First Major Medical Expenses under HDHP

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Icarus961
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First Major Medical Expenses under HDHP

Post by Icarus961 »

Hi everyone,

I have been enrolled in an HDHP through work for several years now, and have been contributing the maximum towards my HSA. I have saved up roughly 6 months worth of expenses for an emergency fund, have $2500 in my HSA cash account and a few times that in the investment account. Anytime a contribution would overfill the cash account it gets swept to the investment account, and anytime it drops below $2500 money gets taken from the investment account to refill it.

Fortune finally caught up with me and I managed to hit my out-of-pocket maximum of $5000 in one go. If I draw it from my emergency fund I would be set back quite a bit (which I am somewhat uncomfortable doing, given the sense of security it has given me, though I am able), and if I take it from the HSA it would both be cutting short the investment potential of the money as well as throwing me into the thick of the HSA claims process, of which I know nothing about.

This is my first time considering withdrawing from what I consider one of my retirement accounts and I am fully paralyzed about it. How do I approach deciding this?

Thanks
alter
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Re: First Major Medical Expenses under HDHP

Post by alter »

I would use your emergency fund dollars. HSA are the most valuable dollars between all accounts so I tend to horde those.

Look at it this way, use your emergency fund dollars and keep the reciept, if a real emergency comes up, you still have the option to use the HSA dollars at any time in the future. It doesn't work the other way around.
jhwkr542
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Re: First Major Medical Expenses under HDHP

Post by jhwkr542 »

alter wrote: Tue Oct 30, 2018 3:24 pm Look at it this way, use your emergency fund dollars and keep the receipt, if a real emergency comes up, you still have the option to use the HSA dollars at any time in the future. It doesn't work the other way around.
+1. Just build the EF back up over time. You can withdraw from the HSA at anytime for this amount.
curmudgeon
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Re: First Major Medical Expenses under HDHP

Post by curmudgeon »

I would base the choice on my other cash flows. If I could easily rebuild my EF over the next several months, I might just use that, and keep the receipts for potential later use. On the other hand, expenses like these are what the HSA is for. Most HSA are pretty straightforward to draw from; I just specify an amount once a year or so and have them send me a check.
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Artful Dodger
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Re: First Major Medical Expenses under HDHP

Post by Artful Dodger »

Just because you have $5000 bill, doesn't mean you have to pay it all at once, or pay any late interest. If one big bill, call the provider, and see if you can pay off in 12 months with no interest. They'll probably take you up on the offer (and be thrilled). If there are a mix of bills, tackle the larger ones as above. Go for 6 to 12 months plans - no interest. Pay the smaller bills either thru the cash HSA account or EF.
gclancer
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Re: First Major Medical Expenses under HDHP

Post by gclancer »

Artful Dodger wrote: Tue Oct 30, 2018 5:54 pm Just because you have $5000 bill, doesn't mean you have to pay it all at once, or pay any late interest. If one big bill, call the provider, and see if you can pay off in 12 months with no interest. They'll probably take you up on the offer (and be thrilled). If there are a mix of bills, tackle the larger ones as above. Go for 6 to 12 months plans - no interest. Pay the smaller bills either thru the cash HSA account or EF.
I all but guarantee they’ll give you 0% interest over a decently long term. I’ve also negotiated prompt pay discounts even after it running thru insurance (if they don’t offer one they typically offer the other).
sawhorse
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Re: First Major Medical Expenses under HDHP

Post by sawhorse »

If you pay from your emergency fund, how much would you have left in the fund? Do you have a Roth IRA that can serve as a backup emergency fund?
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celia
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Re: First Major Medical Expenses under HDHP

Post by celia »

Icarus961 wrote: Tue Oct 30, 2018 3:16 pm I have been enrolled in an HDHP through work for several years now, and have been contributing the maximum towards my HSA. I have saved up roughly 6 months worth of expenses for an emergency fund, have $2500 in my HSA cash account and a few times that in the investment account. Anytime a contribution would overfill the cash account it gets swept to the investment account, and anytime it drops below $2500 money gets taken from the investment account to refill it.

Fortune finally caught up with me and I managed to hit my out-of-pocket maximum of $5000 in one go...
The best thing about this situation is what you can learn from it. If you managed to incur $5,000 in medical expenses all at one time, you can do it again. Look at this as a learning experience. (If you have a family, this will become more frequent as more people can contribute to incurring the expense.)

I hope you recover soon and are back to your regularly scheduled routine. :beer
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grabiner
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Re: First Major Medical Expenses under HDHP

Post by grabiner »

Are you maxing out your retirement accounts? Since you are looking at tapping the emergency fund, I would assume you are not.

If you are not maxing out your retirement accounts, you should use the HSA. While the HSA is the best place to make an investment, it isn't any better than other tax-sheltered accounts for keeping an investment. Currently, you have $5000 in your HSA growing tax-free. If you withdraw that $5000 from your HSA, you won't need to use $5000 to rebuild your emergency fund, and can instead put that $5000 into a Roth IRA, where it will also grow tax-free. Or you could put $6410 into a 401(k) in a 22% tax bracket; that is just as good if you lose 22% of the 401(k) to taxes, and better if you retire in a lower tax bracket.

You can either put the money in the HSA cash account and pay the medical bills from that account (with a debit card or check), or else pay the medical bills from your regular bank account and then reimburse yourself with a withdrawal from the HSA.
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Limoncello402
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Re: First Major Medical Expenses under HDHP

Post by Limoncello402 »

I would use the HSA. That's what it is there for. For me tapping into it is as simple as a few key strokes to withdraw that money and put it into my checking account. You just need to be signed up for this online, so do that anyway.
That said, as others have stated, what you do depends on your larger financial situation at the moment. If you can replenish your emergency fund quickly, you can certainly pay it from there and let the HSA keep growing.
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mmmodem
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Re: First Major Medical Expenses under HDHP

Post by mmmodem »

jhwkr542 wrote: Tue Oct 30, 2018 3:34 pm
alter wrote: Tue Oct 30, 2018 3:24 pm Look at it this way, use your emergency fund dollars and keep the receipt, if a real emergency comes up, you still have the option to use the HSA dollars at any time in the future. It doesn't work the other way around.
+1. Just build the EF back up over time. You can withdraw from the HSA at anytime for this amount.
+2
To allay your fears on HSA reimbursement, the next time you have a small medical purchase like a prescription, purchase ot out of pocket. Then, go through the reimbursement process.

I admit it was intimidating at first but once I did it the first time, subsequent reimbursements were quick. Some HSA custodians let you enter in all your information for the reimbursement but not receive it. Then when you are ready to receive it, you just give the go ahead without having to look for the receipts.
Super Hans
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Re: First Major Medical Expenses under HDHP

Post by Super Hans »

I'm not sure I understand the reimbursement process discussion. Can't you simply write yourself a check from the HSA to pay your credit card bill, withdraw cash from the HSA at an ATM, etc.? It's not like an FSA with a gatekeeper. The gatekeeper is a potential IRS audit.
sergio
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Re: First Major Medical Expenses under HDHP

Post by sergio »

For major expenses, I've paid with my CC to get 2% towards my Fidelity account, then that same night went to my HSA site and transferred that amount to my checking account. When the HSA money hits my checking account, I pay the CC and make sure to back up an electronic copy of the receipt to my Dropbox and Google Drive.

I now realize that I've been using too much HSA money to pay off bills when I could probably just get no-interest financing for 6 or 12 months and pay stuff off with my monthly cash flow :oops: I went back and looked at the hospital bill for my daughter's birth and it even had large notice on it saying "no interest financing available - call to discuss payment options" :oops: :oops:

My HSA strategy now is now to keep $2k (required minimum) in my money market and invest the rest. Then keep half the deductible (the indv deductible) in a high yield savings account. Pay with cash flow (with no-interest financing), and if things get too tight, reach into the emergency fund. Most years we don't come close to meeting our deductible, so this will give us a lot of extra invested HSA money.
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Icarus961
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Re: First Major Medical Expenses under HDHP

Post by Icarus961 »

Hi everyone. Thanks for all of the responses!

I left some stuff out not realizing that it might be important:
-I am maxing out each my 401k, Roth IRA and HSA at the moment. Retirement savings is the largest single expense I have right now, and it took no small amount of courage to build up to maxing them out given how much it removes from my paycheck. I could lower my contributions to refill my emergency fund, but I fear that's a slippery slope (and I'd have the same guilt about lowering the potential retirement value of the money I'm not putting in).
-The $5000 would cut my cash on hand by about a third, leaving me with about $10k which is enough for the month's expenses and a 4-month emergency fund. It would take some time to build it back up, as my net cash after everything in a month averages maybe $500.

The most attractive option I'm hearing is to be able to drag out paying over several months. That way, I could minimize the dent in the emergency fund and mostly just pay out of pocket while hopefully leaving the HSA alone. Looking at my claims on my benefits website I'm seeing lots of bills for smaller amounts (and one largeish one). What kind of mechanism is there for consolidating these into a large payment, and an interest free one at that? Is that handled through the hospital, or through my insurance provider? There's a number on the first of the bills for "Billing Inquiries", so if they all come with the same format I will try that first.

Thanks!
michaeljc70
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Re: First Major Medical Expenses under HDHP

Post by michaeljc70 »

Use the EF! I have never drawn from my HSA and have accumulated almost 6 figures in there. I would only use the EF if it would put me in a really bad financial situation. An HSA is a great investment/savings vehicle.
Broken Man 1999
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Re: First Major Medical Expenses under HDHP

Post by Broken Man 1999 »

Another strategy to stretch out payments to keep out of your emergency/HSA accounts is to use a 0% interest for X months credit card. I sometimes use one to smooth out an unexpected bill. Works great for me as I like to stay as fully invested as I can, since every dollar removed from our investment portfolio is taxed. We do have Roth IRAs, but I would have to be in a real jam before I tapped them. Those accounts are just to precious to raid.

Sometimes when you call about the pay plan at various providers, they might offer you a discount if you pay immediately. When MIL had some hospital expenses she had two payment plans at the same time.

When I called for a payment plan for my injuries last year the hospital offered a discount right off the bat without me asking for it. A 10%-20% reduction is great, if offered.

Not sure who/what the provider might be, but you should, IMHO, protect that HSA account from withdrawals if possible. Too many good features to use if there are other options available.

Broken Man 1999
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Artful Dodger
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Re: First Major Medical Expenses under HDHP

Post by Artful Dodger »

Icarus961 wrote: Wed Oct 31, 2018 9:49 am Hi everyone. Thanks for all of the responses!

I left some stuff out not realizing that it might be important:
-I am maxing out each my 401k, Roth IRA and HSA at the moment. Retirement savings is the largest single expense I have right now, and it took no small amount of courage to build up to maxing them out given how much it removes from my paycheck. I could lower my contributions to refill my emergency fund, but I fear that's a slippery slope (and I'd have the same guilt about lowering the potential retirement value of the money I'm not putting in).
-The $5000 would cut my cash on hand by about a third, leaving me with about $10k which is enough for the month's expenses and a 4-month emergency fund. It would take some time to build it back up, as my net cash after everything in a month averages maybe $500.

The most attractive option I'm hearing is to be able to drag out paying over several months. That way, I could minimize the dent in the emergency fund and mostly just pay out of pocket while hopefully leaving the HSA alone. Looking at my claims on my benefits website I'm seeing lots of bills for smaller amounts (and one largeish one). What kind of mechanism is there for consolidating these into a large payment, and an interest free one at that? Is that handled through the hospital, or through my insurance provider? There's a number on the first of the bills for "Billing Inquiries", so if they all come with the same format I will try that first.

Thanks!
I would never pay the bills from the benefits account. Get the bill for the large amount, call the provider, and set up an interest fee payment plan. Keep maxing your HSA contributions. You have the option of leaving your HSA account alone, and paying with other dollars; or paying some from the HSA account. Only you can decide. I made the decision a while back to let the HSA grow, and just pay expenses outside of it. Optimally, you will manage your money to stretch out the payments on the large bill, and pay the smaller bills from excess cash flow. If needed, pay some from your EF. If you ever get in a pinch, you can always pull money from the HSA.
michaeljc70
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Re: First Major Medical Expenses under HDHP

Post by michaeljc70 »

If there is no other means to pay these bills other than taking it from a tax free account then it is an emergency in my view.
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grabiner
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Re: First Major Medical Expenses under HDHP

Post by grabiner »

Icarus961 wrote: Wed Oct 31, 2018 9:49 am Hi everyone. Thanks for all of the responses!

I left some stuff out not realizing that it might be important:
-I am maxing out each my 401k, Roth IRA and HSA at the moment. Retirement savings is the largest single expense I have right now, and it took no small amount of courage to build up to maxing them out given how much it removes from my paycheck. I could lower my contributions to refill my emergency fund, but I fear that's a slippery slope (and I'd have the same guilt about lowering the potential retirement value of the money I'm not putting in).
-The $5000 would cut my cash on hand by about a third, leaving me with about $10k which is enough for the month's expenses and a 4-month emergency fund. It would take some time to build it back up, as my net cash after everything in a month averages maybe $500.
This suggests keeping the missing part of your emergency fund in the HSA. If you have paid $5000 out of pocket, you can take $5000 out of the HSA penalty-free and tax-free at any time; leave that $5000 in the bank account or in a short-term bond fund until you have rebuilt your emergency fund. That will allow you to keep the money growing tax-free for later use, which you want to do since you are maxing out your tax-deferred savings.
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Icarus961
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Re: First Major Medical Expenses under HDHP

Post by Icarus961 »

Artful Dodger wrote: Tue Oct 30, 2018 5:54 pm Just because you have $5000 bill, doesn't mean you have to pay it all at once, or pay any late interest. If one big bill, call the provider, and see if you can pay off in 12 months with no interest. They'll probably take you up on the offer (and be thrilled). If there are a mix of bills, tackle the larger ones as above. Go for 6 to 12 months plans - no interest. Pay the smaller bills either thru the cash HSA account or EF.
gclancer wrote: Tue Oct 30, 2018 9:21 pm
Artful Dodger wrote: Tue Oct 30, 2018 5:54 pm Just because you have $5000 bill, doesn't mean you have to pay it all at once, or pay any late interest. If one big bill, call the provider, and see if you can pay off in 12 months with no interest. They'll probably take you up on the offer (and be thrilled). If there are a mix of bills, tackle the larger ones as above. Go for 6 to 12 months plans - no interest. Pay the smaller bills either thru the cash HSA account or EF.
I all but guarantee they’ll give you 0% interest over a decently long term. I’ve also negotiated prompt pay discounts even after it running thru insurance (if they don’t offer one they typically offer the other).
Alright, so I went to the hospital, came home. I've only gotten the one bill in writing so far, which is from an umbrella organization that no doubt manages the department I went to, billing me for what my insurance didn't cover. When you say "negotiate with the provider" am I speaking with my insurance company, with this umbrella organization with their name on the bill, or the hospital itself?

Thanks!
gclancer
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Re: First Major Medical Expenses under HDHP

Post by gclancer »

Icarus961 wrote: Thu Nov 01, 2018 1:05 pm
Alright, so I went to the hospital, came home. I've only gotten the one bill in writing so far, which is from an umbrella organization that no doubt manages the department I went to, billing me for what my insurance didn't cover. When you say "negotiate with the provider" am I speaking with my insurance company, with this umbrella organization with their name on the bill, or the hospital itself?

Thanks!
Umbrella organization. I’d say “I can’t afford this bill. If you offer a prompt pay discount I’d be willing to pay for it with a credit card (if you’re aiming for a discount). If they don’t offer discounts when there’s insurance coverage (this happens 25-35% of the time) then ask if you can set up a payment plan. Mostly likely they’ll offer 12 payments = 1/12 of the amount due (thus, 0% APR for one year).
Northern Flicker
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Re: First Major Medical Expenses under HDHP

Post by Northern Flicker »

A few comments...

1. Using the HSA funds is just a matter of withdrawing the funds and ensuring you have receipts for eligible medical expenses to match total HSA withdrawals when you file your taxes. You will get a 1099 for the HSA distribution, and will save the receipts with your saved tax return copies in case you are audited.

2. HSA-eligible expenses may occur in an earlier year than the HSA distribution used to reimburse yourself for the expenses. If you have $5000 of medical receipts that have not been reimbursed with HSA withdrawals, they can drive future HSA withdrawals.

What this means is that you can pay the expenses with your emergency fund, but hold the receipts for future HSA withdrawals if your emergency fund gets depleted. Basically, if you have $5000 of unreimbursed medical expenses, $5000 of your HSA can be treated as an emergency fund.

You may wish to hold $5000 in cash in the HSA until you’ve restored your emergency fund to its target level with future savings, since the HSA investment portfolio may otherwise be eroded by market behavior. Then if you have not used some or all of the HSA funds earnarked for emergency, you may reinvest them.
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Artful Dodger
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Re: First Major Medical Expenses under HDHP

Post by Artful Dodger »

gclancer wrote: Thu Nov 01, 2018 4:20 pm
Icarus961 wrote: Thu Nov 01, 2018 1:05 pm
Alright, so I went to the hospital, came home. I've only gotten the one bill in writing so far, which is from an umbrella organization that no doubt manages the department I went to, billing me for what my insurance didn't cover. When you say "negotiate with the provider" am I speaking with my insurance company, with this umbrella organization with their name on the bill, or the hospital itself?

Thanks!
Umbrella organization. I’d say “I can’t afford this bill. If you offer a prompt pay discount I’d be willing to pay for it with a credit card (if you’re aiming for a discount). If they don’t offer discounts when there’s insurance coverage (this happens 25-35% of the time) then ask if you can set up a payment plan. Mostly likely they’ll offer 12 payments = 1/12 of the amount due (thus, 0% APR for one year).
I agree 100%. A lot of the time the "umbrella organization" is affiliated with the provider, and does their billing.
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Re: First Major Medical Expenses under HDHP

Post by Darth Xanadu »

alter wrote: Tue Oct 30, 2018 3:24 pm I would use your emergency fund dollars. HSA are the most valuable dollars between all accounts so I tend to horde those.

Look at it this way, use your emergency fund dollars and keep the reciept, if a real emergency comes up, you still have the option to use the HSA dollars at any time in the future. It doesn't work the other way around.
In my opinion, this is the best answer.
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Re: First Major Medical Expenses under HDHP

Post by sergio »

gclancer wrote: Thu Nov 01, 2018 4:20 pm
Icarus961 wrote: Thu Nov 01, 2018 1:05 pm
Alright, so I went to the hospital, came home. I've only gotten the one bill in writing so far, which is from an umbrella organization that no doubt manages the department I went to, billing me for what my insurance didn't cover. When you say "negotiate with the provider" am I speaking with my insurance company, with this umbrella organization with their name on the bill, or the hospital itself?

Thanks!
Umbrella organization. I’d say “I can’t afford this bill. If you offer a prompt pay discount I’d be willing to pay for it with a credit card (if you’re aiming for a discount). If they don’t offer discounts when there’s insurance coverage (this happens 25-35% of the time) then ask if you can set up a payment plan. Mostly likely they’ll offer 12 payments = 1/12 of the amount due (thus, 0% APR for one year).
I just received the second half of our newborn birth bill. I called them up and said "im calling about this $xxxx bill", before I could even finish they asked if I wanted a year to pay it off, interest free. First payment is 6 weeks from now. They were absolutely unwilling to offer a discount no matter what I said, as apparently my insurer is not one of their better payers. But this saved me from withdrawing $2k from my HSA. Wish I did this with the first half of the bill...
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Re: First Major Medical Expenses under HDHP

Post by michaeljc70 »

If it was an in-network provider, your insurance company already negotiated the rate down and I highly doubt you will get more off. I had an outpatient surgery and the bill was $30k. The insurance company negotiated rate was $6.5k. You have insurance. Negotiating may work if you are paying cash without insurance.
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Re: First Major Medical Expenses under HDHP

Post by sergio »

michaeljc70 wrote: Thu Nov 01, 2018 6:52 pm If it was an in-network provider, your insurance company already negotiated the rate down and I highly doubt you will get more off. I had an outpatient surgery and the bill was $30k. The insurance company negotiated rate was $6.5k. You have insurance. Negotiating may work if you are paying cash without insurance.
Yeah, this was a $9k bill which ended up at a discounted rate of $2.7k, so I'm definitely not complaining. The lady on the phone claimed they were "writing off" (exact words) 9 - 2.7 = $6.3k, so she was pretty aggressive in holding firm on the $2.7k. Maybe if I told her "fine, send it to collections" they've would've given in, but I'm not willing to go that far.

And what's more perplexing is that $2.7k is actually pretty reasonable for the services the hospital rendered. I just wish I didn't have to pay exorbitant premiums to get "discounted" rates.
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Re: First Major Medical Expenses under HDHP

Post by Bacchus01 »

grabiner wrote: Wed Oct 31, 2018 8:44 pm
Icarus961 wrote: Wed Oct 31, 2018 9:49 am Hi everyone. Thanks for all of the responses!

I left some stuff out not realizing that it might be important:
-I am maxing out each my 401k, Roth IRA and HSA at the moment. Retirement savings is the largest single expense I have right now, and it took no small amount of courage to build up to maxing them out given how much it removes from my paycheck. I could lower my contributions to refill my emergency fund, but I fear that's a slippery slope (and I'd have the same guilt about lowering the potential retirement value of the money I'm not putting in).
-The $5000 would cut my cash on hand by about a third, leaving me with about $10k which is enough for the month's expenses and a 4-month emergency fund. It would take some time to build it back up, as my net cash after everything in a month averages maybe $500.
This suggests keeping the missing part of your emergency fund in the HSA. If you have paid $5000 out of pocket, you can take $5000 out of the HSA penalty-free and tax-free at any time; leave that $5000 in the bank account or in a short-term bond fund until you have rebuilt your emergency fund. That will allow you to keep the money growing tax-free for later use, which you want to do since you are maxing out your tax-deferred savings.
This!

I’ve always paid out of pocket and have thousands in expenses that, at any time, I can go get from my HSA tax free. It IS part of our emergency fund.
michaeljc70
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Re: First Major Medical Expenses under HDHP

Post by michaeljc70 »

sergio wrote: Thu Nov 01, 2018 7:10 pm
michaeljc70 wrote: Thu Nov 01, 2018 6:52 pm If it was an in-network provider, your insurance company already negotiated the rate down and I highly doubt you will get more off. I had an outpatient surgery and the bill was $30k. The insurance company negotiated rate was $6.5k. You have insurance. Negotiating may work if you are paying cash without insurance.
Yeah, this was a $9k bill which ended up at a discounted rate of $2.7k, so I'm definitely not complaining. The lady on the phone claimed they were "writing off" (exact words) 9 - 2.7 = $6.3k, so she was pretty aggressive in holding firm on the $2.7k. Maybe if I told her "fine, send it to collections" they've would've given in, but I'm not willing to go that far.

And what's more perplexing is that $2.7k is actually pretty reasonable for the services the hospital rendered. I just wish I didn't have to pay exorbitant premiums to get "discounted" rates.
That is part of the racket....it makes it hard to self-insure or get a plan without networks (though I know there are still a few indemnity plans). In what other field are discounts of 50-90% "normal"? We had an MRI and the discount was 90%!
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Re: First Major Medical Expenses under HDHP

Post by Olemiss540 »

I believe the correct answer is extremely individualized. Are you the organized type that can file your taxes in pencil and have 2 cloud based backups for all of your weekly expenses? Then hoarding HSA receipts and keeping that money growing in an investment tax free may be the best option.

Believe it or not, there are some people that have zero or less than zero ability to maintain a receipt structure organized enough in case of audit which I believe leads to the better to spend the HSA money than hoarders or group.

I dont judge either way but just preface advice with this in mind. Personally I am barely getting by monthly due to my savings rate so I use HSA funds as I need to pay for healthcare related items. Not going to micromanage the best plan scenario if the simplification adds enough value to offset minimal gains of tax drag on an investment.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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Re: First Major Medical Expenses under HDHP

Post by alter »

Olemiss540 wrote: Fri Nov 02, 2018 12:53 pm I believe the correct answer is extremely individualized. Are you the organized type that can file your taxes in pencil and have 2 cloud based backups for all of your weekly expenses? Then hoarding HSA receipts and keeping that money growing in an investment tax free may be the best option.

Believe it or not, there are some people that have zero or less than zero ability to maintain a receipt structure organized enough in case of audit which I believe leads to the better to spend the HSA money than hoarders or group.

I dont judge either way but just preface advice with this in mind. Personally I am barely getting by monthly due to my savings rate so I use HSA funds as I need to pay for healthcare related items. Not going to micromanage the best plan scenario if the simplification adds enough value to offset minimal gains of tax drag on an investment.
You need to keep the receipts regardless of whether you use the HSA now or wait til later. Actually, it is even more important to keep track of them if you use the HSA now...in case of audit, IRS is not going to care about what you didn't take out of HSA yet...
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Re: First Major Medical Expenses under HDHP

Post by Olemiss540 »

alter wrote: Fri Nov 02, 2018 1:21 pm
Olemiss540 wrote: Fri Nov 02, 2018 12:53 pm I believe the correct answer is extremely individualized. Are you the organized type that can file your taxes in pencil and have 2 cloud based backups for all of your weekly expenses? Then hoarding HSA receipts and keeping that money growing in an investment tax free may be the best option.

Believe it or not, there are some people that have zero or less than zero ability to maintain a receipt structure organized enough in case of audit which I believe leads to the better to spend the HSA money than hoarders or group.

I dont judge either way but just preface advice with this in mind. Personally I am barely getting by monthly due to my savings rate so I use HSA funds as I need to pay for healthcare related items. Not going to micromanage the best plan scenario if the simplification adds enough value to offset minimal gains of tax drag on an investment.
You need to keep the receipts regardless of whether you use the HSA now or wait til later. Actually, it is even more important to keep track of them if you use the HSA now...in case of audit, IRS is not going to care about what you didn't take out of HSA yet...
Except you have to maintain receipts for 3 years to support and audit. And using your HSA debit card on a medical bill would be a whole lot easier to navigate in case of an audit.

If you hoard your HSA, you have to maintain receipts for potentially decades and then for 3 years after you finally make your withdrawal.

Can you not see how one may be a tad bit more simplistic for those that might be a bit scatterbrained? I am biased to either approach, but think it can vary by individual.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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