The Scam that is Health Savings Accounts

[haele]

44. I've had great experiance, also - but I can afford them now when I couldn't 6 years ago.

HSAs (and FSAs) are great for an individual that has health issues making over the equivalent of $20 an hour, or families making the equivalent of around $28 an hour, whether they're pre-tax or tax deductible.
We didn't have to save for braces when the kidlet finally decided to get her extra "eye-teeth" pulled and mouth straightened two years ago, nor did we have to wait and save for prescription glasses changes when they happened.

Full disclosure - I got my account through my previous employer as a WageWorks benefit along with $2500 max for an FSA, which meant before they laid me off last year, I was putting in the monthly max deduction pre-tax.

My current employer does not have a HSA, even though the insurance is a high deductible, so I was able to roll over the $2600+ I had in the HSA and the $124 FSA accrued (but not spent) into a personal HSA account offered by BNYM, and I now put in $200 a month to maintain it.

As my husband is disabled and needs to have lots of maintenance testing and medications, having that money available and dedicated to medical is literally a life-saver.
But again, I'm currently making enough that I can afford an HSA - at $200 a month and any extra money at the end of the month I might be able to spare to throw in on it.

If I were making $50K a year - or became unemployed or retired and eligible for Medicare/Medi-caid/Tricare, I'd seriously think twice about continuing the HSA, balancing the potential medical expenditures against what is required to pay the rent and keep food on the table every month.

The rate of interest return (not taxable, so long as it's rolled into the account) is better than a savings account; .75% no matter how much is in the account. So right now, it's an economically feasible investment, especially if I can put in enough to get it up to - and keep it at around $20K to cover medical emergencies later on.

But - here's the rub with HSA's - according to the rules of my personal HSA through WageWorks/BNYM, the max I can put into one and not have the IRS looking at charging for any interest is $7800 a year, because I'm over 55 and have dependents. Like a 401K, there's a max the IRS lets you put in every year.

Other HSA plans I have looked at have pretty much the same rules. For people under 55, the max seems to be $6800 pre-tax/tax deductible, and single people are only allowed to put $3400 (+ $1K for over 55) in a year pre-tax/tax deductible.

As with all financial products, YMMV depending on the HSA plan you can get in your state.

Haele