In article <gk8g4c$310o$1[at]gal.iecc.com> , John Levine <johnl[at]iecc.com> wrote:
- quote -



A disadvantage is that a nonspousal beneficiary has to take the
distribution pretty quickly and it's all taxable. An IRA allows as
a minimum, a five year payout.

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ArtKamlet at a o l dot c o m Columbus OH K2PZH

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- quote -

Not quite. The HSA rule is that the insurance plan must not have
"first dollar" coverage. My HDHP covers prescription drugs the same
way it covers everything else--it starts paying when I've met the
deductible--and it's HSA compatible. HDHPs can only provide first
dollar coverage for preventive care, such as physicals and
immunizations.

To answer the original question, an HSA is a good deal if you're
currently healthy, which gives you time to build up the balance in
the HSA to a level where it can cover the deductible. Other advantages:

* My HDHP is from Blue Cross, so even when I pay the bills, the
providers send them to BC first which adjusts them down to their
negotiated price, often a lot less than the list price.

* You have the option to use pre-tax HSA money to pay for medical
expenses not covered by the insurance, such as prescription glasses
and dentist visits.

* The rules for HSA money not used for medical expenses are about the
same as for an IRA, so it's a way to increase your retirement
savings. Some people leave all the money in the HSA and don't pay
current medical expenses.

If you set up an HSA, check out a variety of HSA custodians, because
they vary a lot, both in services and prices. There's two basic
approaches. One is to give you a bank account with a checkbook and
debit card which you can use to pay expenses as they occur. The other
is more like an investment account, you pay your expenses yourself,
and reimburse yourself once or twice a year.

I'm happy with HSA Bank (www.hsabank.com) which offers a checkbook
account and very low fees. They offer add-on mutual funds or a
brokerage account, but in this market, their FDIC insured 2.71% looks
pretty good.

Regards,
John Levine, johnl[at]iecc.com, Primary Perpetrator of "The Internet for Dummies",
Information Superhighwayman wanna-be, http://www.johnlevine.com, ex-Mayor
"More Wiener schnitzel, please", said Tom, revealingly.

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There's one extra wrinkle, possibly, depending on where you live.

While an HSA has special provisions for federal income taxes, some states
-- like California -- don't have the same provisions for state income
taxes. This leads to adjustments when preparing a state income tax return.

Reference: http://www.health--savings--accounts...income-tax.htm

--
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removeps-groups[at]yahoo.com <removeps-groups[at]yahoo.com> wrote:

- quote -

IRS. See Pub 969 for details.

Steve

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"Vic Dura" <vpdura[at]hiwaay.net> wrote in message
newse57m4t906dfgf3sbts0kqaajvfh53rouk[at]4ax.com...
- quote -

The difference vs. an employer's FSA is that it's NOT use it or lose
it.

- quote -

Answered by other replies - "above the line."

There's also the fact that your total medical may not exceed 7.5% of
your AGI. You get to deduct the amount when the money goes in, not
when it comes out. Therefore, one can get a deduction which would not
otherwise occur under Section 213 alone.

- quote -

Note also: IF you choose to pay medical expenses NOT from your HSA,
you may do so. However, you also need to track those payments as they
may be subject to reimbursement from your HSA - meaning that at a
later time (including a later year), you may withdraw an amount from
your HSA to reimburse yourself for medical expenses that were paid
using other funds - and therefore, such a reimbursement withdrawl is
tax free. Note that the reimbursement is NOT tax free for amounts
that exceeded 7.5% (or 10% for AMT) of AGI where a deduction occurred
(but only to the extent of that deduction - IRC 111).

- quote -

occurred. I disagree for open years. My view is that the
reimbursement may be taken tax-free but the open year(s) must be
amended to reduce the expense reimbursed. Why? Because statute says
so -- subsection 223(f)(6) states that amounts paid or reimbursed
don't qualify for Section 213 treatment. The IRS conclusion for open
years is wrong because it results in the amount of reimbursement being
taxed in the year of reimbursement where the Code states it's the
removal of the deduction and the EARLIER year's increase in tax for
the smaller deduction. The IRS has the WRONG YEAR for the tax on
reimbursment for a deducted medical expense of an open year. The
IRS's view is inconsistent with statute.

--
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On Jan 6, 10:53 am, spop...[at]speedymail.org (Steve Pope) wrote:

- quote -

Is this a rule of the IRS or your plan administrator?

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Vic Dura wrote:
- quote -


Andy writes:

I just wanted to caution you that the "high deductible" insurance
plan
that qualifies you for the HSA must NOT have a prescription drug
benefit.

If it carries a prescription drug benefit, the insurance plan is
NOT eligible
for an HSA application.

That is a factor often overlooked when making such a decision. You
need
to research the HSA plan requirements for yourself from an IRS or .gov
website to find out exactly what the rules are. Don't take my word
for it, --
--- it is too important. Also, don't take the word of the person who
is trying
to enroll you in an HSA.

This drug benefit item is often not understood or is overlooked by
many
many people trying to set up an HSA for you...

Andy in Eureka, Texas

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Tue, 6 Jan 2009 13:53:05 EST, spope33[at]speedymail.org (Steve Pope)
wrote Re Re: HSA advantages?:

- quote -

Thanks Steve and MyVeryOwnSelf. I understand how it works now.

Vic
--
At first they laugh at you, then they ignore you, then they fight you, then you win.

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In article <9773a214-9b11-42c5-aece-1852d2cf7829[at]g3g2000pre.googlegroups.com> ,
Arthur Rubin <ronnirubin[at]sprintmail.com> wrote:
- quote -


Although an FSA plan is generally use it or lose it. An HSA stays
around as long as you do, and then some.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 6, 11:25*am, MyVeryOwnSelf <s...[at]emailNot.invalid> wrote:
- quote -

That's why I contribute to a medical FSA (Flexible Spending Account).
It's limited (at least at this employer) to $5000, but it's an
adjustment to wages, so it doesn't even appear explicitly on the 1040
or W2.

(If I have a double-signature, please delete it. I don't recall my
Google groups signature.)
--
Arthur L. Rubin

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- quote -

Schedule A lets you deduct only medical expenses over 7.5% of AGI.

An HSA can be applied starting with the first dollar spent.

For me, this is a key advantage of an HSA.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Vic Dura <vpdura[at]hiwaay.net> wrote:

- quote -

No, on Line 25 of form 1040. See the 1040 instructions. It is
an adjustment to income, not a deduction.

You must however be in a "high-deductible health plan" (HDHP) for
this to apply. You will want to look carefully at the advantages
and disadvantages of such a plan. In my case, it was pretty
clear that my health provider's HDHP's are disadvantaeous relative
to their standard plans, for me. The kicker is that once I
shifted down to the high-deductible plan, I was not allowed to
shift back up to the standard plan in the future, so you sort
of lose your position within their care system, and in a major
medical situation this could cost a whole lot.

This is just one of many possible factors. For many the health
plan characteristics are not as big a deal, and the HSA deduction
is highly desirable.

Steve

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Hello All,

My medical insurance provider has recently set up Health Savings
Accounts for it's members. We are allowed to make deposits to the
accounts, up to specified limits, which are supposedly deductible for
income tax purposes.

If the deductibility is correct, where does it get deducted? On Sch-A
under medical insurance? If so, how is contributing $X to the HSA and
deducting it on Sch-A medical any better than just writing a check to
the medical provider and then deducting it on Sch-A medical?

I'm probably not understanding this correctly and hope someone can
enlighten me.

Thanks.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >