HSA (Health Savings Account)

[SlowHabit]

I've looked at HSAs but I didn't like them because of the high deductible per year. You have to pay a lot out of your own pocket until the insurance starts taking care of you.

So the factor that determines on whether or not you should get a regular health premium or a HDHP (HSA qualified) depend on whether you visit the doctor a lot.

FWIW, if you file as a pro, you don't need an HSA to deduct health care expenses. The great thing about HSA is you don't have to pay taxes on any gained interests and thus theoretically, you could have a huge account saved for health care expenses after your poker playing [or self-employed] days.

[cbloom]

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I've looked at HSAs but I didn't like them because of the high deductible per year. You have to pay a lot out of your own pocket until the insurance starts taking care of you.


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But your monthly fee is a lot lower. There's a certain balance. If you're young and healthy and expect to have some years where you don't go to a doctor at all, then an HSA+HDHP is a much better deal. If you have something huge happen, then it's roughly the same because with an HDHP you're paying like $50/month + $2000 deductible instead of $200 or $250/month.

BTW the FAR FAR more important thing with health insurance is to make sure you have 100% coverage past your deductible. Some of the budget plans are like a $1000 deductible and then 70% coverage after that. That can bankrupt you if something really bad happens, because 30% of a major surgery is still way too much.

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FWIW, if you file as a pro, you don't need an HSA to deduct health care expenses.

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That's not really true, so far as I know. For one thing you have to itemize, which for most young people is not a good deal, the standard deduction is better. But the big problem is this :

"You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income"

Hmmm.. but actually as I read the details you're right, there's an except for self employed people, you can deduct 100% and in fact you can deduct your premiums as an income adjustment. That's strange, I think even Russ Fox isn't doing that.

[EuroMetetron]

Ive been deducting my health insurance costs for years. It isnt something new.

[silentbob]

My firm has offered HSA+HDHP for the upcoming year. I did not go to the doctor once this year and my health has always been pretty good so presumably such a plan may be appropriate for me. If I do switch to the HSA+HDHP, is it EV+ for me to contribute the $2,900 max to the HSA even if (2,900+reduced HDHP premium) would be about $1,500 more annually than what I would spend next year on my existing higher premium?

My rationale is that because I'm in the 33% tax bracket, any pre-tax income deduction I can get by contributing to the HSA is free money, even if I don't use the funds anytime soon (because at worst, I can invest it at a money market rate). It would also eliminate any need for me to set aside money for flex-spending in future years. Is this reasoning sound or have I failed to consider other factors?

[krishan]

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FWIW, if you file as a pro, you don't need an HSA to deduct health care expenses. The great thing about HSA is you don't have to pay taxes on any gained interests and thus theoretically, you could have a huge account saved for health care expenses after your poker playing [or self-employed] days.

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I wasn't sure you could just deduct health care expenses as a pro. I know you can do insurance premiums but wasn't sure about other expenses.

Also, what about elective procedures? I'm pretty sure I can't just deduct laser eye surgery from income.

Krishan

[Jimbo]

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I wasn't sure you could just deduct health care expenses as a pro. I know you can do insurance premiums but wasn't sure about other expenses.


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You are correct, they can only be deducted to the extent that they qualify for under your itemized deductions (over 7% of the medical expenses) if you are a sole prop or partnership.

Jimbo