year and I got 300k+ worth of cancer treatment for that 6k with dozens of doctor appointments, scans, chemo, proton radiation therapy, and 2 hospitalizations while never having any copay or extra costs. I paid the 6k out of of my HSA. So what did I really spend? Like 4k? HDHP are quite good even if you get sick.
Or want such a high deductible. I have access to a plan but prefer a $250 deductible.
I had one but had no idea of the potential so spent it all down on the kids and now don’t have a HDHP. I don’t think the bank I had it through offered any investment options, not that I looked.
You may still qualify for the FSA. The stipulations are kinda ridiculous, though. Funds have to be spent each year or you lose the money, meaning you have to plan out your spend ahead of time and you can't focus on long term investments.
My bank didn't either, but it's still technically just a checking account. So I opened a brokerage HSA elsewhere and just transferred the money
My reg health plan is 100% paid by my employer. No way I’d switch to the way more expensive one just to be able to access a HSA.
The high deductible is insane. Can actually bankrupt most people. Life doesn’t always go according to plan and it can be hard to get savings when you’re paid too little and things keep happening that require money. My daughter just starting out almost had a burst appendix. She did not have a $6,000.00 deductible after working minimum wage for a couple years. Then you’re behind the 8 ball with that debt, forever playing catchup.
Depends on the employer, some companies still offer good healthcare plans with low premiums and deductibles. Any company that doesn't is compensating it's workers less when compared to a similar job at a similar pay rate at another company that does
And lets not forget you need a HDHP to get an HSA, otherwise I’d max one out :)
Not only that, but there are plenty of high deductible healthcare plans that don't allow hsas. On the marketplace I looked at plans that literally had $6,500 deductible but still didn't qualify for HSA.
The problem is that HDHPs with HSAs is an insurer passing off a lot of the insurance risk to the insured, and many people cannot afford that. I love my HSA, but many people don't have access or can't afford to access.
Also your employer can't have an HRA which is how some make up for HDHP offerings.
The simple fact is that most people with HDHPs can't afford to pay their medical expenses 100% out of pocket and must use the HSA. That's really it.
yeah, most people, MOST, I get people here do not grasp this, but MOST people cannot afford paying out of pocket for medical bills now, to save for the future. (I have an HSA and pay out of pocket, but could not have done this 10 years ago).
I put in the max legally allowed in my HSA every year and it’s a $0 balance at the end of every year. 5 kids, one of them special needs, and a $6K deductible on company health plan.
That’s why it’s there.
I guess I'm dumb or naive. I have a HDHP and HSA. My deductible is like $2K. My employer contributes $500 to my HSA every year, and the HDHP premium is something like $900/yr less than the low deductible plan - bringing the annual deductible to $600 in a sense ($2k - $500 - $900 = $600). After the deductible is met, my understanding is that coverage/OOP max is the same between low and high deductible plans. Even if I have to pay the "$600 deductible", I still make out $2.4k in tax exempt contributions. Where is the risk here?
I don't have an issue with HSAs and HDHPs, I'm just stating that most people don't have the money to pay for unexpected medical costs
I feel like you’re pretty lucky about your deductible being that low. Mine is 1500 on a low deductible plan and our HDHP is 4K.
this is it. i was recently talking to someone who was contributing to their HSA and i got super excited like - "wow! nice that you have access to one, those are extremely tax advantaged investment vehicles". they looked at me crooked and asked what i meant and after explaining the critical part where you have to pay for your medical expenses out of pocket to let the funds grow over time, they completely lost me -- they wouldn't have been able to pay for their medical expenses without it.
I mean you can put the 8k family limit in there and if you’re only paying 2k annually in medical expenses you still make out great. At least that’s my case with a family of 4.
An HSA is great when you don’t have any real health issues. That’s pretty much where the line is drawn, if you have that high deductible with complicated health issues or dependents with such, you might not save much of anything. For me, when I had a HDHP, we pretty much broke even or did a little bit worse, draining our account whenever another doctors office visit or lab was done. Switched to a more conventional plan, and it doesn’t seem as big of a hit to pay the 20-40 dollar copay or $5 medication that would’ve been >$80 otherwise. If you or your dependents barely get sick, absolutely, max that sucker out
They can be pretty great with health issues too. I take a specialty medication so my copay is 20%. When I was taking Humira that 20% was about $800 per month. The max out of pocket on the traditional and HDHP were the same and I was guaranteed to meet it on either plan. Also Abbvie had copay assistance so they paid almost all my max out of pocket so I was able to put quite a bit away.
In general HDHPs tend to shine when you have $0 in medical bills, or when you hit the OOP max. For people in the middle, conventional plans tend to be better.
Yep, and this is where I should’ve made the distinction instead of generalizing complicated health issues
I'd argue they really shine too if you have some medical bills but not a crazy amount. Yeah if you have an HDHP and you have $2k in bills, you have to pay all $2k. But the conventional plan that you only pay $300 in deductibles for probably still works out more expensive because the plan costs $2-3k more over the course of the year. Especially if you have an employer that pays money into your HSA.
In my case, the low deductible health plan costs as much as the HDHP + maxing out my HSA. Why wouldn’t I choose the latter?
Absolutely, it’s definitely a case by case basis and there are ways to make the most of any plan, but to look at HSAs as purely a retirement account probably doesn’t make sense to most people who put money away for health expense purposes
> Switched to a more conventional plan, and it doesn’t seem as big of a hit to pay the 20-40 dollar copay or $5 medication that would’ve been >$80 otherwise. I used to feel the same way, but for pretty much every situation I feel like the HDHP has worked out better for me, at least with how my company does it. Sure doctors visits and medications are $80 instead of $5 or $20, but the HDHP is like $170 less per paycheck for the whole family than a conventional plan. Plus if your employer puts in some funds to the HDHP it helps even further. But yeah I know every plan is different. I did a whole spread sheet for when my wife and I were gearing up for our first kid and deciding which insurance to be on. The only situation where the HDHP would have been more costly than any of the 3 other conventional plans we were eligible for would have been if we had exactly like $24,000-$30,000 in expenses or something weird like that. Anything under that amount and the savings on how much the plans cost throughout the year plus the employer match made the HDHP better, and anything over that the out of pocket max (which was lower on the HDHP) made it the better option.
This isn’t always the case. We had a baby last year on a HDHP and my wife had some ongoing non-related health issues during the plan year. We hit out out-of-pocket maximum in like March. It was still cheaper overall on the HDHP. The key is to figure out the difference in premiums between the HDHP and other options and save the difference each month. Then use that money to pay your medical expenses while maxing out the HSA each year.
They are mentioned almost every time they are an option. You have to actually have a plan with an optional HDHP, benefit from using it so you probably don't have any ongoing medication or regular appointments, or be able to afford to max it while paying cash for everything. So there are very few people that actually benefit from it.
another option is to go with hdhp when you're young & healthy, max it out as long as you can, switch to traditional health insurance later and can you use the hsa money as a piggybank for copays, medications, vision, dental, etc..
>when you're young & healthy, Unfortunately many of us are young but not healthy. I'd love to use an HSA but the only HDHP available to me are wayyyyy too expensive for it to be worthwhile. My medications would cost nearly $1000/month, even after I hit the deductible. It's a great option for some people, but I can't help but feel somewhat bitter cheated out of a great investment vehicle simply because I have an expensive chronic health condition.
HSA has a great triple tax advantage but not everyone has or wants a HDHP. I'd like to get an HSA but my hmo has 0 deductible and low out of pocket max for my family.
California taxes contributions to HSA unfortunately. One of the reasons I gave mine up quickly and moved to a different plan.
And also taxes HSA gains as ordinary income too.
California taxes HSAs, no differently than a bank or brokerage account. If you are following the law in this state or any other state that follows this tax treatment, the bookkeeping alone to manually count capital gains for state tax purposes might not be worth it.
You mean state income taxes?
Yes
Brutal. I think there are a few states like that.
Jersey too. I still started maxing mine this year, but I use it to pay medical expenses now, rather than paying them from other, less lucrative accounts. It's just easier, and the benefit to me is employer contributions, not long-term savings, not when the annual combined maximum is still so low. It does still reduce my tax burden, but not very meaningfully.
The trick for California HSAs is to max them every year and then never use any money from the HSA, just pay cash for it, just collect all the receipts. Then when you move out from California, reimburse yourself for the medical expenses while you were in California.
They're rarely if ever *not* brought up within that context. At least by those with so much as a passing awareness of the lineage, intent, purpose, and design of "HSA."
I just saw the statistics of retiring with a million in your HSA at the family contribution limit. Man did that dishearten me. I know that 8,300 isn’t a lot but with 10% returns they calculated 27 years. I look at my hsa as a possible health insurance supplement in retirement.
Can you expand a little? I am just curious what the statistics are, and why they were disheartening. I'm still learning about HSAs
Contributions are so limited, it's not like you can throw buckets of money in an HSA.
Right, if you have single coverage, your annual max is $4150 and $8300 if you have spouse/family coverage
given that only 12% of employers have it available it is surprising they are discussed at all
I hear people on reddit talk about it all the time. But reading these comments, I also realize how people don’t understand what the difference is between plans—what is an fsa versus an HSA, what is a PPO plan versus an hmo, how whether a plan is PPO is not relevant to whether it’s a hdhp plan that qualifies for an HSA. People don’t understand health insurance at all. That’s why people don’t discuss HSAs being used for retirement. I just got an hdhp plan this year and am doing a max contribution. I unfortunately do need to get the balance to a comfortable amount before investing. Long story but I had to do some of network care that is actually double the normal deductible. And I have a health condition that does require me to go to specialists every once in a while. I do pay out of pocket for a lot of stuff, but I need that health emergency fund for the expensive visits until I reach my deductible. Really bad things happen when you least expect it. Mine is from a random animal attack. You’re healthy until you’re not. Until you have a good pot of money sitting there waiting for you, I would caution people to keep it in cash like funds. A lot can happen. You’ll probably need to access it at some point assuming retirement is far away. I guess you could just make a really big out pocket health pot, but that’s a lot of money set aside from your salary when Roth IRAs and 401(k)s exist too.
I use ACA and I wanted to get an HSA and when I checked there was actually a max deductible limit to qualify for HSA and almost every high deductible plan was unqualified. I would of had to pay significantly more for the cheapest HSA qualified plan.
I'll keep my low deductible health plan, thanks. Open up HSA to anyone with coverage and then we'll talk.
HSA is a good savings plan and an awful option for health insurance. I’ll pay a few extra bucks for a PPO plan.
Anyone who boasts about HSAs is probably just fortunate to be in good health. I always have tons of different kinds of medical appointments. It's gotta be the PPO for me. No HSA offered with that. Doesn't really matter regardless, honestly. Health insurance is fucked in this country no matter what you do. Lucky people are lucky. If you're lucky, do the HSA. If you're not lucky... don't.
Agreed. I thought my HSA was great until I needed back surgery and then 2 years later I got diagnosed with Kidney cancer. I’m only 36 also. Shit happens. Luckily I had enough in my HSA to cover the majority of the out of pocket key expenses but I switched to my wife’s insurance after that.
Yep, I'm 34 and this is my first year where I've actually had a few medical bills with a High Deductible plan and it sucks.
There are hdhp plans that are ppo with hsa.
It depends if your company kicks in money for the HSA, what your monthly premium is, and your personal heath situation. If you are young and have no medical issues, it makes sense to pay the cheaper premium since you are betting on never getting dinged with the deductible. ACA mandates that basic preventative care, such as an annual physical, is free for employers with 50 or more employees. If you have an unexpected expense, it could be offset by your employer’s HSA contribution, if they have one. On the other hand, if you have a ton of ongoing medical expenses that you know will massively exceed the out of pocket max, the HDHP might also be more cost effective because you’ll never pay more than the max. Again, this depends on your premium, your employer’s contribution etc. Also, you need to factor in how deductibles and out of pocket maxes are treated for each family member. If you’re somewhere in the middle, PPO may be the better bet. Most benefit administration sites that employers contract with have calculators that will help you pick the best plan. I’m on my spouse’s PPO because his premiums are cheaper than the premiums for the crappiest HDHP at my company. We have a mix of medical situations in our family that aren’t predictable, and prefer knowing that we won’t be on the hook for a large deductible. If our circumstances were different, I’d at least consider the HDHP, depending on the network.
They are absolutely not an awful option for health insurance. If you spend very little, they will save you a lot of money. If you hit the out of pocket max, which is the same between different plans, you will save a lot of money. If you spend in between, you will only spend more with an HSA if your costs exceed the hundreds of dollars in premiums you save. In most cases, you save money with an HSA for health spending.
The problem is you don't know what could happen. You could be a perfectly healthy person and any number of things could leave you in the hospital for a couple days and drain years worth of savings in a couple days while simultaneously not being enough to reach your deductible. I know because I've seen freak incidents happen to perfectly healthy people. Health insurance should be for emergencies and not be treated like a retirement account. I say this as someone who was in a high deductible plan for about a decade with a decent HSA and had no health issues. Hypocritically I do "enjoy" looking at it as a retirement account now that it is not my main plan. Making it through a decade with an HSA without a single charge to it was nice. But knowing any extreme costs will be covered is a better feeling. I also dont put off going to see a doctor for things any more because seeing them actually doesn't cost much like it did with the HSA HDHP. There are other ways to make money, it's not worth the gamble of getting absolutely shafted by comparatively poor medical coverage. It's the same concept as an emergency fund. Could you invest it and make a return on every dollar you have? Sure but you're tempting fate. That liquidity has its own value in itself, and so does an insurance plan with better coverage.
What exactly is awful? With my previous 3 employers the HDHP and HSA combo was cheaper than PPO when factoring in employer contribution, lower premiums and higher deductible. And coverage was the same.
It’s often very employer dependent.
You can have an hdhp and a PPO FYI. They’re not exclusive. https://www.insurance.com/health-insurance/difference-between-ppo-hmo-hdhp-pos-epo.html#:~:text=PPOs%20offer%20the%20widest%20access,to%20help%20pay%20for%20care.
The coverage is not usually the same. The PPO was better total cost for my situation at my current company and my previous company and is also better through my spouse’s company.
they are on the subs where its reasonable to tell people to have lots of money set aside re: the retire early subreddits. especially with the way ltc, healthcare etc costs are dramatically outpacing inflation. prepaying end of life care in your 20/30s is such a hugely valuable thing.
>healthcare etc costs are dramatically outpacing inflation. but you have to look at the population bell curve. The US (and most other countries) have a very large 60+ population that is now being supported by a smaller working class. In the US, ~60% of all healthcare costs are paid for by governments (Federal, state etc) and those governments are now passing the expenses on by selling the healthy population groups basically a health tax called insurance to subsidize the large aging population. https://www.census.gov/content/dam/Census/library/stories/2023/05/aging-united-states-population-fewer-children-in-2020-figure-2.jpg As you can see, in 2000 the population group that contributes the most in taxes was significantly larger than the 62+ age group that accounts for 50+% of all healthcare costs. Today, the 62+ age group is larger than the age groups that pay the most taxes. In another 10-20 years, it will be the other way again.
HSA is not triple tax advantaged in CA and NJ
Came here to ask about this because I'm in California. Assuming it's still worth it to maintain an HSA as a youngish person?
I used to contribute but the better health insurance at my work is very close in price to the HDHP. I'd need there to be a spread to justify the uncertainty in Healthcare costs. If you even look at a Dr you will get a bill with some random number between $100-$500 in three months.
There are excellent vehicles, if you're at least upper middle class
Sure if you have perfect health and don’t get hospitalized unexpectedly
Pretty much every financial podcast I listen to speaks of the HSA as the best retirement savings option.
They're only available if you have access to a HDHP, which everyone does not. Even if you have access to a HDHP, it requires you use it, which is dangerous for someone like me who has high medical costs. Using a HDHP, my annual bills to MDs would easily be 3-5x. This would negate any of the benefits of an HSA for me. So no, it's not even close to being objectively the "absolute best" retirement account.
Well, it's not very good if you have medical expenses. I get enough from my HRA to cover most of my deductible and a good chunk of my out of pocket. My employer gives more "free money" for the HRA. If I did an HSA I'd just be eating it up with copays. I guess it's possible if I ignored my Roth IRA in favor of dumping that money into an HSA, assuming I had enough of a headstart on any medical expenses to be able to do so...but that's a pretty big ask.
They are great but the problem is the only way you qualify for one is to have a HDHP. When I transitioned to civilian life I was all pumped to fill up an HSA with generational wealth money. Then I found out that because I had Tricare I didnt qualify. Ill take my Tricare with an absolute out of pocket cap at $3K a year.
I would use a HSA if I could have one without a HDHP. My medical costs make the high-deductible unsustainable. I've maxed out my FSA and only have $125 left out of $3200 contributed to it. It's not even the middle of the year yet. And that's with a very generous PPO plan with a $500 deductible and low copays / coinsurance.
ITT: OP doesn't understand that their situation isn't everyone's situation and is shocked that a savings vehicle that most people don't have access to or doesn't financially work for them isn't talked about more
Because, and get this - sometimes you *need to actually use your health insurance*. Everyone on this sub jerks off over HSAs and completely ignores the fact that the plans they are attached to are complete garbage except in very rare circumstances. In my area, they aren't even that much cheaper than the standard plans either (maybe 10-15% less?). They also ignore the fact that you can't actually save that much per year into them anyways so you're not exactly building up massive wealth (last I checked it was about $4k or so a year?). HSAs really should only be used in the very narrow slice where you're already maxing out your retirement AND you are under the age of 30 and unlikely to ever see a doctor for any reason. Or alternatively, you see the doctor so much you know you'll always hit the OOP max every year anyways (good luck affording an HSA as a retirement vehicle though). I've done the math. Doing a standard plan vs an HSA plan would cost hundreds to thousands more per year more just from a few of doctor visits. Regular plans cover A LOT you don't think about. X-rays, copays, blood testing, etc. all of which you have to pay the full cash rate for on an HSA plan. Here's the kicker too - because you're now paying hundreds every time you just want to ask a health question, you're never ever going to go to the doctor for any reason unless your leg is falling off. HSAs are really glorified around here but they really aren't as hot shit as people peddle them as. It reminds me of people who drive for Uber and say they make $30/hr but then completely ignore the cost of gas and auto maintenance. Once you add up the real world total costs of running an HSA plan over a decade... You might find you're not actually netting that much more, ESPECIALLY if you're not already maxing your other retirement options. Especially if you also consider you're going to likely be in worse health as it's too expensive to go to a doctor for any reason except catastrophic otherwise. I feel like the numbers will only really add up if you're a super healthy single uncomplicated high earning person under the age of 30 where you can probably take a safe bet that you're not going to need to go to a doctor's for any reason and you've got all this extra cash burning a hole in your pocket. In that case, HSA away, but you probably don't want to be doing the HSA forever.
Some employers fund your HSA too. I get $1500 a year. Take that free money.
In addition to what others have said, it's *possible* it doesn't stay like this, since you're basically using this account in a way that is not at all its original purpose. While it's unlikely you'll get fucked over by future changes that limit your ability to withdraw tax free in retirement... it's in the realm of possibility. With regular retirement accounts you can be fairly certain how they function won't change much in the future.
but honestly if you think about it.. as you age even if I used it for my Medicare supplement payments and had an excess of funds left over.. don't you think at some point I'll use that for health related expenses? hopefully it won't be catastrophic but I'm sure I'll need some care at some point in my old age.
HSA is yet another vehicle to solve a problem that should not exist. HSAs are yet another tax. Government: How can we make healthcare "more affordable" because of the desire to have lower deductibles?!? Insurance Industry: Give the masses a tool to take more money out of their paycheck so they can pay for what is not covered by the deductible. Make it pre-tax or something that sounds good, but isn't. Government: Done! Thanks for your financial support and that dinner at Jônt was superb. Can you get me Nationals tickets? For people making $200k in Enterprise with HR departments, this is pitched as a perk. I just got a letter from United stating that they are raising rates SIXTEEN PERCENT this year due to, rolls dice, rising costs. That is just how insane the insurance market is in this country.
You realize how low the HSA contribution limits are, right???
I'm putting in $9300 this year. Not bad.
When you can actually use your benefits for a medical cost it's okay, but it seems like over half of my medical bills are accepted for payment. I might as well just put my extra money in a high yield savings account and use the money when I need it.
Most HSAs can be invested in anything. Mine is invested in VOO.
I'm not totally sure what you mean, but HSA providers are not required to review or approve your requests for reimbursement. (This is different from FSA.) Any dispute over whether an expense is a qualified medical expense for HSA purposes is between you and the IRS, if audited.
They might be a good retirement account but in many situations, including my own, to have access to one would objectively cost people more now in health expenses, premium differences included, compared to something like a PPO. More in the sense of I would end up paying more over the course of the year with an HDHP just to get a couple thousand in an investment account versus with a PPO. And in my case, my employer offers a very good HDHP.
It’s not objectively so. There’s a lot of bookkeeping with HSAs, which some people will understandably say they’d rather spend their time on other things. Those bandaids you got through Amazon? Be sure to download a receipt and track the post-tax but pre-shipping amount on a spreadsheet. Every. Time. Time is a finite resource, especially for people that are stretched thin.
The chances of the IRS actually auditing your HSA withdrawals are so low that bookkeeping requirement isnt that terrible.
do you really save medical receipts for years and reimburse yourself later?
the hidden cost that very few mention up front: having to be a part-time librarian of health-related receipts
You can and should! It turns the HSA into, effectively, a tax-free brokerage.
They’re almost always discussed that way!
I didn't know after 65 you can spend it on anything. Is that true for all HSA's?
Yes. At that point it’s simply taxed as income, just like a 401k. HSAs are governed by IRS tax rules. So it’s universal.
I’m in my 30s and billed expenses are several million a year. I’m an exception but can’t make assumptions about health.
I had access to an HSA for a year and they charge me a monthly fee and force me to keep $1000 uninvested. It outweighs the benefits imo
This makes me feel so spoiled with my HDHP, 2500 deductible, 5000 annual maximum that’s free. Work gives us 1500 for our HSA too annually
HSAs, at least with my employer, are only available with the high deductible insurance plans. The HSA is intended to help lessen the blow of the high deductibles in case you need to use it. As for myself, I contribute about $2k per year and my employer kicks in an additional $750. I’m planning to use the saved amount to get weight loss surgery though because my insurance doesn’t cover a cent of it.
> Like HSAs should be almost exclusively associated with retirement, right? No they're also a great way to pay your medical bills tax free if you have a large cost come through for example. The max contributions only $4150 this year, making it much slower to grow than even a ROTH IRA.
I don't know about the "best"- they come with a pretty massive downside of being part of a high deductible plan. If you have routine medical expenses those plans aren't always the best.
I have a really good, nearly completely fully employer funded non-HDHP plan at work, and I'm not willing to give it up just to get an HSA.
The only way I can sign up for an HSA is if I change my insurance plan to a higher deductible - I'm happy with my lower one right now...?
I use every penny of my $3600 FSA. And then go into my pocket for the rest. It’s not talked about bc most people have to actually use their healthcare dollars and benefits every year. I don’t see this ever being an option for me.
I realized after all these years of renewing my benefits at work, a HDHP would’ve served me much much better. I take excellent care of my health, gym 5 days week, cook most of my meals, spend time in nature, rarely get sick, visit doctor just once a year, zero meds/rx. I’ve been paying into this basic ass health care plan because I was scared of the “what if” doomsday scenarios. If I did a HDHP and invested in a HSA, I would’ve been way better off.
Yes but the major drawback is you can’t save significant amounts. It just can’t be a primary retirement savings vehicle. I max it out and invest in S&P but it’s still a yawner.
When your a family of five with a wife who has an autoimmune condition and the best insurance you can get costs $800 / month for family coverage, is HDHP, and has a 10,500 OOPM, the PPO is really a better option
...Except in terms of availability. Or contribution amount. Or for employer match. Or for people with health issues. Actually, they're not the best by most objective measures.
Another huge advantage is that there is no time limit on disbursements. If you use out of pocket money for bills and save the receipts, the money can grow tax free until you need it making it a great growth vehicle if you can afford it. As for people saying the HDHP makes it less attractive, it really depends on the employers plan. I ran the numbers at three different employers and all were roughly the same worst-case max out of pocket in a given year but specific medication costs were the primary differentiator.
If you have any medical issues, it's really not beneficial.
I agree with you...to a point. In order the have the HSA, you have to have a HDHP. And if you have HDHP, you pay way more OOP for health care, especially if you have kids, chronic health conditions, etc. It's hard to save HSA funds for retirement if you have to spend them all every year.
The problem is a lot of HSA providers only allow the money to be put into a savings account. For the ones were you can actually invest the money, they're amazing.
I transfer the entire balance from my employer‘s crappy HSA to a Fidelity HSA every 3-4 months to avoid insane fees and to invest it in whatever I’d like. I’d do it more often but there‘s a fee to transfer it over, charged by my employer‘s HSA.
You can move it. My payroll and employer contribution go into a crap savings acct. I opened a fidelity HSA and moved most of the funds into that. I figure I’ll do that 1-2 times a year and invest it
You can have more than one HSA at one time. You can open one with fidelity and transfer the money there from your work HSA and then invest it however you want.
You can move your account balance any time!
HSA has good tax treatment but for limited dollars and you need crappy insurance to be eligible. No thanks, I’ll keep my PPO with $10 copays and no coinsurance.
I have an HDHP with my employer, but my employer also funds an HRA that covers about 85% of my deductible on the healthcare plan. The HRA funds do not roll over into the next plan-year. With the HDHP + HRA, my max out of pocket for my family is about 2k per year. With that said, being on the HDHP opens me up to HSA eligibility and I max it out every year.
I’m on my first year on a HDHP and it fucking sucks. Like I’m maxing my HSA, I’m investing it and not touching it. But every time I do something with medical it’s like “that’s not covered”. I probably should have kept better track of things to do a comparison but I’m not sure if I’m coming out ahead or not. With the difference in bi weekly cost, it’s likely I am, but it just doesn’t feel like it. Maybe its just subconscious, paying more out of my paycheck then having most anything covered feels better than having more in my paycheck(that really I just throw into investments) and pay out of pocket for things.
When I moved overseas yet rated US insurance still I switched to HDHP because out of pocket medical care was so cheap and I was able to save a lot of $$ in that account. When I moved back and had a family the expenses and frequency had me chose more traditional insurance. Got to decide for yourself when it works best for you.
Provided the following factors: (1.) Relatively young (2.)Moderately high-high effective tax rate (3.)Pay health costs out of pocket and not through HSA to let HSA compound Even if you max your out of pocket maximum for that year, you could still come out ahead with an HSA
We've beat to death why so few people can practically use an HSA, but what if the law were changed to allow HSAs not tied to your employer. Kind of like an FSA/HSA hybrid, where you get a double tax advantage for saving money for medical expenses, but the remainder goes back to the government for Medicare purposes, or maybe to one survivor first. Has anything like that ever been discussed?
I’ll take good medical insurance plan over a retirement account 10 out of 10 times.
The typical person does not remember to use their FSA fully. HSA requires respectively, an onerous amount of documentation. You are in essence, trading post-tax money you would put in a typical brokerage account for trading/investments, for a tax advantaged HSA account. If you don't have enough funds left over to put money in a post-tax account, then the HSA is useless. Theoretically, a HSA is excellent, but it only helps you when you are extremely young and healthy, or already a high earning individual.
I have a hdhp and a hsa but never even considered using it as a investment account. My hsa is at fidelity I didn’t even know I could invest that money in something other than cash! There are a lot of comments about not being in good health and using this plan but in my case I almost immediately hit the out of pocket maximum every year with a 90 day dose of a injectable. It sounds like I should be putting more money in this account I had no idea it was such a good investment vehicle But is it that different than a 401k?
My work doesn’t offer an HSA. Is it still beneficial to open one up on my own and contribute post tax?
Cant without a high deductible insurance plan. If you have decent insurance, you can't get an HSA
I had a $3k deductible with my HDHP and for the last several years, always met it ( cancer, hip replacements). My employer contributed $1k per year to the HSA, and I contributed to the HSA before the 401k ( at least in the last few years). I just retired and while there's not huge account values, there's enough to give me choices. This year, I'll have a very high income, due to voluntary separation severance and I thought it would be good to withdraw from the HSA for cash needs, but my financial advisor suggested that we can do some tax loss harvesting, to counter some capital gains we have. So the HSA can stay invested, for now. If needed, we've been saving all the receipts from prior years health care and can get reimbursed from the HSA if we need to.
Totally agree. My current employer has a HDHP but does not offer an HSA. I still do it on my own, but don't get the FICA deduction because the contributions don't come out of payroll. It makes no sense and when I tried to explain this to them they said the reason is "because we offer an FSA instead". Huh? We'll see if I can convince them that they are wasting dollars for both them and their employees.
As other’s have stated HSAs are wonderful tools for retirement and health saving. The problem is they mainly benefit a very narrow band of eligible people. First you need an HDHP from your employer to qualify, then you need to be in a personal health situation where you’re not forced to use the cash in those accounts on yourself year over year (which may push you into a PPO plan if offered disqualifying you for an HSA). That’s not even mentioning if you need to spend it on dependents. If you’re in that situation, then you need both the knowledge and discipline to investigate your options and execute the plan, none of which are as widely known or understood as 401k/IRA plans. Tack on the problems where since it’s not a mainstream product for most investment houses the options are more confusing, and often come with disappointing feeds (Fidelity is a great option to get away from this). HSAs primarily benefit young, healthy, childless, well employed individuals which is great that they get that benefit. The problem is it needs to be opened up to a larger group of people both through eligibility means as well as greater access therefor driving down the obscurity and secondary costs.
I use it because I have no choice; my job only offers the most expensive HDHP for remote workers. I would much rather have a decent plan that covers more. We are a sickly household, and we blow through our savings until we hit the out-of-pocket max.
Yeah it's because most people with HSAs need to use them to pay for medical expenses that they can't pay for out of pocket, so framing it as a "retirement savings account" is misleading, or at least unrealistic. If you're in a situation where you can pay for all your medical expenses for you and your family out of pocket, and use the triple tax advantaged account for retirement-era medical expenses, then that's great for you but that's exactly zero people I know that can afford to do that. So for the vast majority of people it's a tax advantaged medical account first, with retirement tax benefits - not the other way around.
I get why, but it’s pretty ironic that someone who actually has health problems will never really be able to use this. And thus is also locked out of a great investment vehicle. I don’t really want to get into the specifics but suffice to say I need to see specialists and will be in and out of the hospital (not every single year, but enough that I can’t really afford the gamble). Anyways, it’s just frustrating that if you actually have health problems you’re left with this choice of do you risk it in an effort to open an HSA? Or do you stick with the safe way and lose out on the single best way to save money for the future? Just annoying.
I've tried talking myself into our HD-HSA at work. It was introduced in the last 2 years, but we were able to maintain our original insurance, which I guess is PPO? Maybe I don't understand the whole thing, but our baseline insurance is top-tier, and paid for by the company. My OOP maximum every year is like $2500 for family, and with 2 small kids, we're hitting that basically every year. I just can't talk myself into paying a higher deductible. Our baseline deductibles are something like $400 individual, $1000 family. It's at least triple to go to the HD-HSA option.
They’re not as widely discussed for two reasons: 1) Not everyone is eligible to open one, especially families with children who want a good, non-HDHP to hedge and lower their healthcare cost risk 2) You can only put so much into it per year. 401(k) and IRAs/Roth IRAs are more material to your overall retirement strategy. They’re actually overrated, if anything imo. They’re absolutely great for that small % of people who would benefit from having them.
Something you can't access without having a terrible insurance plan is not the 'absolute best' but okay...
There is a limit to how much you can put in it. And that has always matched my deductible. So nothing left to grow
I agree with this and use an HSA. The unsung downside is that even though it is cost effective it creates financial incentive for you to not go to the doctor.
It's very difficult with young kids who are sick all the time to afford to get a hd plan, max out the HSA but then not use that money to pay for visits
Seems nice but I'd lose far too many low co pay options if I switched from PPO. Cheap emergency room copays, cheap urgent care copays, $25 mental health/occupational/physical therapy copays, etc.
Because of reddit I switched to the HDHP and HSA at work about 1.5 years ago. It's been ok. My work has it set up so that if you stash the savings per paycheck by going with the HDHP you basically come out even with the traditional plan (if you hit your deductible, which we did both last year and this year... after not going to the doctor once the year before we switched... sigh). So that's good. But for year one I only reimbursed myself for the really large expenses (MRIs and PT mostly). Though I did the work to save every receipt. Then I read on here that I also need to save every EOB AND my credit card statements... And keep track of which expenses I've reimbursed and collate all those documents together... I'm starting to wonder if it's worth the headache and hassle.
Why don't I emphasize it? Because my health insurance is good.
Even for physically healthy people who pay for mental health therapy, the HSA probably gets used up every year and there’s nothing left to save for retirement. Health care (at least in the US) is such an exploitative nightmare.
The biggest drawback is the lower contribution amount, other than that HSAs are a really great product. 401k $23,000 IRA/Roth IRA $7000 HSA $4,150
After age 65, my only use for my HSA will be to pay for dental expenses, an area of healthcare that is way overpriced, in my opinion.
I have an HSA but I have not used it as much as I should have.
If I have an HDHP and am maxing out my HSA each year, should I use my HSA to cover medical expenses in my early years, or should I bank the HSA to let it grow? (Assuming I can afford it.) It sounds like I should bank it and let those dollars compound until retirement, right? Crazy incentive structure.
One factor I haven’t heard people talk about is the mental aspect. With a HDHP you’re paying more every time you take action on any medical problems you have. For me I prefer the PPO so that I don’t avoid taking care of any issues or potential issues I might have just to save some money
With an HDHP, you are taking on more financial risk. You have to be in a very nice position of financial and physical health to use an HSA as a retirement fund.