Need to make decision about Health Saving Accounts (HSA). (funds, paying, vehicle)

[kutra11]

Hi:



My wife's employer has started offering HSA plans, while my employer doesn't. My wife and I are in the mid-30s, and our 7 yr-old son, are healthy so we have less medical expenses not related to preventive care. We are looking at treating my wife's HSA as a retirement savings vehicle since we max out our 401Ks and IRAs. So we will be contributing the max 2013 amount in the HSA which is $6450. We will be paying medical expenses out-of-pocket and let the HSA grow.

1. I plan to get braces in 2013 which will cost us$5000. Should we add another $5000 to FSA ($2500 each; my wife's is called Limited FSA while mine is the regular FSA) on top of the $6450 HSA contribution? Does IRS allow that? Or is it called double-dipping if I get reimbursed $5000 from the FSA for braces, and in later years, claim $5000 from the HSA for eligible medical expense? What strategy should I use?
2. If my wife and I stay on separate plans, but if we add our son to my wife's HSA plan, then the max 2013 contribution limit for her HSA will be the family limit of $6450, correct? That is, do my wife and son qualify for the family max limit?
3. This question is relevant only if the answer to question 2 above is YES. As I mentioned, my employer does not offer HSAs. I am healthy and have minimal expenses outside the preventive care visits. What should be the consideration to decide if I too should be added to my wife's HSA plan, or should I be on my own plan? We would be paying $750 less in annual premiums if I stayed on my plan but I would be paying for copays and 80% of medical expenses not related to preventive care.
4. Is the entire 2013 max. HSA contribution of $6450 tax-exempt or only a portion of it? Also, my wife's employer contributes $1000 for family HSA plan. Does that mean my wife can add only $5450 from our own funds?

Is there something else I should be considering?

Thanks,
K

[MrRational]

Originally Posted by kutra11

My wife's employer has started offering HSA plans, while my employer doesn't.
My wife and I are in the mid-30s, and our 7 yr-old son...

Is there something else I should be considering?

Yeah. Consider whether YOUR employer offers a regular HI plan of some sort.

[Suncc49]

H S A Plans are a great vehicle for taking advantage of planned medical expenses and making them fully tax deductible. One thing to consider is the deductible of your policy?

3) What is its deductible? What is your out of pocket maximum?

Your wife should definitely take advantage of the H S A , especially with the free $1,000 from her employer.

[spencgr]

Most HSA's I know are on an annual "use it or lose it" schedule. I've never known one that allows you to save year over year. The fact that you mentioned the $6K limit (set by the fed gov't) leads me to believe that your wife's is also a "use it or lose it".

I'd certainly look into this before dumping a lot of cash into it.

[oneasterisk]

Originally Posted by spencgr

Most HSA's I know are on an annual "use it or lose it" schedule. I've never known one that allows you to save year over year. The fact that you mentioned the $6K limit (set by the fed gov't) leads me to believe that your wife's is also a "use it or lose it".

I'd certainly look into this before dumping a lot of cash into it.

I think you're referring to a FSA, Flexible Spending Account.

I have a HSA (Health Savings Account) and it definitely carries over. I think you can only get a HSA, if you are on a HDHP (High Deductible Health Plan) though.

[spencgr]

Originally Posted by oneasterisk

I think you're referring to a FSA, Flexible Spending Account.

I have a HSA (Health Savings Account) and it definitely carries over. I think you can only get a HSA, if you are on a HDHP (High Deductible Health Plan) though.

you are correct, I think I am referring to a FSA. thanks.