| Here's a bit of info about HSAs (Health Savings Accounts) since there are a few questions about them. In particular I'll contrast them with FSAs: Like an FSA, pre-tax money goes into an HSA, and you can withdraw from it tax-free for qualifying medical expenses. You can also make taxable withdrawals with no penalty for non-medical purposes after age 65. Unlike an FSA, an HSA is a real savings account and not a use-it-or-lose-it account. You own the money in it; it doesn't vanish at the end of the year. You don't have to get an HSA from the same provider as your medical plan. You simply need to get an HSA-compatible medical plan like the ones mentioned in the article, and then you can open an HSA anywhere they are offered. Once you have that plan, you can open the HSA any time you want. There is no "enrollment period" for an HSA when you open it separately from your medical plan. You don't have to get an HSA that is "managed" in the way that most FSAs are. Instead, you can get an HSA that works like a checking account: You have your own checkbook and an ATM card that works at medical providers. Rather than submitting claim forms and getting reimbursed, you simply write checks or use the ATM card to pay your medical bills. Or if you use other funds (checking, credit card, whatever) to pay a medical bill, you can write a check to yourself from your HSA to reimburse yourself. With this type of HSA, you don't have to decide ahead of time how much you will be putting into it. You get deposit slips or a way to make online deposits, and it's up to you to decide how much and how often to contribute, subject to the maximum contribution limits. If you're maxing out your other retirement account options, you can contribute to your HSA but pay your medical expenses out-of-pocket, so your HSA balance grows like another IRA. This kind of HSA is also portable: if you change insurance companies or plans, you can keep the same HSA instead of having to transfer it to your new provider. As long as your new medical plan is still HSA-compatible, you can keep contributing to the HSA. If you change to a medical plan that is no longer HSA-compatible, you can keep your HSA and continue to use it for medical expenses, or let the money sit in it as long as you want. You just can't make additional contributions to the HSA. I use HSA Bank for my HSA: http://www.hsabank.com/ At the time I opened my HSA many years ago, they were one of the few options for the type of self-managed HSA I wanted. I looked at other banks as well, but they were offering traditional managed HSAs where I'd have to deal with reimbursement forms. I would hope there are a number of other options for self-managed HSAs these days, but at least this is one place to look at. (I have no affiliation with them other than as long-time customer.) I recently talked with the COO of a mid-size software company who was looking into HSAs and their payroll/insurance provider was pushing combined plans that included the medical and HSA into one managed plan. When I recommended he look into these self-managed HSAs and described them to him, he asked, "Is that legal?" I assured them that it is and that I've had one for many years. :-) |
It's essentially a Roth IRA; it actually makes sense, due to compounding, to pay cash for anything your insurance doesn't cover, and max out your HSA every year, keeping it in there, and reinvesting. Well, it makes sense if 1) you have enough income or assets to want to shift an extra $3k/yr into Roth IRA equivalent and 2) you don't fear the law will change before you retire or need lots of uninsured health care money.