High deductible health plans, HSA

blondie42107 · October 2016

smerka said:

DHs HR person told me she thinks everyone will go to a HDHP with an HSA. Kind of like everyone went from an HMO to a PPO. It definitely holds you more accountable to checking the bills thoroughly when you're paying the whole thing.

I wouldn't be opposed to this as long as the deductibles/OOP Maxes were reasonable.

hoffse · October 2016

To clarify a couple things, even if you think your plan has a high deductible, it has to be en eligible high deductible plan to have an HSA. Your plan document and/or summary plan description should tell you what category of plan you have.

PP is right that the max deductible on a HDHP plan for 2016 is $6,550 for individuals.

@Brij, I believe you can frontload your contributions if you have an HSA outside of your employer. My HSA is through my employer, but my understanding of independent HSAs is that you can fund them all at once, a lot like an IRA.

Putting on my tax-geek hat here - HSAs are amazing because they are one of the few true double-dips the IRS permits. You can take a tax write-off when the money goes in, but you do NOT have to pay taxes when the money is taken out for qualified health care (unlike 401(k) and regular IRA contributions where you pay ordinary income tax on those withdrawals).

Also, the money in an HSA can be invested - and the gains are also not taxed if withdrawn for qualified health care (triple dip?)

The accounts are also portable and roll over from year to year. You are never at risk of losing that money like you are with an FSA.

Finally, you can submit receipts in 2016 and wait until 2040 or whatever to withdraw that money. So whenever it's possible to cash flow or pay for medical care out of your regular savings, that's preferable. The HSA can then be used as part of your emergency fund or - eventually - a component of your retirement plan.

AprilZ81 · October 2016

@brij2006

Have you looked at filing as "married filing separately"? That might allow you to meet the 10% AGI on your income to get the write off.

I know I will be asking our accountant that question, because my medical expenses will be more than 10% of my income, but not our joint income. Depending our overall situation it still might be better for us to file jointly, but I'll leave that up to our accountant.

hoffse · October 2016

You can't contribute to a Roth IRA when you file married/separate (unless your income is piddly - it's something like $10K).

Just FYI. Every once in awhile married/separate makes sense, but if you contribute to a Roth IRA in the current year odds are very high your accountant won't have any choice except to have you file married/joint.

AprilZ81 · October 2016

hoffse said:

You can't contribute to a Roth IRA when you file married/separate (unless your income is piddly - it's something like $10K).

Just FYI. Every once in awhile married/separate makes sense, but if you contribute to a Roth IRA in the current year odds are very high your accountant won't have any choice except to have you file married/joint.

Wait, WHAT?!?!

How would that affect your chance to fund a ROTH? As long as you don't make too much money why would filing separately penalize us?

smerka · October 2016

Because you lose out on a lot of credits if you file MFS. You need to have the tax person run it both ways and see which way works better. Don't forget if you're claiming medical expenses, mileage, parking, and tolls can be included. https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2016

AprilZ81 · October 2016

smerka said:

Because you lose out on a lot of credits if you file MFS. You need to have the tax person run it both ways and see which way works better. Don't forget if you're claiming medical expenses, mileage, parking, and tolls can be included. https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2016

Well that just sucks... We've already been contributing to our ROTHs so filing separately is out for us. That totally sucks. We are going to have over $6000 in medical expenses plus our premiums (which I know are already pre-tax).

hoffse · October 2016

AprilZ81 said:

hoffse said:

You can't contribute to a Roth IRA when you file married/separate (unless your income is piddly - it's something like $10K).

Just FYI. Every once in awhile married/separate makes sense, but if you contribute to a Roth IRA in the current year odds are very high your accountant won't have any choice except to have you file married/joint.

Wait, WHAT?!?!

How would that affect your chance to fund a ROTH? As long as you don't make too much money why would filing separately penalize us?

Yeah, MFS is not ideal for most people. They have that rule so higher income earners can't get around the income limits by filing separately. It's stupid because you can always do a conversion to get around that income limit, but I digress.

Unfortunately, that's the rule. You lose a lot of credits and such by filing separate.

If you guys have already contributed to your Roths for this year, you will need to file married joint, unless you can undo the Roth contribution (and I have no idea if you can - you probably can, but what a headache). If you HAVEN'T contributed yet, talk to you accountant before you do because for this year it really might make sense for you guys to file separate and just increase your 401Ks or do taxable investments to offset the stupid Roth rule. If he determines it's better to file joint, then you can do a retroactive Roth contribution in the spring.

Or just number crunch and approximate it yourselves. Look at your prior year tax returns to get a sense of how your accountant does it.

AprilZ81 · October 2016

hoffse said:

AprilZ81 said:

hoffse said:

You can't contribute to a Roth IRA when you file married/separate (unless your income is piddly - it's something like $10K).

Just FYI. Every once in awhile married/separate makes sense, but if you contribute to a Roth IRA in the current year odds are very high your accountant won't have any choice except to have you file married/joint.

Wait, WHAT?!?!

How would that affect your chance to fund a ROTH? As long as you don't make too much money why would filing separately penalize us?

Yeah, MFS is not ideal for most people. They have that rule so higher income earners can't get around the income limits by filing separately. It's stupid because you can always do a conversion to get around that income limit, but I digress.

Unfortunately, that's the rule. You lose a lot of credits and such by filing separate.

If you guys have already contributed to your Roths for this year, you will need to file married joint, unless you can undo the Roth contribution (and I have no idea if you can - you probably can, but what a headache). If you HAVEN'T contributed yet, talk to you accountant before you do because for this year it really might make sense for you guys to file separate and just increase your 401Ks or do taxable investments to offset the stupid Roth rule. If he determines it's better to file joint, then you can do a retroactive Roth contribution in the spring.

Or just number crunch and approximate it yourselves. Look at your prior year tax returns to get a sense of how your accountant does it.

The first year we were married it made sense to file separately, but that was the last year I didn't have a ROTH of my own, but I know DH did. I know our accountant always runs it both ways to see what is better.

We also aren't close to the maximum earnings amount so I feel like it is doubly unfair! But I'm just whining now, so feel free to move on. lol

High deductible health plans, HSA

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