No. of Recommendations: 10
For those of you planning on being able to use your HSA like a Traditional IRA for non-medical expenses after age 65 without being penalized (as allowed by current law) - you may need to re-think those plans. The proposed "Health Savings for Seniors Act" would penalize the use of HSA money for anything other than qualified medical expenses.

https://www.cnbc.com/2019/08/01/medicare-recipients-cant-put...

The bill would allow those on Medicare to continue to make contributions to an HSA, which is currently not allowed. However, it also takes Medicare premiums out of the category of "qualified medical expenses" so that you would have even fewer medical expenses that you could spend the HSA money on without incurring a penalty. https://www.cnbc.com/2019/08/01/medicare-recipients-cant-put...

All in all, the bill punishes those seniors who have saved in their HSA in order to benefit those seniors who have previously saved in an HSA, in return for allowing seniors who haven't previously saved in an HSA a way to run their current medical/dental expenses (other than Medicare premiums) through an account to get tax-free treatment on those expenses, instead of having to meet the higher hurdles of being able to deduct medical expenses.

That said, there have been prior bills proposing changes to HSAs (even a couple last year) that haven't been able to make it into law. Given how divided the House and Senate seem to be, this bill may not be anything to worry about.

AJ
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No. of Recommendations: 3
That said, there have been prior bills proposing changes to HSAs (even a couple last year) that haven't been able to make it into law. Given how divided the House and Senate seem to be, this bill may not be anything to worry about.

Geez, I hope not! I've been contributing the max family rate to an HSA for about 5 years or so and haven't pulled a penny out; fully intending to utilize it for Medicare premiums/deductibles at 65 and "ordinary income" if it grew too fat.

So infuriating that you can follow the rules as written only to have them yanked out from under you.

Draggon
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So infuriating that you can follow the rules as written only to have them yanked out from under you.

Congress needs more money to spend/waste.

I've been saving max individual for about 15+ years with the same intent. Have a nice nest egg that would more than cover Medicare premiums.

JLC
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aj485,

I'm guessing TMFBookNerd (aka Maurie Backman) doesn't read this board...

https://www.fool.com/retirement/2019/08/04/a-new-bill-could-...

She talks profusely about the advantages of this bill and says nothing about how it will screw over seniors that have diligently saved in an HSA before retirement.

- Joel
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I'm guessing TMFBookNerd (aka Maurie Backman) doesn't read this board...

https://www.fool.com/retirement/2019/08/04/a-new-bill-could-......

She talks profusely about the advantages of this bill and says nothing about how it will screw over seniors that have diligently saved in an HSA before retirement.


Yes, it's disturbing when 'financial writers' don't bother to read the fine print, and just parrot the glowing summaries published by the bill's sponsors. Unfortunately, TMF apparently doesn't allow comments on their articles any longer, either.

AJ
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No. of Recommendations: 1
All in all, the bill punishes those seniors who have saved in their HSA in order to benefit those seniors who have previously saved in an HSA, in return for allowing seniors who haven't previously saved in an HSA a way to run their current medical/dental expenses (other than Medicare premiums) through an account to get tax-free treatment on those expenses, instead of having to meet the higher hurdles of being able to deduct medical expenses.

That said, there have been prior bills proposing changes to HSAs (even a couple last year) that haven't been able to make it into law. Given how divided the House and Senate seem to be, this bill may not be anything to worry about.


Well, s***. My wife's former employer had a great HSA plan. I can't remember the exact details, but they kicked in a bunch of money. Then of course you get the tax deduction on the front AND back end, and then there is a the non-medical expenses escape hatch if you should happen to save too much. So we went in pretty hard on the HSA.

The HSA deal is almost too good to be true, so maybe that's why they want to get rid of it. But still.
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Below seems to good to be true, but i was planning on rolling with it....

from https://www.kiplinger.com/article/insurance/T027-C001-S001-s...

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You can use HSA money for any eligible medical expenses you paid on your own after you opened the account (but you can’t use HSA money for medical expenses you incurred before you established the account). “A little-known fact of HSAs is that you can always reimburse yourself retroactively for any expense you paid out of your pocket,” says Will Applegate, vice-president of HSA business development for Fidelity, which provides HSAs for many employers that also offer Fidelity 401(k)s. Not only can you make the withdrawals without penalties, but you won’t have to pay taxes on the money, either. That means you can use an HSA as an extra stash of tax-free money for emergencies.
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You can use HSA money for any eligible medical expenses you paid on your own after you opened the account...That means you can use an HSA as an extra stash of tax-free money

Yes. This will help my retire early (around 60) plan as I recently purchased an expensive brace that I won't reimburse myself for from my HSA until after I retire, at which time I will have an interest in keeping my taxable income low to qualify for health insurance subsidies. The HSA will give me a stash of money I can access tax-free.

Wish I would have gone the HSA route when I was younger and in better health and could have accumulated more money. I just started it this year, a year or two away from retirement, so I'm limited to what I can put in in two years, but it will help...
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There is a large caveat. All of the retroactive expenses that you reimburse yourself for must have been incurred AFTER the HSA account was opened. If you opened the account in 2012, for instance, don't reimburse yourself for the braces your kid got in 2009.

And be sure that you have documentation for the expenses that you are reimbursing yourself for.

AJ
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