Do I have too much HSA money?

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justsomeguy2018
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Do I have too much HSA money?

Post by justsomeguy2018 »

We are in the latter half of our 30s.

Have around $18k in HSA money. Plan to continue maxing contributions each year.

We have probably around $15k+ in medical expenses from prior years that we paid out of pocket.

Should we withdraw some to pay ourselves back? Problem is I have no idea what I would do the money. Probably just move it into a taxable account which seems inefficient. I feel like we may end up with an oversized HSA account though.

I would say so far the HSAs have earned around $1500 in innvestment returns (we only started investing them in past 2 years).
macheta
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Re: Do I have too much HSA money?

Post by macheta »

I would save the receipts for an emergency. Otherwise, keep saving!
Soon2BXProgrammer
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Re: Do I have too much HSA money?

Post by Soon2BXProgrammer »

justsomeguy2018 wrote: Fri Nov 13, 2020 9:24 pm We are in the latter half of our 30s.

Have around $18k in HSA money. Plan to continue maxing contributions each year.

We have probably around $15k+ in medical expenses from prior years that we paid out of pocket.

Should we withdraw some to pay ourselves back? Problem is I have no idea what I would do the money. Probably just move it into a taxable account which seems inefficient. I feel like we may end up with an oversized HSA account though.

I would say so far the HSAs have earned around $1500 in innvestment returns (we only started investing them in past 2 years).
I have about 80k in an HSA and about 20k of receipts. I still keep adding to the HSA because one could have hundreds of thousands of dollars of medical expenses in retirement.
stocknoob4111
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Re: Do I have too much HSA money?

Post by stocknoob4111 »

Just keep it in the HSA, the HSA becomes equivalent of a 401k when you hit 65 (with the additional tax free Medical expenses advantage) so why does it matter? Also, Medicare premiums are qualifying expenses so definitely best to have the maximum amount in the HSA due to it's flexibility. There is NO such thing as too much in HSA, HSA is the best account in terms of tax advantages.
aristotelian
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Re: Do I have too much HSA money?

Post by aristotelian »

Not at all. Worst case scenario, it turns into an additional tax deferred retirement account. And that's the worst case. More likely you use it for Medicare premiums and the occasional big expense.
PhillyPhan
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Re: Do I have too much HSA money?

Post by PhillyPhan »

Soon2BXProgrammer wrote: Fri Nov 13, 2020 9:37 pm
justsomeguy2018 wrote: Fri Nov 13, 2020 9:24 pm We are in the latter half of our 30s.

Have around $18k in HSA money. Plan to continue maxing contributions each year.

We have probably around $15k+ in medical expenses from prior years that we paid out of pocket.

Should we withdraw some to pay ourselves back? Problem is I have no idea what I would do the money. Probably just move it into a taxable account which seems inefficient. I feel like we may end up with an oversized HSA account though.

I would say so far the HSAs have earned around $1500 in innvestment returns (we only started investing them in past 2 years).
I have about 80k in an HSA and about 20k of receipts. I still keep adding to the HSA because one could have hundreds of thousands of dollars of medical expenses in retirement.
80k in your HSA is a very impressive feat. I believe the HSA has only been around since 2003, which means if you are contributing ~3,500 per year as an individual you have reaped some good returns! Kudos!! Any six figure HSA account holders out there?
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anon_investor
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Re: Do I have too much HSA money?

Post by anon_investor »

macheta wrote: Fri Nov 13, 2020 9:25 pm I would save the receipts for an emergency. Otherwise, keep saving!
+1!
Bama12
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Re: Do I have too much HSA money?

Post by Bama12 »

Wish I could open a HSA.
sailaway
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Re: Do I have too much HSA money?

Post by sailaway »

I have twice as much in the HSA and wish it were more. We are going to have medical expenses some day, not doubt.
eukonomos
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Re: Do I have too much HSA money?

Post by eukonomos »

stocknoob4111 wrote: Fri Nov 13, 2020 9:39 pm ... There is NO such thing as too much in HSA, HSA is the best account in terms of tax advantages.
Until you die.

I agree HSA's are great, but your heir would rather get 100K$ as a tIRA than an HSA. Better to spread out their tax burden.

If you max out 2 HSA's for another 30 years, with decent growth, I think you might then have a reasonable question about having too much in them.

No reason not to keep adding to them for now and keeping good records. Just be aware.
piper
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Re: Do I have too much HSA money?

Post by piper »

i have 95K in an HSA and will keep contributing.
Independent George
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Re: Do I have too much HSA money?

Post by Independent George »

There's no such thing as too much HSA money - as you get older, your medical expenses will increase. That's a dead certainty.

Prior to 2017, I actually did not even know I could invest my HSA - I thought it had to be money-market, and therefore never bothered with it. I facepalmed when I learned otherwise on this forum.
honduranhurricane
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Re: Do I have too much HSA money?

Post by honduranhurricane »

Agree with others. Can't have too much in the HSA. Healthcare will cost a bunch in retirement. More in the HSA helps with that, and the tax benefits are the best. Have not said anything others have not, but wanted to add anyway.
Spirit Rider
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Re: Do I have too much HSA money?

Post by Spirit Rider »

In Fidelity's 2020 Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2020 will need approximately $295,000 saved (after tax) to cover health care expenses in retirement. This does not include over-the-counter medications and supplies, dental/vision/hearing services/products and long term care (LTC). You can buy insurance (Medigap, Part D, dental, LTC, etc...), but while that reduces risk, on average it increases costs.

If your projections have your HSAs > $500K (adjusted for medical expense inflation) when you retire. Then maybe you have too much. Otherwise, it will be the rare individual/couple indeed whose HSA outlives them with average or greater life expectancy of the last to die.

A large HSA allows you partially self-insure Medigap by using Plan G HD to pay the Part B 20% co-insurance up to the plan deductible with HSA qualified distributions. It also could allow you to self-insure LTC expenses.
runninginvestor
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Re: Do I have too much HSA money?

Post by runninginvestor »

justsomeguy2018 wrote: Fri Nov 13, 2020 9:24 pm We are in the latter half of our 30s.

Have around $18k in HSA money. Plan to continue maxing contributions each year.

We have probably around $15k+ in medical expenses from prior years that we paid out of pocket.

Should we withdraw some to pay ourselves back? Problem is I have no idea what I would do the money. Probably just move it into a taxable account which seems inefficient. I feel like we may end up with an oversized HSA account though.

I would say so far the HSAs have earned around $1500 in innvestment returns (we only started investing them in past 2 years).
About paying yourself back, just make sure that any amount you pay back was for medical expenses incurred AFTER establishing an HSA account.

Additionally, you can't have too much as others have said. Unless you can't afford to pay out of pocket right as the expenses occur. You can always use the built up funds down the road to pay yourself back (hopefully with tax free gains), for your spouses medical expenses, and any dependent on your tax return.
atomicrc11
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Re: Do I have too much HSA money?

Post by atomicrc11 »

I did have a thought and not sure if it's the best idea, but if the OP's salary is low enough to allow a Roth IRA contribution, would it be better to submit expenses now to then put that money into a Roth IRA? Then the money is more flexible when retirement comes around. Am I missing anything?
eukonomos
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Re: Do I have too much HSA money?

Post by eukonomos »

eukonomos wrote: Sat Nov 14, 2020 8:32 am
stocknoob4111 wrote: Fri Nov 13, 2020 9:39 pm ... There is NO such thing as too much in HSA, HSA is the best account in terms of tax advantages.
Until you die.

I agree HSA's are great, but your heir would rather get 100K$ as a tIRA than an HSA. Better to spread out their tax burden.

If you max out 2 HSA's for another 30 years, with decent growth, I think you might then have a reasonable question about having too much in them.

No reason not to keep adding to them for now and keeping good records. Just be aware.
Spirit Rider wrote: Sat Nov 14, 2020 9:37 am ... Otherwise, it will be the rare individual/couple indeed whose HSA outlives them with average or greater life expectancy of the last to die.
...
Spirit Rider makes a good point about the last to die. Your spouse as beneficiary gets to keep your HSA as an HSA. It is the heirs of the last to die that may have the immediate tax burden.

Oblivious Investor, https://obliviousinvestor.com/inherited-hsa-rules/ suggests paying down the HSA at some point to avoid the task hit to the non-spouse beneficiary.
It’s a good idea to prioritize spending down this account (to the extent of your qualified medical expenses, and potentially beyond that extent once you reach age 65) rather than retirement accounts, because your children (or other non-spouse heirs) would rather inherit a retirement account than an HSA that immediately becomes fully taxable.
Mike adds:
*If, within 1 year of the date of death, your non-spouse beneficiary (other than your estate) pays any of your qualified medical expenses that were incurred before your death, the amount of those expenses is subtracted from the amount that is taxable to the beneficiary.
I interpret "pays" to mean directly paying current expenses to the provider, rather than reaching back and reimbursing earlier medical expenses. Does anyone know differently?
Last edited by eukonomos on Sat Nov 14, 2020 10:25 am, edited 1 time in total.
absolute zero
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Re: Do I have too much HSA money?

Post by absolute zero »

atomicrc11 wrote: Sat Nov 14, 2020 10:19 am I did have a thought and not sure if it's the best idea, but if the OP's salary is low enough to allow a Roth IRA contribution, would it be better to submit expenses now to then put that money into a Roth IRA? Then the money is more flexible when retirement comes around. Am I missing anything?
You’re not missing anything. Leaving money in an HSA despite incurred medical expenses typically only makes sense when all other tax advantaged accounts are already being maxed.
Miriam2
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Re: Do I have too much HSA money?

Post by Miriam2 »

One concern I have with a large HSA when we get older is the management of it, and whether we will be able to fully and properly manage medical reimbursements from it when we are older. Basically, will we remember to do this and how to do this? It's another financial account to manage when we're trying to simplify our lives.

And to use the HSA to reimburse past medical bills, even years past, we have to have necessary receipts and paperwork and they have to be kept somewhere, even if digital. If we end up needing medical care, and we're not all together mentally :annoyed , it seems we have to leave detailed directions for our kids where all this stuff is so they can utilize the HSA for our benefit.

Also, to reimburse past medical expenses, we need proof of the expense, proof we paid it, and proof we were not reimbursed by our insurance company, to keep the IRS happy. Seems like a lot to keep track of when we're older.
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ma2jo
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Re: Do I have too much HSA money?

Post by ma2jo »

I vote for the more the better. I am 69 pre-SS in CA and withdraw from my HSA (75K) each quarter to cover current medical expenses and then do Roth conversions instead of IRA withdrawals to cover this expense. The Roth is CA tax free but not the HSA.
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Re: Do I have too much HSA money?

Post by backpacker61 »

Spirit Rider wrote: Sat Nov 14, 2020 9:37 am It also could allow you to self-insure LTC expenses.
+1
Keep funding the HSA; then do not buy LTC insurance.
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Re: Do I have too much HSA money?

Post by Xrayman69 »

Bama12 wrote: Fri Nov 13, 2020 11:17 pm Wish I could open a HSA.
+1.

Very tax efficient. Reduces income, never pay taxes if used within scope before 65, then essentially a ROTH post 65.

If we qualified this bucket would be filled as a priority.
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Re: Do I have too much HSA money?

Post by willthrill81 »

aristotelian wrote: Fri Nov 13, 2020 10:35 pm Not at all. Worst case scenario, it turns into an additional tax deferred retirement account. And that's the worst case. More likely you use it for Medicare premiums and the occasional big expense.
+1

It's virtually impossible to have too much in HSA funds while you're still accumulating.

However, in retirement, it's the best account to spend from. And it's the worst account for non-spousal heirs, so those with charitable inclinations should strongly consider designating a charity as the secondary beneficiary after their spouse.
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Re: Do I have too much HSA money?

Post by 1789 »

This is one type of an account you would probably not accumulate enough during your lifetime. Welcome to USA.
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Re: Do I have too much HSA money?

Post by TravelforFun »

anon_investor wrote: Fri Nov 13, 2020 11:16 pm
macheta wrote: Fri Nov 13, 2020 9:25 pm I would save the receipts for an emergency. Otherwise, keep saving!
+1!
No need to save receipts now. When you get old, large medical bills come in droves.

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Re: Do I have too much HSA money?

Post by illumination »

If you do overfund it, you can still draw it down for non-medical expenses in retirement (after age 65) and it gets the same tax treatment as if you were drawing down an IRA. And you don't have to take RMDs, so you can make the case it's better than funds that were instead in an IRA or 401(k).

It would be difficult for me to envision someone that really has too much since it's actually pretty flexible. Leaving to your heirs and their tax treatment is about the only fly in the ointment.
ved
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Re: Do I have too much HSA money?

Post by ved »

Spirit Rider wrote: Sat Nov 14, 2020 9:37 am It also could allow you to self-insure LTC expenses.
Can you elaborate on this? Or provide some links I can research?

Thanks
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Re: Do I have too much HSA money?

Post by BernardShakey »

atomicrc11 wrote: Sat Nov 14, 2020 10:19 am I did have a thought and not sure if it's the best idea, but if the OP's salary is low enough to allow a Roth IRA contribution, would it be better to submit expenses now to then put that money into a Roth IRA? Then the money is more flexible when retirement comes around. Am I missing anything?
I think the HSA is actually better than the Roth. You put the money in pre-tax, it grows tax free, and comes out tax free (as long as you save your receipts). It doesn't get any better than that, right ?
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Re: Do I have too much HSA money?

Post by Miriam2 »

TravelforFun wrote: No need to save receipts now. When you get old, large medical bills come in droves.
Ahh, I see! Answered my question and relieved my anxiety about having to save every little receipt :shock: :D :mrgreen:
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Re: Do I have too much HSA money?

Post by anon_investor »

Miriam2 wrote: Sun Nov 15, 2020 12:31 am
TravelforFun wrote: No need to save receipts now. When you get old, large medical bills come in droves.
Ahh, I see! Answered my question and relieved my anxiety about having to save every little receipt :shock: :D :mrgreen:
I save the receipts because it is like having an extra emergency fund. But I fully expect to be able to spend down my HSA with medical costs in retirement.
Jb526
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Re: Do I have too much HSA money?

Post by Jb526 »

My HSA balance is similar, and I definitely plan on adding more. But it's impressive that you've been able to continually find a health plan that allows for HSA contributions to begin with. Last year, there were exactly zero available, so I had no choice in the matter. For this year, coverage including an HSA component was available, so I jumped on the chance and am happily contributing again. Next year, there are a few options available, but the price of participation is higher.

I think it would be a good idea to take every opportunity to contribute, if it makes to do so at the time.
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Re: Do I have too much HSA money?

Post by wander »

justsomeguy2018 wrote: Fri Nov 13, 2020 9:24 pm We are in the latter half of our 30s.

Have around $18k in HSA money. Plan to continue maxing contributions each year.

We have probably around $15k+ in medical expenses from prior years that we paid out of pocket.

Should we withdraw some to pay ourselves back? Problem is I have no idea what I would do the money. Probably just move it into a taxable account which seems inefficient. I feel like we may end up with an oversized HSA account though.

I would say so far the HSAs have earned around $1500 in innvestment returns (we only started investing them in past 2 years).
If you cannot spend all, it will become your retirement money. But illness will happen to everyone at old age. You can feel invincible now, but nobody will escape getting old and sick.
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Re: Do I have too much HSA money?

Post by Silverado »

illumination wrote: Sat Nov 14, 2020 9:09 pm
It would be difficult for me to envision someone that really has too much since it's actually pretty flexible. Leaving to your heirs and their tax treatment is about the only fly in the ointment.
Yeah, and it’s not even my ointment. Having an heir not get as much as they would otherwise is several decimal places down from something anyone should use for decision making about whether to save for medical expenses in an HSA.
neverdone
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Re: Do I have too much HSA money?

Post by neverdone »

I have about $360K in my HSA. Retired a year ago. I treated the amount in my HSA as "fun" money and bought some stock. hsabank allows stock trades with tdameritrade. In 2016 I bought 100 shares of Tesla, cost $15K; gain about $190K. In 2018 I bought 30 shares of Amazon; gain $50K. Last week I bought 200 shares of pfizer.
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Re: Do I have too much HSA money?

Post by stimulacra »

You can keep the HSA for as long as you want and there are several reasons why you should.

You can invest it same as an IRA or Roth IRA.
Investments grow tax free year after after year.
You can contribute to it if you have a qualifying HDHP but in the years you don't you can still keep it and let your investments grow.
Best of all, it's triple-tax advantaged if used for healthcare.
If you don't use it for healthcare it gets taxed like a regular IRA.

There are a lot of good custodians out there you can roll over to if you don't like your employer provided one. I think Fidelity has the best mix of available funds and low fees. Healthsavings.com is another.
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Re: Do I have too much HSA money?

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Re: Do I have too much HSA money?

Post by absolute zero »

Miriam2 wrote: Sun Nov 15, 2020 12:31 am
TravelforFun wrote: No need to save receipts now. When you get old, large medical bills come in droves.
Ahh, I see! Answered my question and relieved my anxiety about having to save every little receipt :shock: :D :mrgreen:
There is a happy medium, in my opinion. Just pick a threshold based off “hassle factor.” Example could be $100. For every medical expense above $100, save the receipt and EOB. For anything below $100, toss the receipt and move on.
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Re: Do I have too much HSA money?

Post by wolf359 »

ved wrote: Sat Nov 14, 2020 9:09 pm
Spirit Rider wrote: Sat Nov 14, 2020 9:37 am It also could allow you to self-insure LTC expenses.
Can you elaborate on this? Or provide some links I can research?

Thanks
Long-term Care expenses by definition qualify as medical expenses under HSA rules. That means that if you accumulate sufficient funds in your HSA, you're essentially self-insured, because you have funds that can cover your LTC expenses.

For reference, the average lifetime LTC expenses are currently $172,000 for those who need them. (The actual costs vary by person and by state.) Source: AARP https://www.aarp.org/health/health-insu ... re-fd.html
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Re: Do I have too much HSA money?

Post by willthrill81 »

neverdone wrote: Sun Nov 15, 2020 5:04 pm I have about $360K in my HSA.
Come again? HSAs didn't begin until very late in 2003. How did you get so much into it?
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Re: Do I have too much HSA money?

Post by anon_investor »

willthrill81 wrote: Sun Nov 15, 2020 7:35 pm
neverdone wrote: Sun Nov 15, 2020 5:04 pm I have about $360K in my HSA.
Come again? HSAs didn't begin until very late in 2003. How did you get so much into it?
Sounds like neverdone did quite well on some good stock picks, Tesla and Amazon.
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Re: Do I have too much HSA money?

Post by MrBeaver »

PhillyPhan wrote: Fri Nov 13, 2020 11:12 pm 80k in your HSA is a very impressive feat. I believe the HSA has only been around since 2003, which means if you are contributing ~3,500 per year as an individual you have reaped some good returns! Kudos!! Any six figure HSA account holders out there?
We have almost 180k right now, all with index funds (100% stock AA). Been maxing it since 2003 (some early years individual, later as family), even when income was low. A few years the deduction helped us qualify for the savers credit on Roth contributions.

Even at a 4% real return over the next 25 years until I’m 65, that will grow to 775k in 2020 dollars. Far more than I anticipate needing for health care expenses. I’m ok with that for a few reasons:
  • I like the idea of being self insured for LTC.
  • If things go south, we can use it to supplement our retirement savings, or if they go really well we could spend down Roth for early retirement and then continue to fund retirement from the HSA/other tax deferred savings.
  • If we both die, I’m not interested in bequeathing all of my wealth to individuals. In fact, the secondary beneficiary for this account is already a charity.
The biggest risk I see to this is actually legislative risk. Rules have changed in the past – early on, over the counter drugs and I think insurance premiums were eligible expenses. That was scaled back to only Medicare premiums and medications fulfilled with a prescription.
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Re: Do I have too much HSA money?

Post by anon_investor »

MrBeaver wrote: Sun Nov 15, 2020 8:31 pm
PhillyPhan wrote: Fri Nov 13, 2020 11:12 pm 80k in your HSA is a very impressive feat. I believe the HSA has only been around since 2003, which means if you are contributing ~3,500 per year as an individual you have reaped some good returns! Kudos!! Any six figure HSA account holders out there?
We have almost 180k right now, all with index funds (100% stock AA). Been maxing it since 2003 (some early years individual, later as family), even when income was low. A few years the deduction helped us qualify for the savers credit on Roth contributions.

Even at a 4% real return over the next 25 years until I’m 65, that will grow to 775k in 2020 dollars. Far more than I anticipate needing for health care expenses. I’m ok with that for a few reasons:
  • I like the idea of being self insured for LTC.
  • If things go south, we can use it to supplement our retirement savings, or if they go really well we could spend down Roth for early retirement and then continue to fund retirement from the HSA/other tax deferred savings.
  • If we both die, I’m not interested in bequeathing all of my wealth to individuals. In fact, the secondary beneficiary for this account is already a charity.
The biggest risk I see to this is actually legislative risk. Rules have changed in the past – early on, over the counter drugs and I think insurance premiums were eligible expenses. That was scaled back to only Medicare premiums and medications fulfilled with a prescription.
CARES act made OTC medications a qualified expense for HSAs again.
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Re: Do I have too much HSA money?

Post by TravelGeek »

Miriam2 wrote: Sat Nov 14, 2020 11:38 am Also, to reimburse past medical expenses, we need proof of the expense, proof we paid it, and proof we were not reimbursed by our insurance company, to keep the IRS happy. Seems like a lot to keep track of when we're older.
I share your concerns about added complexity, but still just renewed our HSA-eligible ACA plan. It’s only our second year, so the balances are still small.

We keep the receipts for HSA-eligible items in paper and as a scanned digital copy and I maintain a spreadsheet inventory of receipts. Not a challenge so far, but at some point I will need to document it in my “when I get hit by a bus” instruction manual for my wife.

Question: what do you keep as proof that you weren’t reimbursed by insurance?
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Re: Do I have too much HSA money?

Post by gch »

TravelGeek wrote: Sun Nov 15, 2020 9:14 pm
Miriam2 wrote: Sat Nov 14, 2020 11:38 am Also, to reimburse past medical expenses, we need proof of the expense, proof we paid it, and proof we were not reimbursed by our insurance company, to keep the IRS happy. Seems like a lot to keep track of when we're older.
I share your concerns about added complexity, but still just renewed our HSA-eligible ACA plan. It’s only our second year, so the balances are still small.

We keep the receipts for HSA-eligible items in paper and as a scanned digital copy and I maintain a spreadsheet inventory of receipts. Not a challenge so far, but at some point I will need to document it in my “when I get hit by a bus” instruction manual for my wife.

Question: what do you keep as proof that you weren’t reimbursed by insurance?
I keep the insurance EOB that shows I owe this much, and then a credit card statement that showed I paid that much. Takes a few hours at the end of every year for me to download the EOB’s and the yearly CC statements so not a huge hassle.
Miriam2
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Re: Do I have too much HSA money?

Post by Miriam2 »

TravelGeek wrote: Sun Nov 15, 2020 9:14 pm
Miriam2 wrote: Sat Nov 14, 2020 11:38 am Also, to reimburse past medical expenses, we need proof of the expense, proof we paid it, and proof we were not reimbursed by our insurance company, to keep the IRS happy. Seems like a lot to keep track of when we're older.
I share your concerns about added complexity, but still just renewed our HSA-eligible ACA plan. It’s only our second year, so the balances are still small.

We keep the receipts for HSA-eligible items in paper and as a scanned digital copy and I maintain a spreadsheet inventory of receipts. Not a challenge so far, but at some point I will need to document it in my “when I get hit by a bus” instruction manual for my wife.

Question: what do you keep as proof that you weren’t reimbursed by insurance?
Exactly my concern - how do we prove a negative?

However, BH absolute zero, above thread, saves his EOB's (Explanation of Benefits) from his insurance company to show what they did and didn't pay. The only difficulty would be when we don't receive an EOB, such as dental or eye expenses that we don't have insurance for anyway, thus there would be no EOB.
John Bogle, "The Twelve Pillars of [Financial] Wisdom"- Pillar 5: Diversify, Diversify, Diversify.
gch
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Re: Do I have too much HSA money?

Post by gch »

Miriam2 wrote: Sun Nov 15, 2020 9:31 pm
TravelGeek wrote: Sun Nov 15, 2020 9:14 pm
Miriam2 wrote: Sat Nov 14, 2020 11:38 am Also, to reimburse past medical expenses, we need proof of the expense, proof we paid it, and proof we were not reimbursed by our insurance company, to keep the IRS happy. Seems like a lot to keep track of when we're older.
I share your concerns about added complexity, but still just renewed our HSA-eligible ACA plan. It’s only our second year, so the balances are still small.

We keep the receipts for HSA-eligible items in paper and as a scanned digital copy and I maintain a spreadsheet inventory of receipts. Not a challenge so far, but at some point I will need to document it in my “when I get hit by a bus” instruction manual for my wife.

Question: what do you keep as proof that you weren’t reimbursed by insurance?
Exactly my concern - how do we prove a negative?

However, BH absolute zero, above thread, saves his EOB's (Explanation of Benefits) from his insurance company to show what they did and didn't pay. The only difficulty would be when we don't receive an EOB, such as dental or eye expenses that we don't have insurance for anyway, thus there would be no EOB.
For dental at the end of the year I just have the dentist print off a yearly summary of what all my family had done and what I paid then scan that in with the Cc statement
z06ray
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Re: Do I have too much HSA money?

Post by z06ray »

anon_investor wrote: Sun Nov 15, 2020 8:53 pm
MrBeaver wrote: Sun Nov 15, 2020 8:31 pm
PhillyPhan wrote: Fri Nov 13, 2020 11:12 pm 80k in your HSA is a very impressive feat. I believe the HSA has only been around since 2003, which means if you are contributing ~3,500 per year as an individual you have reaped some good returns! Kudos!! Any six figure HSA account holders out there?
We have almost 180k right now, all with index funds (100% stock AA). Been maxing it since 2003 (some early years individual, later as family), even when income was low. A few years the deduction helped us qualify for the savers credit on Roth contributions.

Even at a 4% real return over the next 25 years until I’m 65, that will grow to 775k in 2020 dollars. Far more than I anticipate needing for health care expenses. I’m ok with that for a few reasons:
  • I like the idea of being self insured for LTC.
  • If things go south, we can use it to supplement our retirement savings, or if they go really well we could spend down Roth for early retirement and then continue to fund retirement from the HSA/other tax deferred savings.
  • If we both die, I’m not interested in bequeathing all of my wealth to individuals. In fact, the secondary beneficiary for this account is already a charity.
The biggest risk I see to this is actually legislative risk. Rules have changed in the past – early on, over the counter drugs and I think insurance premiums were eligible expenses. That was scaled back to only Medicare premiums and medications fulfilled with a prescription.
CARES act made OTC medications a qualified expense for HSAs again.
That’s a very healthy HSA. Not trying to nit pick, but how does 4% real arrive at 775k?
Miriam2
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Re: Do I have too much HSA money?

Post by Miriam2 »

OP, here is another reason why you may not have too much HSA money.

Here is a Vanguard research paper on using your HSA for retirement planning and other long-term goals. One of the flexible advantages of an HSA is that it can be used "for a variety of long-term savings goals," not just immediate medical reimbursements, since money is fungible.

https://personal.vanguard.com/pdf/ISGHS ... Online.pdf - "HSAs: An off-label prescription for retirement saving"
Making the most of this flexibility requires careful recordkeeping, but the flexibility also
makes HSAs an attractive vehicle for a variety of long-term savings goals. Suppose you
pay $2,000 out of pocket this year for your daughter’s braces. Save the receipt, and you
can use that bill ten years from now to withdraw funds—tax-free—to pay for her college
tuition. Or you can use it for your retirement expenses in 40 years. (pg 3)
What you would be doing is reimbursing yourself the $2,000 for the braces, with the receipt, ten years later, and using the reimbursement money to pay for tuition.

Another example, in this BH thread, viewtopic.php?f=2&t=293637, the Q was whether the BH could withdraw funds from his HSA to pay his Roth conversion taxes, ie. paying his conversion taxes with untaxed HSA funds.

Grabiner wrote yes, with these caveats -
grabiner wrote: It is legal to use the HSA for any purpose, but withdrawals for non-medical purposes are taxable (and subject to a 20% penalty if you are under 65). Therefore, it is better to use the HSA for medical expenses.

But once you have the medical expenses, you can reimburse yourself from the HSA in a later year. If you have $10,000 of past medical expenses, you can withdraw $10,000 from the HSA this year as reimbursement for those medical expenses, deposit the $10,000 in your bank account and use it to pay a tax bill. Doing this is better than withdrawing $10,000 from a Roth IRA, or taking $10,000 more from a traditional IRA than the amount you wanted to convert from the Roth.

I agree that the HSA is the most valuable saving vehicle (and should be maxed out in preference to anything except a 401(k) with employer match), but you extracted that value when you made the contribution; it costs less out of pocket to put a dollar in an HSA than to put a dollar in a Roth IRA. Once the dollars are already there, it is better to have dollars in the Roth IRA.
John Bogle, "The Twelve Pillars of [Financial] Wisdom"- Pillar 5: Diversify, Diversify, Diversify.
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willthrill81
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Re: Do I have too much HSA money?

Post by willthrill81 »

anon_investor wrote: Sun Nov 15, 2020 7:41 pm
willthrill81 wrote: Sun Nov 15, 2020 7:35 pm
neverdone wrote: Sun Nov 15, 2020 5:04 pm I have about $360K in my HSA.
Come again? HSAs didn't begin until very late in 2003. How did you get so much into it?
Sounds like neverdone did quite well on some good stock picks, Tesla and Amazon.
That sort of thing is the only explanation I can come up with.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
TravelforFun
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Re: Do I have too much HSA money?

Post by TravelforFun »

wolf359 wrote: Sun Nov 15, 2020 7:21 pm
ved wrote: Sat Nov 14, 2020 9:09 pm
Spirit Rider wrote: Sat Nov 14, 2020 9:37 am It also could allow you to self-insure LTC expenses.
Can you elaborate on this? Or provide some links I can research?

Thanks
Long-term Care expenses by definition qualify as medical expenses under HSA rules. That means that if you accumulate sufficient funds in your HSA, you're essentially self-insured, because you have funds that can cover your LTC expenses.

For reference, the average lifetime LTC expenses are currently $172,000 for those who need them. (The actual costs vary by person and by state.) Source: AARP https://www.aarp.org/health/health-insu ... re-fd.html
Or you can use your HSA to pay your LTC insurance premium. This is what I've been doing.

TravelforFun
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