Maybe dropping healthcare - Page 2

[carmel23]

Originally Posted by sunnysandiegan 

Just for clarification purposes, the IRS dictates the HSA rules not the bank/trustee. The IRS has cracked down on the rules. This year, for example, all payments/withdrawals for "medicine" (of any kind, even OTC) has to have a written prescription. Two years ago, when we were last able to contribute to our HSA, this was not the case. I looked up the rules on the IRS website since our HSA trustee is the same now as then. Even when you can no longer contribute, you can still take distributions for qualified medical expenses.

Anyway, that sort of thing doesn't concern me or my husband. We use the HSA for dental visits and eyeglasses. We would also use it for co-pays, if we have any. (We don't actually go to the doctor very often.) Our main purpose of having the HSA, though, is to build it up for supplemental retirement funds. DH's company does not have a 401k. We each have Roth IRAs and we max them out each year, but it is not enough to retire on. An HSA can be used for health expenses at any point in your life whether you can contribute anymore or not, so we use it for the random qualified medical expenses now and we build it for any potential unplanned health expenses in the future. It is treated like an IRA in many ways, just with a defined use. So, we just plan to build it more slowly for that defined use for the long-term. We look at it as it diverts health expenses away from our regular retirement funds when that time comes. It is a savings account meantime.

I found that it really depended on how the administrator interpreted the language. For example, in the past we had obtained prescriptions from our doctor for fish oil.  Fine with HSA administrator #1.  This was not acceptable to HSA administrator #2, they needed not only the prescription but an additional document from the doctor naming the specific illness that this was treating.  Because the prescription wasn't a strong enough indication that it was medically necessary. 

Also, in some HSA's if the employer contributes a portion to the HSA, and the individual does not use that money by the end of the year, it goes back to the employer.  So it is a total bate and switch, IMO.

[kristandthekids]

I do think it's crap that HSAs quit covering OTC stuff. But insurance wouldn't be covering those things either.

I guess I look at it from the perspective of my ex paying so much for insurance on healthy kids. In two months he would have both their annual checkups paid for. Then I could use the rest towards their glasses and their dental instead of worrying is this covered or is that in our plan or am I allowed to see that doc will they take the insurance. I always end up paying for their eye exams and glasses because nobody wants to deal with his crappy insurance. Even if that jerk (or an employer) got the unused money at the end of the year, that's better than it going to some big corp CEO as a bonus.

[sunnysandiegan]

It doesn't sound like the same type of HSA I have. There is no "administrator" and the money stays in the account until you choose to use it. Our HSA accounts have been with a credit union and an online bank. I have total control over when I use the money or not. The trustee is the "bank", but they only track the contributions and distributions in terms of dollar amounts and report that to the IRS each year. They don't approve or even see what we use the money for. The only real "problem" would occur if we were audited by the IRS and had used the funds in a non-qualified way. Big transactions might attract the trustees attention, but ultimately the taxpayer is the one responsible for how the money is contributed and disbursed from an HSA.

What you are describing sounds like a FSA (flexible spending account), which is administered by companies and usually handled by the HR dept. Those have quite a few rules and a lot of people have issues with them. They offer tax benefits, too, but are not the same as an HSA.

There may be other types of trustees for HSAs that I have not come across, but ours was chosen by me and is only controlled by us. It has nothing to do with DH's employer. Our original HDHP was through DH's company and they still had nothing to do with the HSA. The HSA is individually owned, even if DH's company chose to contribute on our behalf. This is clearly stated in the IRS publication. The new HDHP is an individual policy I got on my own. I just called up the bank where our HSA is and asked if I could start contributing again. (The old HDHP was a family plan, which is why I was asking.) I had to open a new HSA in my name and add my DH as the authorized user. The other HSA was the opposite. We can transfer the funds from one to the other in order to earn more interest (tiered interest rates) and to avoid any fees (fees only occur if balance is below a certain amount after 3 months). This will be a non-reportable transfer (no tax consequences). These are normal banking and IRS things ... not unlike IRAs.