Open Enrollment and HSA's

I have a Health Savings Account. It requires that I choose insurance which is compatible with it. This greatly limits my insurance options but I am still probably choosing a similar plan than one I would choose without it. The plan does cost a little more than the one that isn't HSA compatible. I did this for the tax advantage. I can deposit up to $5,150 this year (I get the $1000 additional amount because I'm over 55.) The account this money is in gets a little better interest than a regular money market. The big advantage is the $5,150 tax deduction. I do not ever have to pay tax on the proceeds from this account if the money is used for medical expenses. When I turn 65, I can take the money out and use it for anything but I would have to pay taxes if I don't use it for medical. The account can not be used to pay premiums. As far as I understand, there is no requirement to ever take money out of it so it is like an IRA that doesn't have Required Minimum distribution.

I have a debit card I can use for medical expenses. I keep the receipts and I report on my taxes how much I spent each year. Of course you also have the bank statement that shows what you spent but you need the receipts in case of an audit.

Adding: my info is for a HCFSA, a flexible spending account. This is not the same as an HSA, like the poster above was referring. Sorry!

So I'm not sure which one you mean--they are two different things. My HCFSA has a card that carries a balance and is easy to use.

If you had to use the amount by the end of the year that is an FSA. A HSA has no use by date. Your money on the hsa rolls over every year inlike a fsa.

To have a HSA you have to have a high deductible plan. We have both. Currently our hsa has over $30k in it. We pay what bills we can without dipping in it and use it for bigger bills. What we pay in cash we claim on our taxes. We like having the hsa as a type of nest egg for when we retire.

As said above, the money going into the hsa is taken out of your paycheck pre-tax. You never pay taxes on that money unless you use it for something that you can't claim as medical.

We ran the numbers and even with the higher deductible we actually save money because we meet our deductible pretty quickly with my medications and health issues.

Does that help?




Edited to add: we do get a credit/debt card for our hsa. We use our airlines credit cards to get the miles and just submit our claim to our hsa to be reimbursed online and it is put directly into our checking account.