Serious question. Does anyone know if there is a brokerage etc where you can open/ transfer into a HSA where you could invest in mutual funds, stock, tbills etc? It seems to me that most/all HSAs you put your monies in and they put you into a savings account that pays deminimus interest? Or it's kind of an online only outfit like Lively where there is nowhere to walk into a place and speak to someone.
Pls advise if you have further insight
Tks
Baseball Fan
Comments
https://ybbpersonalfinance.proboards.com/thread/258/hsa-health-savings-accounts
M* had a recent update, https://www.morningstar.com/specials/the-best-hsa-providers
2023 M* Update on Top HSAs
A brief explanation of HSAs is followed by rating tables and then by more detailed descriptions of a few top plans.
HSA - Spending
Fidelity, First American Bank, Health Equity, HSA Bank, Lively, etc.
HSA - Investing
Fidelity, Associated Bank, Health Equity, Lively, UMB, etc.
Many HSAs have brokerage windows
Fido HSA https://www.fidelity.com/go/hsa/investing-hsa-your-way
Schwab HSA/HSBA https://www.schwab.com/hsba
https://www.mutualfundobserver.com/2023/06/the-young-investors-secret-weapon-the-hsa/
M* has published annual evaluations of HSA providers since 2017.
ISTR that the Fidelity HSA was always rated high as an investment vehicle.
FWIW...
My understanding is that can't participate in Medicare Part A (or B) and contribute to an HSA at the same time. Is this correct? If so, would it make sense to unenroll (if possible) from Medicare Part A?
This link seems to cover a lot of the questions regarding HSA and turning 65
hsa_and_medicare
Employers may now require Medicare signup for eligible employees. Mine kicked me out of the group plan as soon as I became Medicare eligible (as a retiree).
One huge benefit of HSAs is years of buildup of funds and that won't happen with late signups.
Thanks for the link.
"Stopping Medicare to Reclaim HSA Eligibility
If you signed up for Medicare Part A and now want to decline it, you can do so by contacting the Social Security Administration. Assuming you have not begun receiving Social Security checks this will reestablish your eligibility for an HSA. If you have applied for or have begun receiving Social Security, you cannot opt out of Medicare Part A without paying the government back all the money you received from Social Security payments plus paying the government back for any money Medicare spent on your medical claims. This action will also stop future Social Security payments (until you reapply and start this cycle over again)."
She has not begun receiving Social Security checks, so she would need to contact the Social Security Administration to now "decline" Medicare Part A, in order to reestablish her eligibility for an HSA. Is there any downside to doing this?
Baseball Fan
2023 $3,850/7,750
2024 $4,150/8,300
There is also additional $1,000 catchup for 55+.
https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits
A common misconception is that all Medicare Part C plans are HMOs. This is why one often sees articles saying that a disadvantage of Medicare Advantage (MA) plans is that they limit you to doctors in a network. That's true for HMO plans but not for the other types of MA plans. The PPOs still require insurer approval for some procedures, though.
Even a non-spouse heir can withdraw the HSA assets tax-free, so long as she keeps records of qualifying expenses. The heir must make the withdrawals within a year of death.
https://tax.thomsonreuters.com/blog/what-happens-to-the-funds-in-an-hsa-after-the-account-holder-dies/
And, assuming that she works 3 more years and for easy math, have $15,450 ($5,150 x 3) available for qualifying medical expenses (deductibles, co-payments, etc.)?
Annual contributions are adjusted each year, so they may be higher in 2025, 2026,...
Tax math looks OK otherwise.
As davidsherman said "HSA is superior to IRA and Roth IRA". This seems to be the case because unlike an IRA where you are tax upon withdrawal, with an HSA you are not taxed on the income for the contribution or the distribution so long as it is a qualifying medical expense. Am I characterizing this correctly?
1. Possible employer contribution
2. Reduction in payroll income subject to FICA
a) Social Security (6.2% employee-side) - someone in the 32% tax bracket would likely max out even if W2 income is reduced by HSA contribution amount
b) Medicare (1.45% employee-side) - this is the only obvious benefit of contributing to the employer's chosen HSA.
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Color me skeptical about being able to disenroll from Part A. The referenced page is not authoritative and was shown to be imprecise (re: Part C premiums). To offer another non-authoritative page, here's an AARP page. It says that one cannot generally drop part A if one is not paying a premium, even if one has an employer plan providing primary coverage.
The hedging there is in the word "generally". AARP is just repeating what Medicare.gov says: "Generally, you can only drop Part A (Hospital Insurance) if you have to pay a premium for it."
However, CMS is unambiguous: "Individuals entitled to premium-free Part A cannot voluntarily terminate their Part A coverage. This is not permitted by law. "
https://www.cms.gov/medicare/enrollment-renewal/health-plans/original-part-a-b
(last modified 9/6/2023)
For a longer narrative saying the same thing, see this Forbes piece, Can You Drop Part A?, 6/9/2023.
https://www.forbes.com/sites/dianeomdahl/2023/06/09/can-you-drop-medicare-part-a/
I did not get to read this long thread.
My recollection from my last research on the topic is Avoid HealthEquity and Fidelity is decent.
YBB personal finance page has a lot of information you might want.
Sorry I am pressed for time.
https://offices.depaul.edu/human-resources/benefits/Documents/HSA-medicare-faqs.pdf
https://www.medicareinteractive.org/get-answers/coordinating-medicare-with-other-types-of-insurance/job-based-insurance-and-medicare/health-savings-accounts-hsas-and-medicare
CMS (Centers for Medicare and Medicaid Services) is the Medicare regulatory agency (authority) within HHS much as the IRS is the taxation regulatory agency within the Treasury Dept. And much as the IRS puts out Pubs which can have errors (they are not the regulations themselves), CMS puts out material for public consumption that can have errors. In both instances, errors are not common but they're certainly possible.
So when CMS says that disenrolling from non-premium Part A Medicare is against the law, it's possible that this agency is misstating its own regs. Not likely, but possible.
Here's CMS form 1763 for terminating Medicare coverage.
https://www.cms.gov/medicare/cms-forms/cms-forms/downloads/cms1763.pdf
It is titled: REQUEST FOR TERMINATION OF PREMIUM PART A, PART B, OR
PART B IMMUNOSUPPRESSIVE DRUG COVERAGE
It begins: Is it possible that there's a different form for non-premium Part A beneficiaries to terminate coverage? Sure, but not likely since this form covers all other situations.
We can go back to the Wellesley College page with info from HSA Resources to observe some oddities.
First, this is an old page (not disqualifying, but curious). The pdf creation date is 11/22/2016. That's consistent with the fact that HSA Resources was acquired by Select Account in Dec 2016.
(FWIW, SelectAccount was renamed Further and acquired by HealthEquity in 2021.)
More important is how it suggests that disenrollment is dated differently depending on whether one is receiving SS checks. If you are receiving checks, it says that you are supposed to pay back any Medicare money spent on claims. Effectively, this is undoing the Medicare enrollment entirely. OTOH, it doesn't say that you have to refund Medicare benefits received if you're not receiving SS checks. It seems you are allowed to keep Medicare benefits received up to the time of disenrollment request.
What this page is doing is misquoting the rules for undoing registration for Social Security (not Medicare) benefits: https://www.journalofaccountancy.com/news/2023/mar/how-to-reverse-course-collecting-social-security.html
You have to repay the Medicare premiums not the Medicare benefits, from start until termination. That is, you have Medicare throughout, but the premium payments come from you and not your Social Security check if you undo those checks. And it terminates SS benefits, not Medicare enrollment.
The one item I have found that supports the idea that any Medicare Part A can be voluntarily terminated is in the Medicare statute itself (42 U.S. Code § 1395q(b)(1)): https://www.law.cornell.edu/uscode/text/42/1395q
That says only that such a filing will terminate coverage. It doesn't specify the conditions under which such filing is permitted. Such as being charged a Part A premium. Those conditions may be in the regs, which gets us right back to CMS.
However, they told her that if she is interested in an HSA that she would need to change healthcare plans. With her current plan, approximately $200 is taken out of her paycheck monthly. $300 yearly in-network deductible, $3,000 maximum out-of pocket limit, and mostly copays. $30/visit for her primary, $50/visit for a specialist, $30/visit for x-rays, and $10 copay / $25 copay for generic drugs. With the HSA eligible plan, it would cost her approximately $100 per month. $1,500 yearly in-network deductible, $3,000 maximum out-of pocket limit, and the coverages change from smallish copays to 20% coinsurance pretty much across the board.
The combination of uncertainty regarding unenrolling and reenrolling with Medicare Part A and the inferior healthcare coverage, she decided pass on an HSA. Thanks all for your input!
My HSA amount isn't great and with being on Medicare the past 5 years I haven't been able to contribute. Bummer. I wish the gov. would change that rule and allow contributions for seniors! I mean, my Medicare advantage plan is no different than the required plans younger folks have.
https://ybbpersonalfinance.proboards.com/post/592/thread
By design, high deductible, HSA-eligible health plans discourage use. Aside from free (no deductible) preventive care, they may cost so much to use that they are effectively just catastrophic insurance.
They work for people in excellent health or those who expect to require major care (premiums + out of pocket cap can be smaller on these plans). They typically don't work as well for those approaching Medicare age, or more generally for people who use some but not a lot of health care goods and services.
These two plans are very good, and the HDHP plan may be (slightly) better in most cases.
Illustrating, where low use means just premiums and free annual preventive care and high use means premiums plus out of pocket cap. For medium care I add deductible and a few routine visits including specialists (say 6 specialist visits CPT 99213, quarterly PCP). For the regular plan, the copays come to 6 x $50 + 4 x $30.
Regular plan: Low use $2400, medium use $3100 (approx), high use $5400
HDHP plan: Low use $1200, medium use in the middle, high use $4200
With the HDHP it's easy to hit the $4200 ($100/mo + $3000 cap) max, especially with Upper East Side doctors, even in network. So say in the medium case (just office visits, minor testing, nothing special) you're comparing $4200 to $3100. That's a difference of $1100. The tax savings (32% bracket) with an HSA is around 32% of $4K or around $1300.
The HDHP may be close to a wash in the middle use range and better on both ends. That's not typical (usually the regular plan works out better in the middle).
Regardless, it may not be a big enough difference one way or the other to be worth pursuing. Your friend might check with a Social Security office to see if Medicare disenrollment is possible. Out of curiosity if nothing else