Dear Tom and Alan:
I read your last column, “Tax-Break Trifecta?”, and have some questions.
First, what if my boss wants to offer an HSA plan at work? Who puts the money in? What if I change jobs?
I realize there’s no way to start a plan now and benefit on my 2016 tax return, but if I do go on an HSA eligible plan, how soon do I put money into it?
Tom: All very good questions. We did focus mainly on individual and family High Deductible Health Plans (HDHP) in the previous column.
The rules are the same: once you have an HSA-eligible plan in place, contributions can begin right away, or you can put it all in the day before taxes are due next year.
It doesn’t matter who puts in the money.
If you put in $3,400 for an individual or $6,750 for a family, you get the benefit of taking it off your gross income next year.
If your boss contributes, he/she gets the deduction as a business expense.
The “trifecta” part refers to the three positives of HSA plans: contributions are “pre-tax”; the funds can grow tax-free; and, if used for legitimate health expenses, whatever you pay out is not taxed.
Al: The author of the article we quoted, Julie Appleby in California Healthline, states that the GOP’s plans to expand the use of HSA’s is “…based on a long-held conservative view that consumers should be more responsible for their health care spending…”
Al: Senator Orrin Hatch and Congressman Erik Paulsen sponsored the Health Savings Act of 2016 then again last February the Health Savings Act of 2017 to expand the availability of HSA plans to more people.
In the April edition of “California Broker” magazine, Kevin Robertson of the HSA Bank in Sheboygan, Wisconsin (I do like saying ‘Sheboygan, Wisconsin’) stated:
“Expansion: That could include a number of approaches. One would be the creation of a Medicare HSA option, and a Medicaid ‘HSA-like’ product, similar to Vice President Mike Pence’s Healthy Indiana program.”
“There could also be elevated funding limits, probably to the out-of-pocket maximum limits or beyond. And expanded definition of high-deductible health plans, broadening the availability to more Americans.”
Tom: To go back to our reader’s questions, it is very important to realize that whatever is unspent in the HSA account does not go away.
You can contribute every single year and increase the funds accessible for either health related payments, or, in the future, for retirement.
Should you change jobs, the account is still yours, you just can’t contribute to it until you get another HDHP plan in place.
But, you can always use your existing account for healthcare expenses.
And, yes, even if your boss contributed 100 percent, it is all yours when you leave!