HSA Help/Tax Expert Needed

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Thegame14
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HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 8:21 pm

DW and I are having a baby February 2019. We can contribute to FSA at work up to $2,600 each for a total of $5,200. DW has family coverage insurance provided by her employer but we can change it for 2019 if it makes sense. Right now the plan we have DW pays $25 a month and it has a deductible of $1,000 per person, $3,000 family. According to Insperity her HR outsourced service provider this is not a HSA and she cannot open one through her employer.

I called Fidelity and asked them about opening an HSA and they said no problem as long as you qualify based on IRS publication 969 you can sign up and it is all self reported no one checks to make sure you qualify, but I assume if I am wrong it will be bad. According to IRS publication 969 a HDHP is one that has an individual deductible of $1,350 or family deductible of $3,000. Since her plan is a family plan and the deductible is $3,000 IMO we qualify for an HSA, and they even said I can fully fund the max of $6,900 for 2018 and I can do a transfer from an IRA to not have to come out of pocket for 2018 and then in 2019 I can fund in through payroll deductions.

Which one is right? Fidelity says I am right I can do it, Insperity says no. I read the publication and believe it qualifies. Worst case I guess, I don't qualify for 2018 and can choose the official HDHP for 2019 that has a lower out of pocket max, be able to fund the $6,900 for the HSA since I assume having a baby will max out our family out of pocket max for the year.

Please advise.

crazygrow
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Re: HSA Help/Tax Expert Needed

Post by crazygrow » Thu Nov 29, 2018 8:24 pm

If it isn't an official HDHP then no HSA.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 8:25 pm

crazygrow wrote:
Thu Nov 29, 2018 8:24 pm
If it isn't an official HDHP then no HSA.
If it meets the definition according to IRS publication why not?

mhalley
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Re: HSA Help/Tax Expert Needed

Post by mhalley » Thu Nov 29, 2018 8:26 pm

There are multiple requirements for an insurance plan to be hsa compliant in addition to the deductable, in general insurance co want you to know and the fact that a plan is hsa compliant will be featured prominently in its literature.
. High deductibles are not the only requirement for an HDHP to be HSA eligible. As defined by the IRS, HSA qualified HDHPs have:

A higher deductible than typical individual health insurance plans.
A maximum limit on the annual deductible and medical expense costs, including copays and other items.
No insurance coverage until the deductible is met, except for the following expenses:
Health insurance premiums
Wellness and preventive care (e.g., checkups, mammograms, smoking cessation, weight loss)
Expenses resulting from accidents
Dental expenses
Vision expenses
https://www.peoplekeep.com/blog/how-to- ... -qualified

More info here
https://thefinancebuff.com/not-all-high ... gible.html
Last edited by mhalley on Thu Nov 29, 2018 8:35 pm, edited 2 times in total.


Topic Author
Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 8:29 pm


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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 8:31 pm

again I am no expert, but to me the problem and reason why it isn't declared a HDHP plan is that single deductible is $1,000 vs the IRS says for single plan the deductible needs to be at least $1,350, but we have the family coverage with the $3,000 deductible and the IRS says the minimum needs to be at least $2,700, so to me it seems like if you take this plan as a single coverage it does not qualify, but as family coverage it does apply.

crazygrow
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Re: HSA Help/Tax Expert Needed

Post by crazygrow » Thu Nov 29, 2018 8:40 pm

It doesnt matter what you feel but what your company reports. If it was hsa compliant they would be offering you an HSA. Which it sounds like they arent.

From the linked article and probably why yours doesnt qualify:
Besides a high deductible, in order to qualify as an HDHP, a health insurance plan must also not offer any benefit beyond preventive care before you meet the annual deductible. An otherwise high deductible plan fails the HSA qualification when it tries to be nice and it gives you some benefits before you meet the deductible.

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Nate79
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Re: HSA Help/Tax Expert Needed

Post by Nate79 » Thu Nov 29, 2018 8:50 pm

In almost all cases an HSA compatible plan will be called an HDHP with HSA in the plan name. It is irrelevant to the discussion to look at the basic info like deductibles and try and determine if your plan is compatible with an HSA.

Call your insurance company.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 9:22 pm

Nate79 wrote:
Thu Nov 29, 2018 8:50 pm
In almost all cases an HSA compatible plan will be called an HDHP with HSA in the plan name. It is irrelevant to the discussion to look at the basic info like deductibles and try and determine if your plan is compatible with an HSA.

Call your insurance company.
Can I call them directly? That would probably help, Insperity said it doesn't qualify, but talking to Fidelity they say it doesn't qualify to open through the employer, but that doesn't mean I cant open in myself through Fidelity. They said as long as the deductible is over $2,700 it qualifies and I can open it through them.

Big Dog
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Re: HSA Help/Tax Expert Needed

Post by Big Dog » Thu Nov 29, 2018 9:27 pm

Right now the plan we have DW pays $25 a month and it has a deductible of $1,000 per person, $3,000 family. According to Insperity her HR outsourced service provider this is not a HSA and she cannot open one through her employer.
And HR is correct. A couple of seconds of googling will show that an HSA compliant HD plan MUST have a deductible of no less than $1350 for the individual and $2700 for a family. The current plan that you are enrolled in is more generous than that and therefore does not qualify for HSA.

https://www.healthcare.gov/glossary/hig ... alth-plan/
Last edited by Big Dog on Thu Nov 29, 2018 9:28 pm, edited 1 time in total.

crazygrow
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Re: HSA Help/Tax Expert Needed

Post by crazygrow » Thu Nov 29, 2018 9:28 pm

Yes you can call them directly.

Fidelity isn't the expert and also doesn't care if you mess up. They aren't penalized - you are.

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Nate79
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Re: HSA Help/Tax Expert Needed

Post by Nate79 » Thu Nov 29, 2018 9:31 pm

Thegame14 wrote:
Thu Nov 29, 2018 9:22 pm
Nate79 wrote:
Thu Nov 29, 2018 8:50 pm
In almost all cases an HSA compatible plan will be called an HDHP with HSA in the plan name. It is irrelevant to the discussion to look at the basic info like deductibles and try and determine if your plan is compatible with an HSA.

Call your insurance company.
Can I call them directly? That would probably help, Insperity said it doesn't qualify, but talking to Fidelity they say it doesn't qualify to open through the employer, but that doesn't mean I cant open in myself through Fidelity. They said as long as the deductible is over $2,700 it qualifies and I can open it through them.
If the company plan documents for your insurance doesn't say HSA in the title the chance is almost zero but you can call the insurance company to confirm.

Fidelity is so far wrong its sad.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 9:32 pm

Big Dog wrote:
Thu Nov 29, 2018 9:27 pm
Right now the plan we have DW pays $25 a month and it has a deductible of $1,000 per person, $3,000 family. According to Insperity her HR outsourced service provider this is not a HSA and she cannot open one through her employer.
And HR is correct. A couple of seconds of googling will show that an HSA compliant HD plan MUST have a deductible of no less than $1350 for the individual and $2700 for a family. The current plan that you are enrolled in is more generous than that and therefore does not qualify for HSA.

https://www.healthcare.gov/glossary/hig ... alth-plan/
How is it more generous that than, the family deductible is $3,000??? I am guessing that is the problem that the single person coverage options is NOT compliant, but the family coverage is.

crazygrow
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Re: HSA Help/Tax Expert Needed

Post by crazygrow » Thu Nov 29, 2018 9:38 pm

Thegame14 wrote:
Thu Nov 29, 2018 9:32 pm
Big Dog wrote:
Thu Nov 29, 2018 9:27 pm
Right now the plan we have DW pays $25 a month and it has a deductible of $1,000 per person, $3,000 family. According to Insperity her HR outsourced service provider this is not a HSA and she cannot open one through her employer.
And HR is correct. A couple of seconds of googling will show that an HSA compliant HD plan MUST have a deductible of no less than $1350 for the individual and $2700 for a family. The current plan that you are enrolled in is more generous than that and therefore does not qualify for HSA.

https://www.healthcare.gov/glossary/hig ... alth-plan/
How is it more generous that than, the family deductible is $3,000??? I am guessing that is the problem that the single person coverage options is NOT compliant, but the family coverage is.
Did you actually read the posted articles that a member kindly googled for you? The single deductible is one problem but isn't likely the major one.
Last edited by crazygrow on Thu Nov 29, 2018 9:39 pm, edited 1 time in total.

Topic Author
Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 9:38 pm

yes I did

"The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family. "

The family deductible is higher than the $2,700 amount since it is $3,000 and $3,000 is more than $2,700 according to MATH.

the total yearly out of pocket cant be more than $13,300 and the out of pocket max is $10,000 and $10,000 is less than $13,300 according to MATH, so then based on MATH, the plan should qualify.

crazygrow
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Re: HSA Help/Tax Expert Needed

Post by crazygrow » Thu Nov 29, 2018 9:42 pm

Thegame14 wrote:
Thu Nov 29, 2018 9:38 pm
yes I did

"The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family. "

The family deductible is higher than the $2,700 amount since it is $3,000 and $3,000 is more than $2,700 according to MATH.

the total yearly out of pocket cant be more than $13,300 and the out of pocket max is $10,000 and $10,000 is less than $13,300 according to MATH, so then based on MATH, the plan should qualify.
Re-read the articles. The deductible is one component.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 9:44 pm

crazygrow wrote:
Thu Nov 29, 2018 9:42 pm
Thegame14 wrote:
Thu Nov 29, 2018 9:38 pm
yes I did

"The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family. "

The family deductible is higher than the $2,700 amount since it is $3,000 and $3,000 is more than $2,700 according to MATH.

the total yearly out of pocket cant be more than $13,300 and the out of pocket max is $10,000 and $10,000 is less than $13,300 according to MATH, so then based on MATH, the plan should qualify.
Re-read the articles. The deductible is one component.
right but the other components are:

You must be covered under an HDHP. which based on math this should be a HDHP
You must have no other health coverage, with the exception of several types of ancillary coverage. we have no other health coverage
You must not be enrolled in Medicare. we are not enrolled in medicare
You cannot be claimed as a dependent on someone else's tax return. We file MFJ.

so none of these things disqualify us for HSA

crazygrow
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Re: HSA Help/Tax Expert Needed

Post by crazygrow » Thu Nov 29, 2018 9:46 pm

It is likely this that makes your plan not eligible:
"Besides a high deductible, in order to qualify as an HDHP, a health insurance plan must also not offer any benefit beyond preventive care before you meet the annual deductible. An otherwise high deductible plan fails the HSA qualification when it tries to be nice and it gives you some benefits before you meet the deductible"

Regardless I wish you luck with the new kiddo but your posts come across as really emotional so I'm stepping g out of this thread.

Soon2BXProgrammer
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Re: HSA Help/Tax Expert Needed

Post by Soon2BXProgrammer » Thu Nov 29, 2018 9:49 pm

crazygrow wrote:
Thu Nov 29, 2018 9:46 pm
It is likely this that makes your plan not eligible:
"Besides a high deductible, in order to qualify as an HDHP, a health insurance plan must also not offer any benefit beyond preventive care before you meet the annual deductible. An otherwise high deductible plan fails the HSA qualification when it tries to be nice and it gives you some benefits before you meet the deductible"

Regardless I wish you luck with the new kiddo but your posts come across as really emotional so I'm stepping g out of this thread.
furthermore, normally a giveaway that a plan isn't compliant is if it is a "family plan" and has an "individual" deductible component...

normally compliant family HDHP only have a family deducible.

dknightd
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Re: HSA Help/Tax Expert Needed

Post by dknightd » Thu Nov 29, 2018 9:58 pm

Your DW seems to have a good plan. Don't try to nickle and dime the costs.
This is why we have emergency funds. Birth is a tiny percentage of the cost of a child.
Enjoy the moment. Pay the deductible. Smile and be happy.
Congratulations on making a new person :)

If you feel you need expert help, then hire an expert@!

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FiveK
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Re: HSA Help/Tax Expert Needed

Post by FiveK » Thu Nov 29, 2018 10:01 pm

See https://www.irs.gov/pub/irs-pdf/p969.pdf (note that as of this date the numbers are for 2017):
Family plans that don’t meet the high deductible rules.
There are some family plans that have deductibles for both the family as a whole and for individual family
members. Under these plans, if you meet the individual deductible for one family member, you don’t have to meet
the higher annual deductible amount for the family. If either the deductible for the family as a whole or the deduc-
tible for an individual family member is less than the minimum annual deductible for family coverage, the plan
doesn’t qualify as an HDHP.
Example.
You have family health insurance coverage in 2017. The annual deductible for the family plan is
$3,500. This plan also has an individual deductible of $1,500 for each family member. The plan doesn’t qualify
as an HDHP because the deductible for an individual family member is less than the minimum annual deductible
($2,600) for family coverage.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 10:03 pm

Soon2BXProgrammer wrote:
Thu Nov 29, 2018 9:49 pm
crazygrow wrote:
Thu Nov 29, 2018 9:46 pm
It is likely this that makes your plan not eligible:
"Besides a high deductible, in order to qualify as an HDHP, a health insurance plan must also not offer any benefit beyond preventive care before you meet the annual deductible. An otherwise high deductible plan fails the HSA qualification when it tries to be nice and it gives you some benefits before you meet the deductible"

Regardless I wish you luck with the new kiddo but your posts come across as really emotional so I'm stepping g out of this thread.
furthermore, normally a giveaway that a plan isn't compliant is if it is a "family plan" and has an "individual" deductible component...

normally compliant family HDHP only have a family deducible.
There are plan options on her summary document that have HDHP listed plans that have both individual and family components, so this is not true.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 10:06 pm

FiveK wrote:
Thu Nov 29, 2018 10:01 pm
See https://www.irs.gov/pub/irs-pdf/p969.pdf (note that as of this date the numbers are for 2017):
Family plans that don’t meet the high deductible rules.
There are some family plans that have deductibles for both the family as a whole and for individual family
members. Under these plans, if you meet the individual deductible for one family member, you don’t have to meet
the higher annual deductible amount for the family. If either the deductible for the family as a whole or the deduc-
tible for an individual family member is less than the minimum annual deductible for family coverage, the plan
doesn’t qualify as an HDHP.
Example.
You have family health insurance coverage in 2017. The annual deductible for the family plan is
$3,500. This plan also has an individual deductible of $1,500 for each family member. The plan doesn’t qualify
as an HDHP because the deductible for an individual family member is less than the minimum annual deductible
($2,600) for family coverage.
this is what I think is the issue, but I don't get how you can co-mingle the deductibles, we have the family coverage plan with a family deductible of $3,000 which is more than the $2,700 to make it qualify. the individual deductible should not matter since we did not choose individual insurance, we chose family coverage, so the amount of the individual coverage is and should be irrelevant.

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celia
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Re: HSA Help/Tax Expert Needed

Post by celia » Thu Nov 29, 2018 10:12 pm

I agree that if doesn't sound like this plan is eligible.

For one thing, Pub. 969 says:
Family plans that don’t meet the high deductible rules.

There are some family plans that have deductibles for both the family as a whole and for individual family members. Under these plans, if you meet the individual deductible for one family member, you don’t have to meet the higher annual deductible amount for the family. If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan doesn’t qualify as an HDHP.
Thegame14 wrote:
Thu Nov 29, 2018 8:21 pm
We can contribute to FSA at work up to $2,600 each for a total of $5,200.
I think that making use of the FSA (Flexible Spending Account) will benefit you instead. The only stickler with that is projecting what your out-of-pocket medical costs will be for the year. Sign up for that instead.

And NO NOT use TIRA funds to fund a HSA, when you do become eligible. That is a waste of money that already is tax-deferred. Withdrawals from the TIRA can be spent on anything, whereas withdrawals from a HSA must be balanced with medical expenses. Just let your TIRA grow instead.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

Big Dog
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Re: HSA Help/Tax Expert Needed

Post by Big Dog » Thu Nov 29, 2018 10:13 pm

I am guessing that is the problem that the single person coverage options is NOT compliant,
Correct.

The deductible is one component.
It only takes one component to disqualify per IRS.
Last edited by Big Dog on Thu Nov 29, 2018 10:17 pm, edited 2 times in total.

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FiveK
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Re: HSA Help/Tax Expert Needed

Post by FiveK » Thu Nov 29, 2018 10:14 pm

Thegame14 wrote:
Thu Nov 29, 2018 10:06 pm
this is what I think is the issue, but I don't get how you can co-mingle the deductibles, we have the family coverage plan with a family deductible of $3,000 which is more than the $2,700 to make it qualify. the individual deductible should not matter since we did not choose individual insurance, we chose family coverage, so the amount of the individual coverage is and should be irrelevant.
Except it isn't irrelevant, because if any one individual incurs more than $1,000 expenses, your plan will start covering expenses for that individual.

The way the law was written, that makes it "not an HDHP."

Soon2BXProgrammer
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Re: HSA Help/Tax Expert Needed

Post by Soon2BXProgrammer » Thu Nov 29, 2018 10:22 pm

Thegame14 wrote:
Thu Nov 29, 2018 10:03 pm
Soon2BXProgrammer wrote:
Thu Nov 29, 2018 9:49 pm
crazygrow wrote:
Thu Nov 29, 2018 9:46 pm
It is likely this that makes your plan not eligible:
"Besides a high deductible, in order to qualify as an HDHP, a health insurance plan must also not offer any benefit beyond preventive care before you meet the annual deductible. An otherwise high deductible plan fails the HSA qualification when it tries to be nice and it gives you some benefits before you meet the deductible"

Regardless I wish you luck with the new kiddo but your posts come across as really emotional so I'm stepping g out of this thread.
furthermore, normally a giveaway that a plan isn't compliant is if it is a "family plan" and has an "individual" deductible component...

normally compliant family HDHP only have a family deducible.
There are plan options on her summary document that have HDHP listed plans that have both individual and family components, so this is not true.
normally the paperwork is really confusing. my employeer has been working to make it clearer, that even though its an HDHP and there is individual/family options.. if you pick individual, then you get all the individual levels, and if you pick family plan, you get all the family levels.

unfortunately, the way it looks is almost identical to how the individual/family levels looks on the traditional plan that has both caps in affect on a family plan..

while it is true that you can have an individual deductible on a family plan, it still has to be higher then the family minimum by law. this is why there isn't a lot of them in existence.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Thu Nov 29, 2018 10:25 pm

celia wrote:
Thu Nov 29, 2018 10:12 pm
I agree that if doesn't sound like this plan is eligible.

For one thing, Pub. 969 says:
Family plans that don’t meet the high deductible rules.

There are some family plans that have deductibles for both the family as a whole and for individual family members. Under these plans, if you meet the individual deductible for one family member, you don’t have to meet the higher annual deductible amount for the family. If either the deductible for the family as a whole or the deductible for an individual family member is less than the minimum annual deductible for family coverage, the plan doesn’t qualify as an HDHP.
Thegame14 wrote:
Thu Nov 29, 2018 8:21 pm
We can contribute to FSA at work up to $2,600 each for a total of $5,200.
I think that making use of the FSA (Flexible Spending Account) will benefit you instead. The only stickler with that is projecting what your out-of-pocket medical costs will be for the year. Sign up for that instead.

And NO NOT use TIRA funds to fund a HSA, when you do become eligible. That is a waste of money that already is tax-deferred. Withdrawals from the TIRA can be spent on anything, whereas withdrawals from a HSA must be balanced with medical expenses. Just let your TIRA grow instead.
We will be using the FSA but it caps out at $2,600 each for a total of $5,200 where this insurance plan the out of pocket max is $10,000, and I assume having a baby that we will hit the max and have a $10,000 bill, so I am trying to see how we can bridge that gap or else I have to pay the rest after taxes instead of pre tax, which of course makes a difference of hundreds of dollars and with a new baby, a $10,000 hospital bill, furniture, clothes and of course now 2 daycare bills, we need to save all we can. Plus I love the idea of an HSA being triple tax benefit. Now the big problem is that wife company rolls out new insurance each year in February/March and makes it retro and we will have the baby in between that time and how do you handle that, the insurance we have to give the hospital may be one plan, but then we can choose a HDHP compliant plan with a lower out of pocket max and then what happens???

Spirit Rider
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Re: HSA Help/Tax Expert Needed

Post by Spirit Rider » Thu Nov 29, 2018 10:28 pm

You are not reading or listening.

One basic rule for an HSA qualifying HDHP is that no reimbursement can occur before the plan type minimum deductible is met.

The family plan has a family deductible of $3,000 which is >= than the 2019 minimum family plan deductible of $2,700. However, if it has an imbedded individual deductible of $1,000. Then an individual can be reimbursed for expenses before the plan deductible is met.

It may also have co-pays which reimburse before the minimum deductible is met.

If either is true the HDHP plan is not HSA qualified.

Furthermore, if either spouse is enrolled in an FSA, that is considered other coverage that makes both spouses HSA ineligible.
Last edited by Spirit Rider on Thu Nov 29, 2018 10:31 pm, edited 1 time in total.

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FiveK
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Re: HSA Help/Tax Expert Needed

Post by FiveK » Thu Nov 29, 2018 10:30 pm

Thegame14 wrote:
Thu Nov 29, 2018 10:25 pm
Now the big problem is that wife company rolls out new insurance each year in February/March and makes it retro and we will have the baby in between that time and how do you handle that, the insurance we have to give the hospital may be one plan, but then we can choose a HDHP compliant plan with a lower out of pocket max and then what happens???
Yes, that's a problem. You can't establish an HSA until you are covered by a compliant HDHP, and you can't use the HSA to cover costs incurred prior to establishing an HSA.

dknightd
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Re: HSA Help/Tax Expert Needed

Post by dknightd » Thu Nov 29, 2018 10:37 pm

Thegame14 wrote:
Thu Nov 29, 2018 10:03 pm

There are plan options on her summary document that have HDHP listed plans that have both individual and family components, so this is not true.
This is ludicrous! Your Baby is due in Feb 2019. So you have had months to plan and investigate. And you are just starting now!?
And your concern is Taxes on health care coverage! Trust me, unless something goes very very wrong at delivery, the cost of delivering a child is a drop in the bucket.

My suggestion is to not worry about taxes on Healthcare to have your kid. Think about how much it will cost you to raise that kid.

You might want to consider condoms, or other methods, to have no more kids. Or just admit they are expensive.

SuzBanyan
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Re: HSA Help/Tax Expert Needed

Post by SuzBanyan » Thu Nov 29, 2018 10:41 pm

The issue is the FSA. “A health FSA that reimburses all qualified § 213(d) medical expenses without other restrictions is a health plan that constitutes other coverage.” https://www.irs.gov/irb/2005-49_IRB#d0e1151

You cannot contribute to an HSA even if you have a HDHP if you have “other coverage.” As noted above, the ability to contribute to an FSA constitutes “other coverage.”

TropikThunder
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Re: HSA Help/Tax Expert Needed

Post by TropikThunder » Thu Nov 29, 2018 10:45 pm

SuzBanyan wrote:
Thu Nov 29, 2018 10:41 pm
The issue is the FSA. “A health FSA that reimburses all qualified § 213(d) medical expenses without other restrictions is a health plan that constitutes other coverage.” https://www.irs.gov/irb/2005-49_IRB#d0e1151

You cannot contribute to an HSA even if you have a HDHP if you have “other coverage.” As noted above, the ability to contribute to an FSA constitutes “other coverage.”
Correct. You can have a Limited Purpose FSA (which can be used to pay for just vision and dental) but you can’t have a General Purpose FSA at the same time.

Soon2BXProgrammer
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Re: HSA Help/Tax Expert Needed

Post by Soon2BXProgrammer » Thu Nov 29, 2018 10:56 pm

Thegame14 wrote:
Thu Nov 29, 2018 10:25 pm
We will be using the FSA but it caps out at $2,600 each for a total of $5,200 where this insurance plan the out of pocket max is $10,000, and I assume having a baby that we will hit the max and have a $10,000 bill, so I am trying to see how we can bridge that gap or else I have to pay the rest after taxes instead of pre tax, which of course makes a difference of hundreds of dollars and with a new baby, a $10,000 hospital bill, furniture, clothes and of course now 2 daycare bills, we need to save all we can. Plus I love the idea of an HSA being triple tax benefit. Now the big problem is that wife company rolls out new insurance each year in February/March and makes it retro and we will have the baby in between that time and how do you handle that, the insurance we have to give the hospital may be one plan, but then we can choose a HDHP compliant plan with a lower out of pocket max and then what happens???
after your deductible, how much does your insurance cover? 60%? 70%? etc?

between negotiated rates, and then the insurance covering a decent percentage. i doubt you could hit 10k out of pocket, unless something goes really bad.

we had one child on a HDHP.. bill was like 17k, negotiated rate was like 7, then we paid our 2500 deductible and then 10% of the rest (as we had a 90% plan), therefore we paid about 3k..

you should talk to the hospital and insurance and while they can't tell you what your bill is. they should be able to give you some info about typical stays.

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MP123
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Re: HSA Help/Tax Expert Needed

Post by MP123 » Thu Nov 29, 2018 11:16 pm

TropikThunder wrote:
Thu Nov 29, 2018 10:45 pm
SuzBanyan wrote:
Thu Nov 29, 2018 10:41 pm
The issue is the FSA. “A health FSA that reimburses all qualified § 213(d) medical expenses without other restrictions is a health plan that constitutes other coverage.” https://www.irs.gov/irb/2005-49_IRB#d0e1151

You cannot contribute to an HSA even if you have a HDHP if you have “other coverage.” As noted above, the ability to contribute to an FSA constitutes “other coverage.”
Correct. You can have a Limited Purpose FSA (which can be used to pay for just vision and dental) but you can’t have a General Purpose FSA at the same time.
Agreed.

Between the FSA (the elephant in the room in this case) and the deductible the OP is not likely to be HSA eligible.

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Re: HSA Help/Tax Expert Needed

Post by Katietsu » Fri Nov 30, 2018 12:03 am

Now that it has been pointed out that you can not contribute to both a general FSA and an HSA, the OP will not feel so bad about not having a HSA eligible HDHP.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Fri Nov 30, 2018 9:01 am

Soon2BXProgrammer wrote:
Thu Nov 29, 2018 10:56 pm
Thegame14 wrote:
Thu Nov 29, 2018 10:25 pm
We will be using the FSA but it caps out at $2,600 each for a total of $5,200 where this insurance plan the out of pocket max is $10,000, and I assume having a baby that we will hit the max and have a $10,000 bill, so I am trying to see how we can bridge that gap or else I have to pay the rest after taxes instead of pre tax, which of course makes a difference of hundreds of dollars and with a new baby, a $10,000 hospital bill, furniture, clothes and of course now 2 daycare bills, we need to save all we can. Plus I love the idea of an HSA being triple tax benefit. Now the big problem is that wife company rolls out new insurance each year in February/March and makes it retro and we will have the baby in between that time and how do you handle that, the insurance we have to give the hospital may be one plan, but then we can choose a HDHP compliant plan with a lower out of pocket max and then what happens???
after your deductible, how much does your insurance cover? 60%? 70%? etc?

between negotiated rates, and then the insurance covering a decent percentage. i doubt you could hit 10k out of pocket, unless something goes really bad.

we had one child on a HDHP.. bill was like 17k, negotiated rate was like 7, then we paid our 2500 deductible and then 10% of the rest (as we had a 90% plan), therefore we paid about 3k..

you should talk to the hospital and insurance and while they can't tell you what your bill is. they should be able to give you some info about typical stays.
80%

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Re: HSA Help/Tax Expert Needed

Post by Soon2BXProgrammer » Fri Nov 30, 2018 9:31 am

Thegame14 wrote:
Fri Nov 30, 2018 9:01 am
Soon2BXProgrammer wrote:
Thu Nov 29, 2018 10:56 pm
Thegame14 wrote:
Thu Nov 29, 2018 10:25 pm
We will be using the FSA but it caps out at $2,600 each for a total of $5,200 where this insurance plan the out of pocket max is $10,000, and I assume having a baby that we will hit the max and have a $10,000 bill, so I am trying to see how we can bridge that gap or else I have to pay the rest after taxes instead of pre tax, which of course makes a difference of hundreds of dollars and with a new baby, a $10,000 hospital bill, furniture, clothes and of course now 2 daycare bills, we need to save all we can. Plus I love the idea of an HSA being triple tax benefit. Now the big problem is that wife company rolls out new insurance each year in February/March and makes it retro and we will have the baby in between that time and how do you handle that, the insurance we have to give the hospital may be one plan, but then we can choose a HDHP compliant plan with a lower out of pocket max and then what happens???
after your deductible, how much does your insurance cover? 60%? 70%? etc?

between negotiated rates, and then the insurance covering a decent percentage. i doubt you could hit 10k out of pocket, unless something goes really bad.

we had one child on a HDHP.. bill was like 17k, negotiated rate was like 7, then we paid our 2500 deductible and then 10% of the rest (as we had a 90% plan), therefore we paid about 3k..

you should talk to the hospital and insurance and while they can't tell you what your bill is. they should be able to give you some info about typical stays.
80%

i know things change and prices go up.. but that would mean you would need a hospital bill after negotiated rates of roughly 38k to hit the 10k out of pocket max.. yes things happen..but i don't think you should plan on that.. while you can plan for that possibility, unless you know something we don't, that isn't a "typical birthing stay"

38k - 3k deductible - 35k left over, and pay at 20% = 7k more to owe to hit your max oop at 10k.

(it probably would be even higher then this, because you have an individual deductible of 1k, and you wont have to hit the family deductible.. this is because normally, unless something goes haywire, all expenses are billed against the momma from insurance perspective, until a couple days into life of the child..... so it could need as high as 46k of expenses to hit your 10k oop max)

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Fri Nov 30, 2018 9:49 am

Soon2BXProgrammer wrote:
Fri Nov 30, 2018 9:31 am
Thegame14 wrote:
Fri Nov 30, 2018 9:01 am
Soon2BXProgrammer wrote:
Thu Nov 29, 2018 10:56 pm
Thegame14 wrote:
Thu Nov 29, 2018 10:25 pm
We will be using the FSA but it caps out at $2,600 each for a total of $5,200 where this insurance plan the out of pocket max is $10,000, and I assume having a baby that we will hit the max and have a $10,000 bill, so I am trying to see how we can bridge that gap or else I have to pay the rest after taxes instead of pre tax, which of course makes a difference of hundreds of dollars and with a new baby, a $10,000 hospital bill, furniture, clothes and of course now 2 daycare bills, we need to save all we can. Plus I love the idea of an HSA being triple tax benefit. Now the big problem is that wife company rolls out new insurance each year in February/March and makes it retro and we will have the baby in between that time and how do you handle that, the insurance we have to give the hospital may be one plan, but then we can choose a HDHP compliant plan with a lower out of pocket max and then what happens???
after your deductible, how much does your insurance cover? 60%? 70%? etc?

between negotiated rates, and then the insurance covering a decent percentage. i doubt you could hit 10k out of pocket, unless something goes really bad.

we had one child on a HDHP.. bill was like 17k, negotiated rate was like 7, then we paid our 2500 deductible and then 10% of the rest (as we had a 90% plan), therefore we paid about 3k..

you should talk to the hospital and insurance and while they can't tell you what your bill is. they should be able to give you some info about typical stays.
80%

i know things change and prices go up.. but that would mean you would need a hospital bill after negotiated rates of roughly 38k to hit the 10k out of pocket max.. yes things happen..but i don't think you should plan on that.. while you can plan for that possibility, unless you know something we don't, that isn't a "typical birthing stay"

38k - 3k deductible - 35k left over, and pay at 20% = 7k more to owe to hit your max oop at 10k.

(it probably would be even higher then this, because you have an individual deductible of 1k, and you wont have to hit the family deductible.. this is because normally, unless something goes haywire, all expenses are billed against the momma from insurance perspective, until a couple days into life of the child..... so it could need as high as 46k of expenses to hit your 10k oop max)
I am not sure, my wife said that as soon as the baby is born, they will start charging expenses to him separately. Either way it would have been nice to be able to have an HSA, now the main problem is her company doesn't announce the new insurance plans until February and March, but we will have to present the hospital with the insurance we have at the time which will be the old insurance, so I am worried about how that will work out. She had a co-worker who was in a similar situation last year and she said it was a big pain.

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Re: HSA Help/Tax Expert Needed

Post by Spirit Rider » Fri Nov 30, 2018 9:56 am

People change insurance plans all the time. It is only a pain If you are lazy and don't provide your healthcare providers with the new insurance information before dates of service that fall under the new plan.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Fri Nov 30, 2018 10:01 am

Spirit Rider wrote:
Fri Nov 30, 2018 9:56 am
People change insurance plans all the time. It is only a pain If you are lazy and don't provide your healthcare providers with the new insurance information before dates of service that fall under the new plan.
What do you mean? We are going to have the baby around Feb 6th, 2019, but her company wont have the 2019 health insurance plans finalized until march. SO then in March AFTER the date of service, we have to choose a new plan that her company retro's to Jan 1, 2019, so then the insurance we must provide to the hospital on February 6th will not be the actual insurance that we have once the company releases the new plans and does the retro unless we stay on the same plan as last year. And I am kind of thinking we should change to the official HDHP since it's out of pocket max is only $7,350 vs $10,000 and then we could do an HSA instead of an FSA, but again, we have to sign up for an FSA by December 31, which I already did, so what if I sign up for a 2019 FSA and then choose the HDHP plan???

Soon2BXProgrammer
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Re: HSA Help/Tax Expert Needed

Post by Soon2BXProgrammer » Fri Nov 30, 2018 10:04 am

Thegame14 wrote:
Fri Nov 30, 2018 10:01 am
...and then we could do an HSA instead of an FSA, but again, we have to sign up for an FSA by December 31, which I already did, so what if I sign up for a 2019 FSA and then choose the HDHP plan???
you can choose an HDHP, but you won't be eligible for an HSA

if you want to do an HSA for 2019, you should cancel the Medical FSA for 2019.

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Re: HSA Help/Tax Expert Needed

Post by Spirit Rider » Fri Nov 30, 2018 10:18 am

Thegame14 wrote:
Fri Nov 30, 2018 10:01 am
We are going to have the baby around Feb 6th, 2019, but her company wont have the 2019 health insurance plans finalized until march.
I have never heard of any company having an open enrollment and then retroactively applying coverage.

I think it is far more likely you misunderstand and don't realize that a company's health and welfare plan does not have to be a calendar year plan. A plan that you enroll in Feb/Mar may be effective Apr - Mar.
so what if I sign up for a 2019 FSA and then choose the HDHP plan???
You will be ineligible for HSA contributions.

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celia
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Re: HSA Help/Tax Expert Needed

Post by celia » Fri Nov 30, 2018 10:34 am

You can't use a FSA **AND** a HSA to reimburse you for the same out-of-pocket costs. That is not allowed.

Even if you could, since you can't open a HSA until after you are on the HDHP, the baby will have already been born and you can't cover expenses from the HDHP for an expense previously incurred.

So don't worry about this. Your choice has already been made. The only thing you can probably change is signing up for an additional insurance coverage through your employer.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Fri Nov 30, 2018 10:39 am

celia wrote:
Fri Nov 30, 2018 10:34 am
You can't use a FSA **AND** a HSA to reimburse you for the same out-of-pocket costs. That is not allowed.

Even if you could, since you can't open a HSA until after you are on the HDHP, the baby will have already been born and you can't cover expenses from the HDHP for an expense previously incurred.

So don't worry about this. Your choice has already been made. The only thing you can probably change is signing up for an additional insurance coverage through your employer.
and that is one of the many problems I am facing, our deadline to sign up for the 2019 FSA is December 31, 2018, we are told by her HR director that 2019 insurance plans wont be finalized and available to choose until late February/early March of 2019, and she says they will be retro to Jan 1, 2019. So how can I decide on an FSA by December 3, 2018, if I don't know what health insurance plan I am choosing until March, 2019?

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FiveK
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Re: HSA Help/Tax Expert Needed

Post by FiveK » Fri Nov 30, 2018 10:52 am

Thegame14 wrote:
Fri Nov 30, 2018 10:39 am
and that is one of the many problems I am facing, our deadline to sign up for the 2019 FSA is December 31, 2018, we are told by her HR director that 2019 insurance plans wont be finalized and available to choose until late February/early March of 2019, and she says they will be retro to Jan 1, 2019. So how can I decide on an FSA by December 3, 2018, if I don't know what health insurance plan I am choosing until March, 2019?
That's a great question for the HR director. It would be interesting to see the response.

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Re: HSA Help/Tax Expert Needed

Post by Spirit Rider » Fri Nov 30, 2018 11:05 am

FiveK wrote:
Fri Nov 30, 2018 10:52 am
Thegame14 wrote:
Fri Nov 30, 2018 10:39 am
and that is one of the many problems I am facing, our deadline to sign up for the 2019 FSA is December 31, 2018, we are told by her HR director that 2019 insurance plans wont be finalized and available to choose until late February/early March of 2019, and she says they will be retro to Jan 1, 2019. So how can I decide on an FSA by December 3, 2018, if I don't know what health insurance plan I am choosing until March, 2019?
That's a great question for the HR director. It would be interesting to see the response.
I agree.

If these are the facts, the HR department is incompetent and maybe even in non-compliance with IRS regulations.

Normally, you can not revoke a Section 125 plan election such as an FSA, but there is something rattling in the back of my mind. There may be an exception to this based on such facts and circumstances.

Certainly don't take any actions based on the vauge recollection of some anonymous internet guy. Check with HR to see if they can and will revoke the FSA election if you elect the HDHP plan when it is available.

Meanwhile, I will try to see if I can find any relevant IRS guidance.

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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 » Fri Nov 30, 2018 11:41 am

Spirit Rider wrote:
Fri Nov 30, 2018 11:05 am
FiveK wrote:
Fri Nov 30, 2018 10:52 am
Thegame14 wrote:
Fri Nov 30, 2018 10:39 am
and that is one of the many problems I am facing, our deadline to sign up for the 2019 FSA is December 31, 2018, we are told by her HR director that 2019 insurance plans wont be finalized and available to choose until late February/early March of 2019, and she says they will be retro to Jan 1, 2019. So how can I decide on an FSA by December 3, 2018, if I don't know what health insurance plan I am choosing until March, 2019?
That's a great question for the HR director. It would be interesting to see the response.
I agree.

If these are the facts, the HR department is incompetent and maybe even in non-compliance with IRS regulations.

Normally, you can not revoke a Section 125 plan election such as an FSA, but there is something rattling in the back of my mind. There may be an exception to this based on such facts and circumstances.

Certainly don't take any actions based on the vauge recollection of some anonymous internet guy. Check with HR to see if they can and will revoke the FSA election if you elect the HDHP plan when it is available.

Meanwhile, I will try to see if I can find any relevant IRS guidance.
The HR Person is not a traditional HR person, she is the sister of the founder of the company so I am not 100% confident in her. Also according to Insperity, also not confident in them as well, that the company is not allowed to have health insurance retroactively applied, but wife swears this has happened last few years and last year another woman had a baby in February and had problems with insurance.

Also insperity says if I elect FSA in 2018 for 2019 and then the plan I choose in March is a HDHP plan, then the FSA is forfeited. Which would be 2 months time two incomes at $216.66 a month so basically almost $1,000....

At this point the only logical thing is to just try to keep the same plan next year as we have right now, assuming it is offered.

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Re: HSA Help/Tax Expert Needed

Post by Atgard » Fri Nov 30, 2018 12:03 pm

Thegame14 wrote:
Thu Nov 29, 2018 9:38 pm
yes I did

"The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family. "

The family deductible is higher than the $2,700 amount since it is $3,000 and $3,000 is more than $2,700 according to MATH.
Family plans will usually quote both an individual deductible and a family deductible (usually 2x the individual). That means if Person 1 gets sick, he pays up until the individual deductible, then the plan starts to cover stuff. When Person 2 gets sick, they have a separate individual deductible before the plan starts covering stuff. Then when Person 3 gets sick (or maybe Person 4 in your example), you've finally reached the overall family deductible and the plan will cover stuff without Person 3/4 having to reach another separate individual deductible.

In other words, family plans have both individual and family deductibles that apply.
Soon2BXProgrammer wrote:
Thu Nov 29, 2018 9:49 pm
furthermore, normally a giveaway that a plan isn't compliant is if it is a "family plan" and has an "individual" deductible component...

normally compliant family HDHP only have a family deducible.
This is not accurate, as pointed out above.

In every case I've seen, the plan will have the word "HSA" right in the title if it qualifies. It may not due to some arcane rule (quite common is that the max out-of-pocket amount allowed under the ACA in general vs. for HSAs are tied to different indexes and have diverged, so plans don't qualify for an HSA if the OOP max is too high), you can try to figure it out but odds are if it were HSA compliant the insurer would label it as such, it's a big selling feature.

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