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So. The HSA limit has NEVER been tied to the out of pocket limits, not to
mention the HSA plans have been around far longer than the ACA. The FAMILY
limit on the HSA is $6650 for 2016, the INDIVIDUAL limit is $3350 so the assumed
$6850 is irrelevant to either of those.
The numbers you are quoting are the CONTRIBUTION limits. There's a MINIMUM deductible limit and a MAXIMUM out-of-pocket limit that a plan must meet to be considered a HDHP that is eligible to use with an HSA. Not sure why there's a maximum limit on out-of-pocket, and I didn't know about it either until I started investigating why the cheapest Obamacare plans were not HSA eligible. In order to be considered a High Deductible Health Plan (HDHP) as defined for IRS purposes, the plan must adhere to both a minimum deductible and a maximum out-of-pocket set by the IRS. Obamacare plans that have a max out-of-pocket above that set by the IRS for HDHP's are not considered to be a HDHP and therefore not eligible to be used with an HSA. I read if you do attempt to use an HSA with a non-eligible plan, you will have to pay the back taxes plus a 20% penalty... yikes!
Check IRS Pub 969. This is from page 3 on the version you can download from the IRS web site:
The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014.
Maximum annual deductible
and other out-of-pocket expenses* ---- $6,350 ------------- $12,700
* This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies.
Just checked, and the 2015 Obamacare out-of-pocket max was $6600 and the limit to be a HDHP was $6450, so it looks like this was an issue in 2015 as well. The cheapest Anthem individual policy offered in NV last year (my policy) had a max out-of-pocket of $6300, so that's why it was HSA eligible. Perhaps Anthem intentionally set their max out-of-pocket under the IRS HDHP limit so all their Bronze policies would be HSA eligible so long as the minimum deductible was adhered to.
Last edited by mitchmiller9; 10-31-2015 at 02:04 AM..
The numbers you are quoting are the CONTRIBUTION limits. There's a MINIMUM deductible limit and a MAXIMUM out-of-pocket limit that a plan must meet to be considered a HDHP that is eligible to use with an HSA. Not sure why there's a maximum limit on out-of-pocket, and I didn't know about it either until I started investigating why the cheapest Obamacare plans were not HSA eligible. In order to be considered a High Deductible Health Plan (HDHP) as defined for IRS purposes, the plan must adhere to both a minimum deductible and a maximum out-of-pocket set by the IRS. Obamacare plans that have a max out-of-pocket above that set by the IRS for HDHP's are not considered to be a HDHP and therefore not eligible to be used with an HSA. I read if you do attempt to use an HSA with a non-eligible plan, you will have to pay the back taxes plus a 20% penalty... yikes!
Check IRS Pub 969. This is from page 3 on the version you can download from the IRS web site:
The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014.
Maximum annual deductible
and other out-of-pocket expenses* ---- $6,350 ------------- $12,700
* This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies.
Just checked, and the 2015 Obamacare out-of-pocket max was $6600 and the limit to be a HDHP was $6450, so it looks like this was an issue in 2015 as well. The cheapest Anthem individual policy offered in NV last year (my policy) had a max out-of-pocket of $6300, so that's why it was HSA eligible. Perhaps Anthem intentionally set their max out-of-pocket under the IRS HDHP limit so all their Bronze policies would be HSA eligible so long as the minimum deductible was adhered to.
Well, all I can tell you is that we have a BCBS Bronze plan now but the out of pocket max is too HIGH for it to qualify for a HSA.
Which is freaking ridiculous. "OH, that plan will cost you too MUCH money - so, nyahhhh, you don't need those tax benefits - NO TAX BENEFITS FOR YOU! We're going to ********* over in every possible way."
Yes... that's really ridiculous. You would think that given Obamacare is now the law of the land, the IRS and Obamacare would coordinate so the IRS max limit for out-of-pocket to qualify as a HDHP, is ALWAYS set equal to the limit on max out-of-pocket for Obamacare plans.
I'm guessing the IRS imposed that out-of-pocket limit as a disincentive for people to buy policies with deductibles that were so high the average person couldn't afford to cover it, should they have high unexpected medical expenses... basically the SAME reason Obamacare has an out-of-pocket limit.
I hope I helped people realize this because I was ready to switch to a lower cost Obamacare plan for 2016 thinking ... of course I can use my HSA with it... it has a REALLY high deductible. I can see a lot of people getting upset when they find they can no longer use their HSA for their dental or vision because they accidentally chose a cheaper Obamacare medical plan that is not eligible to use with an HSA.
Medical, dental, and vision should be split out into three independent categories for HSA's, given insurance treats them as distinct categories.
Last edited by mitchmiller9; 10-31-2015 at 04:57 PM..
I can see a lot of people getting upset when they find they can no longer use their HSA for their dental or vision because they accidentally chose a cheaper Obamacare medical plan that is not eligible to use with an HSA.
Indeed. People need to pay attention. The exchange policies offered in my area on healthcare.gov clearly designated HSA eligible policies along with non-HSA. It's not like that information is hidden - therefore, a thinking person shouldn't assume all policies allow use of an HSA. Further, iirc, the first year the ACA became law the federal exchange actually had a sort option for only HSA compatible policies - at least for my state it did. Not this year - a mistake, imo. When one is only interested in HSA - one should be able to narrow the options. That said, the bigger issue, I think, is education of the consumer on what an HSA actually is and its benefits. Greater demand for HSA-compatible health plans may eventually result in more choices.
The numbers you are quoting are the CONTRIBUTION limits. There's a MINIMUM deductible limit and a MAXIMUM out-of-pocket limit that a plan must meet to be considered a HDHP that is eligible to use with an HSA. Not sure why there's a maximum limit on out-of-pocket, and I didn't know about it either until I started investigating why the cheapest Obamacare plans were not HSA eligible. In order to be considered a High Deductible Health Plan (HDHP) as defined for IRS purposes, the plan must adhere to both a minimum deductible and a maximum out-of-pocket set by the IRS. Obamacare plans that have a max out-of-pocket above that set by the IRS for HDHP's are not considered to be a HDHP and therefore not eligible to be used with an HSA. I read if you do attempt to use an HSA with a non-eligible plan, you will have to pay the back taxes plus a 20% penalty... yikes!
Check IRS Pub 969. This is from page 3 on the version you can download from the IRS web site:
The following table shows the minimum annual deductible and maximum annual deductible and other out-of-pocket expenses for HDHPs for 2014.
Maximum annual deductible
and other out-of-pocket expenses* ---- $6,350 ------------- $12,700
* This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies.
Just checked, and the 2015 Obamacare out-of-pocket max was $6600 and the limit to be a HDHP was $6450, so it looks like this was an issue in 2015 as well. The cheapest Anthem individual policy offered in NV last year (my policy) had a max out-of-pocket of $6300, so that's why it was HSA eligible. Perhaps Anthem intentionally set their max out-of-pocket under the IRS HDHP limit so all their Bronze policies would be HSA eligible so long as the minimum deductible was adhered to.
I know those are the contribution limits but you did not read what I posted. The contribution limits have NEVER been tied to out of pocket maximums. Keep in mind, the HSA funds roll over if you don't use them so if you have a $12,000 OOP max on a family plan, for example, if you fully fund your HSA over 2 years, you have the dollars saved. The OOP max is NOT the only qualification to be HSA qualified as well so unless the policy specifically states it is HSA qualified, you do not just get to open one because you want to. The HSA contribution limits have gone up a little each year for the past many years. They also have the option, if their company offers it, to contribute to a limited purpose FSA if the have an HSA, so on top of the $6650 they could add another $2550 to pay for expenses (dental and vision and after they meet their deductible, medical expenses out of that account). So, someone could contribute $9200 TAX FREE with these options, so depending on their tax bracket, that could be a potential of another $2000 or so they save on taxes, so there you have it, in one year, just about all of your OOP max....if you are over 55, even better because you can put in $7550 into your HSA (family plan).
Our new HSA plan that my husband's company FINALLY moved to has a max out of pocket for our FAMILY of $3000. The "high deductible" really is a misnomer, however, not all companies are that generous either.
Quote:
Originally Posted by mitchmiller9
Yes... that's really ridiculous. You would think that given Obamacare is now the law of the land, the IRS and Obamacare would coordinate so the IRS max limit for out-of-pocket to qualify as a HDHP, is ALWAYS set equal to the limit on max out-of-pocket for Obamacare plans.
I'm guessing the IRS imposed that out-of-pocket limit as a disincentive for people to buy policies with deductibles that were so high the average person couldn't afford to cover it, should they have high unexpected medical expenses... basically the SAME reason Obamacare has an out-of-pocket limit.
I hope I helped people realize this because I was ready to switch to a lower cost Obamacare plan for 2016 thinking ... of course I can use my HSA with it... it has a REALLY high deductible. I can see a lot of people getting upset when they find they can no longer use their HSA for their dental or vision because they accidentally chose a cheaper Obamacare medical plan that is not eligible to use with an HSA.
Medical, dental, and vision should be split out into three independent categories for HSA's, given insurance treats them as distinct categories.
You can ALWAYS use the funds in an HSA for qualified expenses. If you do not have a tax qualified high deductible medical plan, you can not CONTRIBUTE to that account any longer. So, if you had an HSA in the past, have $8000 in the account, you can use that $8000 to cover medical, dental, vision qualified expenses but you can not put any more money into that account until you change back to a qualified medical plan.
My employer is offering an HDHP plan with an HSA. My wife has an HDHP with an HRA that is a better deal for my curren situation.
My employer is telling me I cannot refuse their HSA ... Is that true? I cannot find anywhere online that states I am mandated to accept it (and I can't have an HSA and an HRA).
My employer is offering an HDHP plan with an HSA. My wife has an HDHP with an HRA that is a better deal for my curren situation.
My employer is telling me I cannot refuse their HSA ... Is that true?
No. Your employer is misunderstanding the ACA rules. Employers are required to OFFER coverage to employees - not demand that employee enroll:
Quote:
In order to avoid the ACA’s employer shared responsibility penalty, large employers must offer full-time (30+ hours/week) employees coverage that is affordable and provides at least minimum value. (For businesses with 50 to 99 employees, the requirement was delayed until 2016.)
As long as your employer offers such coverage, they’re not subject to the employer mandate penalty, even if you waive the coverage offer.
The individual shared responsibility provision requires you to maintain coverage, but as long as you remain covered by your husband’s policy, you’re complying with the requirement and won’t be subject to any penalty.
If you work full time and become eligible for your employer’s coverage, you can waive it and keep your existing coverage, and nobody gets penalized.
Your employer may want evidence of your other insurance, although that shouldn't be necessary, either, nor should you be required to provide it. It's all on you whether or not you are insured.
Hi! I can't seem to find this answer. Can I deposit money into my HSA, and take it right back out, and that still counts for my tax deduction? If I deposit money into my HSA, and then I take it right back out, do I need to have a specific expense to apply the withdrawal to immediately? Do withdrawals and dates of eligible expenses need to match up? Or as long as my withdrawals and expenses reconcile at the end of the year is that OK. For instance, I need my cash for other things at the moment, but want to get the tax advantages of depositing the money to the HSA so I deposit, say $500. Within a day or two I withdraw the $500, but I don't have an expense AT THIS MOMENT. I will, however, have some expenses later in the year (but I don't want my cash tied up). Thanks!
Hi! I can't seem to find this answer. Can I deposit money into my HSA, and take it right back out, and that still counts for my tax deduction?
Yes, provided you've incurred a comparable medical expense in the same tax year.
Quote:
Originally Posted by MartyMoose
If I deposit money into my HSA, and then I take it right back out, do I need to have a specific expense to apply the withdrawal to immediately?
No.
Quote:
Originally Posted by MartyMoose
Do withdrawals and dates of eligible expenses need to match up? Or as long as my withdrawals and expenses reconcile at the end of the year is that OK.
IRS doesn't care when you deposit and withdraw during the year. As long as withdrawals and expense reconcile at the end of the year, you should be fine. Be sure to file a Schedule 8889 with your 1040 which essentially states you've incurred medical expenses equal to the withdrawals. If you don't file the 8889, IRS will tax you on the withdrawal.
Hi! I can't seem to find this answer. Can I deposit money into my HSA, and take it right back out, and that still counts for my tax deduction? If I deposit money into my HSA, and then I take it right back out, do I need to have a specific expense to apply the withdrawal to immediately? Do withdrawals and dates of eligible expenses need to match up? Or as long as my withdrawals and expenses reconcile at the end of the year is that OK. For instance, I need my cash for other things at the moment, but want to get the tax advantages of depositing the money to the HSA so I deposit, say $500. Within a day or two I withdraw the $500, but I don't have an expense AT THIS MOMENT. I will, however, have some expenses later in the year (but I don't want my cash tied up). Thanks!
Why do you want to do this? If you are going to have expenses later, you can just deposit the money then. Yes, you will get a tax break for deposits, just make sure you don't put in more than you are allowed in a given year. You just need to prove that your withdrawals are for qualified expenses if you are audited so hang on to your receipts forever.
Quote:
Originally Posted by Ariadne22
Yes, provided you've incurred a comparable medical expense in the same tax year.
No.
IRS doesn't care when you deposit and withdraw during the year. As long as withdrawals and expense reconcile at the end of the year, you should be fine. Be sure to file a Schedule 8889 with your 1040 which essentially states you've incurred medical expenses equal to the withdrawals. If you don't file the 8889, IRS will tax you on the withdrawal.
You do not need to have your withdrawals match up with expenses in the same tax year for an HSA. You can save your receipts for years and years and then make withdrawals down the road if you want--one of the pluses of the HSA. Many people do this, save the receipts and reimburse themselves during retirement years for some tax free funds. You just need to prove that the withdrawal was a qualified expense if you are audited.
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