Tell me how you use your HSA?

[Anonymous]

Anonymous wrote:We have about 40K in HSAs invested. Don't plan on touching it for medical expenses. We just pay out of pocket for medical expenses.

I love the HSA. It combines the best of a regular IRA and Roth IRA (tax free going in and tax free coming out) except that it's limited to medical expenses.

Here's the best part. The IRS does not really track how it is spent nor ask you to prove it was spent for medical expenses. For instance, about 3+ years ago, I withdrew $10K from that account to invest in the stock market by mistake (instead of liquidating a deposit account with the bank). The bank wouldn't "fix" my mistake because it was several months before I realized. The IRS did not come after me to prove I used it for medical expenses.

Not yet, but if you are audited, you will be in hot water. You know you could have completed a form and sent the HSA custodian a check for the money taken in error (maybe you still can) to set things right and not have to worry about the possibility of getting "caught."

[Anonymous]

Anonymous wrote:what are the benefits of having one? can you take money out at any time for any reason?

Once you hit 65, you can treat the HSA like an IRA.
Before you are 65, you have to pay tax penalties for non-medical withdrawals (unless you're the PP above!!)

From what I've read, people use HSAs one of two ways:
-- Manage cash flow during the year when dealing with big medical bills and a high deductible health plan.
-- As a retirement plan.

[Anonymous]

My HSA gets barely 1% YTD interest, so it's not my retirement plan. I use it for medical expenses.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have about 40K in HSAs invested. Don't plan on touching it for medical expenses. We just pay out of pocket for medical expenses.

I love the HSA. It combines the best of a regular IRA and Roth IRA (tax free going in and tax free coming out) except that it's limited to medical expenses.

Here's the best part. The IRS does not really track how it is spent nor ask you to prove it was spent for medical expenses. For instance, about 3+ years ago, I withdrew $10K from that account to invest in the stock market by mistake (instead of liquidating a deposit account with the bank). The bank wouldn't "fix" my mistake because it was several months before I realized. The IRS did not come after me to prove I used it for medical expenses.

Not yet, but if you are audited, you will be in hot water. You know you could have completed a form and sent the HSA custodian a check for the money taken in error (maybe you still can) to set things right and not have to worry about the possibility of getting "caught."

I did not know about the form (nor did the credit union where I had this account). This was a while back and I doubt the IRS will come after me. If they do, I will have to pull medical receipts from the past that can go against that amount. At least that's the theory. .

My point is, audit likelihood in general very low 1 in 160 or 0.625%) . I'm not too worried about them opening the books on me. I know several people that do the backdoor Roth even though they are not qualified to do so and nothing has happened to them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:what are the benefits of having one? can you take money out at any time for any reason?

Once you hit 65, you can treat the HSA like an IRA.
Before you are 65, you have to pay tax penalties for non-medical withdrawals (unless you're the PP above!!)

From what I've read, people use HSAs one of two ways:
-- Manage cash flow during the year when dealing with big medical bills and a high deductible health plan.
-- As a retirement plan.

Can you withdraw money from HSA after 65 without pay tax?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:what are the benefits of having one? can you take money out at any time for any reason?

Once you hit 65, you can treat the HSA like an IRA.
Before you are 65, you have to pay tax penalties for non-medical withdrawals (unless you're the PP above!!)

From what I've read, people use HSAs one of two ways:
-- Manage cash flow during the year when dealing with big medical bills and a high deductible health plan.
-- As a retirement plan.

Can you withdraw money from HSA after 65 without pay tax?

Nevermind, quick google search says yes to no tax after 65.

[Anonymous]

We should have put more into it when we had it for the year we had a high deductible plan. The best thing to do is treat it like a retirement account and use cashflow or regular savings for medical expenses. But when DH left his company with a $2k balance, they started charging $5/mo for a maintenance fee and would only let us invest amounts over $1000. So in practice, the fee was eating away all our gains. I used it for medical expenses and closed the account.

[Anonymous]

Anonymous wrote:We should have put more into it when we had it for the year we had a high deductible plan. The best thing to do is treat it like a retirement account and use cashflow or regular savings for medical expenses. But when DH left his company with a $2k balance, they started charging $5/mo for a maintenance fee and would only let us invest amounts over $1000. So in practice, the fee was eating away all our gains. I used it for medical expenses and closed the account.

You could always move it to a low cost provider and invest the money.

[Anonymous]

Anonymous wrote:We should have put more into it when we had it for the year we had a high deductible plan. The best thing to do is treat it like a retirement account and use cashflow or regular savings for medical expenses. But when DH left his company with a $2k balance, they started charging $5/mo for a maintenance fee and would only let us invest amounts over $1000. So in practice, the fee was eating away all our gains. I used it for medical expenses and closed the account.

This is interesting. My company keeps saying "you take the money with you! If you leave it's yours!", but I hadn't though about the maintenance fees. Good plan to use it for medical expenses and then close it out.