Tom Schrette and Alan Cash

Tom Schrette and Alan Cash

J.L. Sousa

Dear Tom and Alan:

I’m wondering about all the new and proposed changes to healthcare laws.

One specific question I have is in regard to HSAs.

Mine is one of those high-deductible plans where pretty much nothing is covered until I reach the deductible.

But since it’s HSA eligible, I can put money in a separate account each year. Are there plans to change these kind of plans?

Penny Wise

Tom: OK, I get it…”penny wise and pound foolish”?

If you’re contributing regularly to an HSA account, nobody’s going to call you foolish!

First, to refresh our readers’ memories: HSA is Health Savings Account; current deposits to your account are pre-tax; it looks like an IRA contribution, lowering your gross income, thus lowering taxes.

Please keep in mind that contributions to your HSA account are deductible from your gross income on the Federal tax return, but not on your California return.

As for the American Health Care Act (AHCA), and the Better Care Reconciliation Act (BCRA), one provision increased the maximum annual contribution to an HSA account from $3,400 to $6,550 for an individual.

Al: From the early 1990s when Medical Savings Accounts (MSA) became law, the government’s main concern was that too many people would jump on this and garner tax breaks. While the list of eligible medical expenses is enormous, the penalties for using HSA funds for non-eligible expenses are onerous.

To me, the startling thing about the early MSAs was that virtually none of our local banks or stockbrokers would handle them.

Also, many CPAs didn’t either.

My favorite CPA quote: “I’ve never heard of it, so it must not be very good.”

Tom: Well, a lot of financial institutions want them now. If you Google “health savings accounts,” you’ll find a ton of places to park your money.

Morningstar, a company known for investment research, just did a summary of the 10 largest providers of HSA accounts.

They are: Alliant Credit Union, Bank of America, BenefitWallet, HealthEquity, HealthSavings Administrators, HSA Bank, Optum, SelectAccount, the HSA Authority and UMB Bank.

Each company was evaluated as to how it performed as an investment (for future medical expenses) and for spending (immediate medical expenses).

Only one, The HSA Authority, scored positive on both.

Two others rated positive as investments: HealthEquity and Optum. Two others rated positive as spending: Alliant Credit Union and SelectAccount.

However, Alliant was given a negative rating as an investment.

Bank of America and HealthSavings Administrators received negative ratings as spending vehicles, probably due to the fees they charge.

Al: Sounds like you should ask some questions before putting thousands a year into a company holding your money.

Two things many people don’t know about HSAs: there is no legal requirement to put money into it; you can use the funds to pay for long term care premiums.

Submit questions at schrette@gmail.com or alancash@gmail.com.

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