HSA Considerations
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HSA Considerations
Open enrollment is happening and I have this week to decide if I want to switch my health insurance to enable an HSA.
We are also looking at getting a 401k at work. By my projections, I SHOULD be able to max out my 401k, Roth, and HSA, plus have a little extra cash depending on my spending to contribute to my taxable account.
If I keep my current plan, I will have a lower deductible of $1250 and co-payments on prescriptions (most prescriptions I would ever need can be had for cheap even without insurance though). The HSA plan has a $4500 deductible and only pays percentages for things like prescriptions. The biggest difference for common occurrences for my lifestyle would be the difference between a $35-$70 co-pay for doctor visits, vs. a 35% coinsurance for the HSA plan. I would think tax-savings could win this battle after a few years though; I would say I see a doctor for something like this perhaps once every 2 years.
Any reason not to do the lesser plan which enables HSA? Both are essentially free to me from employer.
Current plan: https://s3.amazonaws.com/hawaiian-ice/p ... 0_3045.pdf
HSA plan: https://s3.amazonaws.com/hawaiian-ice/p ... a_3065.pdf
We are also looking at getting a 401k at work. By my projections, I SHOULD be able to max out my 401k, Roth, and HSA, plus have a little extra cash depending on my spending to contribute to my taxable account.
If I keep my current plan, I will have a lower deductible of $1250 and co-payments on prescriptions (most prescriptions I would ever need can be had for cheap even without insurance though). The HSA plan has a $4500 deductible and only pays percentages for things like prescriptions. The biggest difference for common occurrences for my lifestyle would be the difference between a $35-$70 co-pay for doctor visits, vs. a 35% coinsurance for the HSA plan. I would think tax-savings could win this battle after a few years though; I would say I see a doctor for something like this perhaps once every 2 years.
Any reason not to do the lesser plan which enables HSA? Both are essentially free to me from employer.
Current plan: https://s3.amazonaws.com/hawaiian-ice/p ... 0_3045.pdf
HSA plan: https://s3.amazonaws.com/hawaiian-ice/p ... a_3065.pdf
Re: HSA Considerations
HSA is great if you have good health and an emergency fund for potential healthcare expenses. Triple tax advantaged savings*(in most states), growing tax free for 30 years is wonderful. Sure, it’s a hassle to keep medical bills for that long, but well worth it.
https://www.whitecoatinvestor.com/retir ... ealth-ira/
You don’t say who your hsa provider is, but even if they are not good, you can transfer the bad one to a good one each year. I think lively is getting good reviews these days.
viewtopic.php?t=228522
*States that tax hsa contributions include AL,CA,NJ
HSA earnings are taxed by NH,TN
https://www.whitecoatinvestor.com/retir ... ealth-ira/
You don’t say who your hsa provider is, but even if they are not good, you can transfer the bad one to a good one each year. I think lively is getting good reviews these days.
viewtopic.php?t=228522
*States that tax hsa contributions include AL,CA,NJ
HSA earnings are taxed by NH,TN
Last edited by mhalley on Thu Feb 22, 2018 12:15 pm, edited 5 times in total.
Re: HSA Considerations
Just a reminder that if OP is in California, the HSA is not triple tax free in CA.
Re: HSA Considerations
Edited post to reflect state taxes.
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Re: HSA Considerations
Thanks all. CA here so sounds like I will lose out on a bit of advantage, but tax-free growth is still nice.
Looking forward to getting this and my 401k on auto-pilot, and saving some taxes (for now). Rumor is the company will provide the tax-savings they'll receive as a contribution on their end, which will certainly add up and help make this the right decision.
Looking forward to getting this and my 401k on auto-pilot, and saving some taxes (for now). Rumor is the company will provide the tax-savings they'll receive as a contribution on their end, which will certainly add up and help make this the right decision.
Re: HSA Considerations
To get fully tax-free growth, you need to invest your HSA in Treasury bonds, which are exempt from CA state tax. Many HSA providers have low-cost TIPS funds.MotoTrojan wrote: ↑Thu Feb 22, 2018 6:11 pm Thanks all. CA here so sounds like I will lose out on a bit of advantage, but tax-free growth is still nice.
If TIPS don't fit your portfolio, you can invest in stock index funds, which will give you a low but not zero state tax cost, just as they would in taxable accounts.
Re: HSA Considerations
Just to be clearer, for CA purposes the HSA will be like a taxable account. So taxed on dividends/capital gains, etc. Unless there is an exception, e.g. TIPS example. [edit for grammar]MotoTrojan wrote: ↑Thu Feb 22, 2018 6:11 pm Thanks all. CA here so sounds like I will lose out on a bit of advantage, but tax-free growth is still nice.
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Re: HSA Considerations
Ah I see. Above seemed to allude the contribution was taxed but not the gains. Good to know. Current AA is 100% equity but I’ll adjust as that does.JamesSFO wrote: ↑Fri Feb 23, 2018 5:53 amJust to be clearer, for CA purposes the HSA will be like a taxable account. So taxed on dividends/capital gains, etc. Unless there is an exception, e.g. TIPS example. [edit for grammar]MotoTrojan wrote: ↑Thu Feb 22, 2018 6:11 pm Thanks all. CA here so sounds like I will lose out on a bit of advantage, but tax-free growth is still nice.
Re: HSA Considerations
Nope you will have to report interest/dividends/capital gains. Your provider is unlikely to give you this info directly so it is up to you. That's why another poster recommended a gov't bond fund.MotoTrojan wrote: ↑Fri Feb 23, 2018 10:15 am Ah I see. Above seemed to allude the contribution was taxed but not the gains. Good to know. Current AA is 100% equity but I’ll adjust as that does.
See: http://www.benefitscafe.com/hsa/taxtreatment/
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Re: HSA Considerations
Hmm interesting. If the provider did not give me a 1099 or whatever the correct form is, that sounds like it would be a quite a pain. If bonds were part of my AA that would be a different story.JamesSFO wrote: ↑Fri Feb 23, 2018 11:24 amNope you will have to report interest/dividends/capital gains. Your provider is unlikely to give you this info directly so it is up to you. That's why another poster recommended a gov't bond fund.MotoTrojan wrote: ↑Fri Feb 23, 2018 10:15 am Ah I see. Above seemed to allude the contribution was taxed but not the gains. Good to know. Current AA is 100% equity but I’ll adjust as that does.
See: http://www.benefitscafe.com/hsa/taxtreatment/
Re: HSA Considerations
Bottom line in CA if you are planning to hold your HSA for federal tax-free growth expect some paperwork. AFAIK you will NOT get a 1099 or similar. I am tracking transactions in a simple Google Sheet and doing the record keeping manually.MotoTrojan wrote: ↑Fri Feb 23, 2018 12:19 pm Hmm interesting. If the provider did not give me a 1099 or whatever the correct form is, that sounds like it would be a quite a pain. If bonds were part of my AA that would be a different story.
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Re: HSA Considerations
Appreciate that. Sounds like a pain.JamesSFO wrote: ↑Fri Feb 23, 2018 12:33 pmBottom line in CA if you are planning to hold your HSA for federal tax-free growth expect some paperwork. AFAIK you will NOT get a 1099 or similar. I am tracking transactions in a simple Google Sheet and doing the record keeping manually.MotoTrojan wrote: ↑Fri Feb 23, 2018 12:19 pm Hmm interesting. If the provider did not give me a 1099 or whatever the correct form is, that sounds like it would be a quite a pain. If bonds were part of my AA that would be a different story.
My company is going to contribute $40/month to this account. Perhaps I may do that just for the free money, and then rather than invest in my AA, I'll place it in some sort of non-interest paying, or non state-taxable fund.
Will have to see if my companies contribution will automatically get picked up in my State AGI; sounds like maybe not.
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Re: HSA Considerations
Just got the Welcome Packet. HSA is through Avidia Bank (Gusto) and uses Devenir as the HSA Investment advisor. They provide a 4bp Vanguard 500 Index fund which would fit within my AA. There is a minimum of $1000 which must remain uninvested.
States that I will receive a 1099 SA, which sounds like it will cover my annual distributions, but perhaps not dividends/capital gains. Hmm doesn't sound like fun to track that myself.
States that I will receive a 1099 SA, which sounds like it will cover my annual distributions, but perhaps not dividends/capital gains. Hmm doesn't sound like fun to track that myself.
Re: HSA Considerations
MotoTrojan wrote: ↑Fri Feb 23, 2018 4:55 pm Just got the Welcome Packet. HSA is through Avidia Bank (Gusto) and uses Devenir as the HSA Investment advisor. They provide a 4bp Vanguard 500 Index fund which would fit within my AA. There is a minimum of $1000 which must remain uninvested.
States that I will receive a 1099 SA, which sounds like it will cover my annual distributions, but perhaps not dividends/capital gains. Hmm doesn't sound like fun to track that myself.
1099 SA is a Federal IRS form; you will need to track all of this yourself for California.