HSAs in Retirement- No Tax Advantage?- No Point?

[bsloan1960]

I have a Health Savings account. Money is put into it Pre Tax by my employer- so the advantage is it is money that is never taxed.

I'm aware that some people have Health Savings account while retired. I'm wondering why... Unless money can be put into the HSA Pre Tax from pension payments you'd be putting money that has Already Been Taxed into the account. What would be the point of this?

I'm retiring soon and working on money strategy.

Thanks!

[retiredguy123]

The money that you deposit into the HSA can be invested, and the investment income will not be taxed. That is the tax advantage.

[Toymeister]

Why contribute to an HSA when retired? Well...

Retirement doesn't begin at 65 but the tax advantage of HSAs does. Ero, retirees under 65 can and should contribute to HSAs, if eligible.

[Keefelane66]

My employer provides $2700 annually for me and $1700 for my spouse into an HSA for medical related expenses. I can also claim on a voucher the amount deducted from my Social Security for Medicare Part B and get reimbursed $170.10 monthly or $2041 annually. Or purchase Supplemental Insurance like F plans reimbursed.

[bsloan1960]

The money that you deposit into the HSA can be invested, and the investment income will not be taxed. That is the tax advantage.

Really? Is it invested by a broker? If you only have a couple of thousand in there and you are pulling $50-100 dollars out per month you wouldn't see much gain.

My questions may seem silly, but this is a subject that I'm not well versed in.

[retiredguy123]

Really? Is it invested by a broker? If you only have a couple of thousand in there and you are pulling $50-100 dollars out per month you wouldn't see much gain.

My questions may seem silly, but this is a subject that I'm not well versed in.
I am not an expert on HSA's, but it seems to me that you could deposit the money into a Fidelity Investment account, and buy CDs or bonds and let the money accumulate tax free. You don't need to spend it until you need it. And, as long as you eventually use the money for qualified medical expenses, the earnings would not be taxed. I would suggest calling Fidelity and asking them what investment options you would have with their HSAs accounts. They also have an office at Lake Sumter.

[Kenswing]

Really? Is it invested by a broker? If you only have a couple of thousand in there and you are pulling $50-100 dollars out per month you wouldn't see much gain.

My questions may seem silly, but this is a subject that I'm not well versed in.We still have an HSA from my wife's previous company. She max'd it out every year and we hardly ever use it. We treat it like another 401K. We keep enough in the actual HSA to cover any deductible or copay we may have. The rest we transfer into an investment account which is attached to our HSA (same company). I select the funds that money is invested into. If we need more money in the HSA we can transfer it back from the investment account. We haven't touched the HSA since moving here, since the health insurance plan we currently have has no deductible. We're not yet 60 so that money just sits there earning (or not-lol) until we decide we need it.

[Babubhat]

The benefit is tax deferred compounding. You don’t withdraw until the bitter end is insight. Can put in index fund

[Haggar]

Why contribute to an HSA when retired? Well...

Retirement doesn't begin at 65 but the tax advantage of HSAs does. Ero, retirees under 65 can and should contribute to HSAs, if eligible.

The problem you have is you're not allowed to make non-qualified contributions to your HSA.

So using it as a tax deferral vehicle is disallowed and the growth is taxable.

Now that you have mixed non deductible with deductible how do you determine the non taxable withdrawals?

[retiredguy123]

The problem you have is you're not allowed to make non-qualified contributions to your HSA.

So using it as a tax deferral vehicle is disallowed and the growth is taxable.

Now that you have mixed non deductible with deductible how do you determine the non taxable withdrawals?
Huh? How did you conclude that he made non-qualified contributions? As long as you are enrolled in a qualified high-deductible health plan (HDHP) and are not on Social Security or another non-high deductible plan, you can contribute to an HSA.

[Haggar]

Huh? How did you conclude that he made non-qualified contributions? As long as you are enrolled in a qualified high-deductible health plan (HDHP) and are not on Social Security or another non-high deductible plan, you can contribute to an HSA.

One of the posters referred to "previously taxed money".

[retiredguy123]

One of the posters referred to "previously taxed money".
As I understand it, all HSA contributions are tax deductible. From "investmentfirms.com":

"How Do I Know If My HSA Contributions Are Tax Deductible?
All HSA contributions are tax deductible. The earnings from investments made through your HSA as well as withdrawals for medical expenses are also tax deductible. The tax advantages provided by an HSA makes it very attractive compared to more traditional types of medical coverage."

[bsloan1960]

Huh? How did you conclude that he made non-qualified contributions? As long as you are enrolled in a qualified high-deductible health plan (HDHP) and are not on Social Security or another non-high deductible plan, you can contribute to an HSA.

I will be on Social Security and Part A and Part B. I do have a high deductible BC/BS Health Insurance plan. With this in mind am I allowed to have a HSA?

[retiredguy123]

I will be on Social Security and Part A and Part B. I do have a high deductible BC/BS Health Insurance plan. With this in mind am I allowed to have a HSA?
If you are on Medicare, Part A or Part B or both, you are not eligible to contribute money to an HSA. But, you can still use the money in the HSA after you enroll in Medicare.

[mrf0151]

We love our HSA account. All funds are on a bank debit card. We use it to pay things like going to the dentist, Chiropractor, and other doctor visits that are not covered by Medicare. The best thing is we use this account to pay one of our Medicare part B annual payments. Put as much are you can into this tax-free account as it is one of the best tax shelters going!!

[valuemkt]

If you are on Medicare you are not eligible to contribute tax free to an HSA.

[bsloan1960]

If you are on Medicare you are not eligible to contribute tax free to an HSA.
Even if you have private insurance- such as BC/BS>

[retiredguy123]

Even if you have private insurance- such as BC/BS>
Yes. Having Medicare is a disqualifier for HSA contributions?

[Haggar]

As I understand it, all HSA contributions are tax deductible. From "investmentfirms.com":

"How Do I Know If My HSA Contributions Are Tax Deductible?
All HSA contributions are tax deductible. The earnings from investments made through your HSA as well as withdrawals for medical expenses are also tax deductible. The tax advantages provided by an HSA makes it very attractive compared to more traditional types of medical coverage."

Only qualified contributions are tax deductible. If you add extra money above the allowed and qualified limits it is not tax deductible.

The qualified contributions are tax deductible. The withdrawals for medical expenses are not tax deductible. They are not taxable income..

The earnings are also not tax deductible. These earnings are not taxed.

[Haggar]

Even if you have private insurance- such as BC/BS>

As long as you are not on medicare OR SOMETHING like a medicare advantage plan and have a high deductible plan you can contribute.

By the way a 6% tax on excess contributions each year until they are removed from the HSA.

[retiredguy123]

Only qualified contributions are tax deductible. If you add extra money above the allowed and qualified limits it is not tax deductible.

The qualified contributions are tax deductible. The withdrawals for medical expenses are not tax deductible. They are not taxable income..

The earnings are also not tax deductible. These earnings are not taxed.
Why would you make a non-qualified contribution to an HSA? To me, that would make no sense. Basically, it would be a mistake and not considered part of the HSA account. And, it would have no special tax treatment.

[jump4]

I am not an expert on HSA's, but it seems to me that you could deposit the money into a Fidelity Investment account, and buy CDs or bonds and let the money accumulate tax free. You don't need to spend it until you need it. And, as long as you eventually use the money for qualified medical expenses, the earnings would not be taxed. I would suggest calling Fidelity and asking them what investment options you would have with their HSAs accounts. They also have an office at Lake Sumter.

Fidelity is the best for HSAs (google Moringstar review of HSAs). Fidelity charges no fees for the HSA account, and offers some zero to low cost investment options.