HSA/FSA related question

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tbxavier
Posts: 13
Joined: Wed Aug 22, 2018 2:00 pm

HSA/FSA related question

Post by tbxavier » Thu Oct 11, 2018 7:07 pm

I need help with health savings accounts. I just started learning about HSA and FSA account and would like some advice on how to use them
So here's my situation:
Currently I am enrolled in my workplace high deductible plan with HSA (HDP/HSA). My wife has a regular insurance plan with her job (NO HSA OR FSA).
Open enrollment is this month (October 2018) for both of us and am considering as to what to elect. We both have no children at the moment but plan on getting pregnant in summer of 2019 (God's willing) and we are planning that way. We both have separate insurance plans with our work places as it is cheaper that us being on each other's plan. So my options are as such:

1. I re-enroll in the HDP/HSA plan at work and contribute some funds to the account along with getting my employer match ($600). Since that money is always mine and never goes away, I am planning to use it to help pay for some of my wife's expenses during pregnancy/delivery. Note: both our insurance max out of pocket for the year is around $6000. My wife would be on a regular/traditional insurance plan with no FSA. Is this a good idea?

2. When open enrollment comes around again in October 2019 I am thinking I would have to give up the HDP/HSA and enroll my wife or myself in a FSA account to help with the balance of the cost for delivery/hospital bills during that year and get some tax advantage at the same time. The amount contributed would be the difference in the max out of pocket for our insurance ( around $6000) and the amount I already have in the HSA account. Am pretty sure that having a child we will easily spend the max out of pocket for insurance. Do I have to give up the HDP/HSA account? Any other scenario that could be better than this is appreciated.

3. Also, after the birth of our child/children we would consider a dependent care related FSA since we may need that option given that we don't have family living near us.

All comments are appreciated. Thank you

MrBeaver
Posts: 240
Joined: Tue Nov 14, 2017 4:45 pm

Re: HSA/FSA related question

Post by MrBeaver » Thu Oct 11, 2018 7:27 pm

tbxavier wrote:
Thu Oct 11, 2018 7:07 pm
2. When open enrollment comes around again in October 2019 I am thinking I would have to give up the HDP/HSA and enroll my wife or myself in a FSA account to help with the balance of the cost for delivery/hospital bills during that year and get some tax advantage at the same time. The amount contributed would be the difference in the max out of pocket for our insurance ( around $6000) and the amount I already have in the HSA account. Am pretty sure that having a child we will easily spend the max out of pocket for insurance. Do I have to give up the HDP/HSA account? Any other scenario that could be better than this is appreciated.
A few thoughts:
  • Make sure baby + mother are on the same health plan. Otherwise you may end up paying two deductibles/OOP max limits.
  • Depending on the cost of family coverage through your job and your wife’s job, it may be better to put everyone on a single family plan once any children are born.
  • I don’t think there is a need for you to give up your HSA in 2020. Often, the OOP max of HDHPs can be lower than the OPP max of co-pay PPOs, so sometimes it’s actually better from a risk mitigation perspective to have mom + baby on a HDHP. However, I also think (but check this) your HSA can be used to pay for expenses of dependents on a different health plan (your wife’s copay PPO in this instance). In other words, try to separate the decision of insurance coverage from where money will come from to pay OOP costs.

yohac
Posts: 79
Joined: Sat Sep 01, 2018 1:42 pm

Re: HSA/FSA related question

Post by yohac » Thu Oct 11, 2018 7:31 pm

If your employer contributes to your HSA, then it's a no-brainer - take advantage this year and next year. You can only contribute up to the HSA max for yourself ($3450 in 2018) since your wife is not on your plan. Your wife can contribute to her FSA next year, but you can't contribute to both an HSA and healthcare FSA in the same year, unless it's a "restricted" (dental/vision only) FSA. You can use your HSA funds for your wife and baby.
Last edited by yohac on Thu Oct 11, 2018 7:54 pm, edited 1 time in total.

zguy
Posts: 10
Joined: Wed May 16, 2018 4:03 pm

Re: HSA/FSA related question

Post by zguy » Thu Oct 11, 2018 7:45 pm

The difference between FSA and HSA is that you need to spend down your entire FSA balance every year or you lose it, but HSA you do not need to.

With an HSA you can also pay for medical expenses out of pocket and then reimburse yourself from your HSA in the current year or any other year. Not the same with FSA.

To my knowledge you can have both an HSA and a DCFSA. DCFSA you need to spend down every year.

tbxavier
Posts: 13
Joined: Wed Aug 22, 2018 2:00 pm

Re: HSA/FSA related question

Post by tbxavier » Fri Oct 12, 2018 1:07 pm

Thanks for the responses so far.

lukestuckenhymer
Posts: 77
Joined: Wed May 30, 2018 11:53 am

Re: HSA/FSA related question

Post by lukestuckenhymer » Fri Oct 12, 2018 2:39 pm

Be very careful about HSA partial-year rules.

https://www.benstrat.com/downloads/HSA- ... bility.pdf

If you're enrolling Oct 1st with plans to max out your HSA contribution for 2018, you must remain on that HDHP plan for the entirety of calendar 2019 or else the amount over the prorated HSA contribution (for family, 3/12 x $6,900 = $1,725) will become taxable and subject to penalties.

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