Just a 46-year-old mom of 2 in Northern California. My kids are Monkey Monkey(MM) and Drama Llama (DL). I am married to Monkey Hubby (MH). Um, I change my tune. I am starting to see LITTLE in benefits of a HSA for us.
The nice thing is we can still take the reduced premiums. We will be better off to put the money (premiums saved) in our bank account and earn better returns.
The only exception will be if we do not use our deductible for the year. Then we could use the HSA for tax advantage. If not, there will be no tax advantage and we'll get crappy returns (if we spend it we can itemize the deduction). Heck, I might prefer to put it in an IRA if we do not need it. One big factor being the California nightmare where it is not tax-deductible for state. (& earnings are taxed for state).
I'll share more my thinking later. But this is where we land. I am starting to remember more why I never liked these things. They just make no sense in a situation like ours. We'll see... I have to think on it more. But it's where I am leaning. I was discussing it with dh and it occurred to me we would be better off without the HSA anyway. Sad but true.
But I am still relieved to have a more affordable insurance option. Phew.
Nevermind...
November 16th, 2007 at 02:04 am
November 16th, 2007 at 12:38 pm 1195216728
Also, after age 65 you can take the money out to use for anything. So for people who are already maxing out their retirement contributions, this could be viewed as extra tax-sheltered retirement money. (Not our case, certainly!)
November 16th, 2007 at 12:45 pm 1195217127
November 16th, 2007 at 02:42 pm 1195224149
If you think your situation is bad, our health insurance apparently has a FSA after all, and they're pimping it like it's the greatest since sliced bread....
November 17th, 2007 at 06:46 pm 1195325198
There are MANY factors to consider:
Income
Expenses
Premiums
Returns on HSA
Expenses of HSA
Likelihood we'll have any left at year-end (slim for us. We'll easily use the $5800 max on medical and dental expenses, and could deduct on schedule A instead without the HSA).
State Tax affect (So I lose 5% tax savings but the record keeping for the fed/state differences is also atrocious).
From my perspective it only made sense if we had more money than we knew what to do with and needed more tax shelters. Or if our income was getting high enough & we could no longer itemize much of it. We're just not there today, but maybe in a few years. We get to deduct less every year on Schedule A, as my income rises.
It's getting much closer to a good deal for us, but still not there yet.
You can't deduct an HSA AND medical expenses on schedule A. (I assume you could deduct insurance premiums though, but those alone would not be over 7.5% of our income so would be no benefit). So it has to be pretty much all or nothing. So even if we didn't use deductible and could put $3k in the HSA, then we couldn't deduct the $3k we spent on expenses (which we will spend on dentist and vision and doctor visits and such). But in that case it may make a little sense. Just a little. No great benefit there. If we go 2 years without using the deductible.... Then maybe we can start to invest the money and get some benefit.