HSA contribution increases for 2024

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inspector00
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HSA contribution increases for 2024

Post by inspector00 »

For 2024 HSA contribution limits will increase to $4,150 self-only ($300 more than 2023) and $8,300 for Family coverage ($550 more than 2023)

https://www.taxnotes.com/research/feder ... hsas/7gpf1
bg5
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Re: HSA contribution increases for 2024

Post by bg5 »

The HSA should be the very first thing that any investor maxes out (Assuming the investment options and fees are normal). The fact that you can never get taxed on these earnings is amazing and I am lucky enough to have VTSAX as an option for my HSA
OrangeKiwi
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Re: HSA contribution increases for 2024

Post by OrangeKiwi »

Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
JD2775
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Re: HSA contribution increases for 2024

Post by JD2775 »

bg5 wrote: Wed May 17, 2023 8:57 am The HSA should be the very first thing that any investor maxes out (Assuming the investment options and fees are normal). The fact that you can never get taxed on these earnings is amazing and I am lucky enough to have VTSAX as an option for my HSA
I do get taxed on them (living in CA) but I still max it out every year in a S&P 500-index fund.

That's a nice limit jump next year :)
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MP123
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Re: HSA contribution increases for 2024

Post by MP123 »

Looks like we'll be back to having the Family limit be twice the self-only limit for 2024.

For this year the Family limit ($7750) is more than twice the self-only ($3850), and sometimes it goes the other way, depending on how the limits are rounded to $50.

This could be a decision point in selecting Family vs. two self-only HDHP plans.
Weathering
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Re: HSA contribution increases for 2024

Post by Weathering »

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ryman554
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Re: HSA contribution increases for 2024

Post by ryman554 »

MP123 wrote: Wed May 17, 2023 10:36 am Looks like we'll be back to having the Family limit be twice the self-only limit for 2024.

For this year the Family limit ($7750) is more than twice the self-only ($3850), and sometimes it goes the other way, depending on how the limits are rounded to $50.

This could be a decision point in selecting Family vs. two self-only HDHP plans.
Over $50?

Decisions like how deductibles aggregate family vs. self-only would seem to move the needle quite a bit more.....
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MP123
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Re: HSA contribution increases for 2024

Post by MP123 »

ryman554 wrote: Wed May 17, 2023 10:46 am
MP123 wrote: Wed May 17, 2023 10:36 am Looks like we'll be back to having the Family limit be twice the self-only limit for 2024.

For this year the Family limit ($7750) is more than twice the self-only ($3850), and sometimes it goes the other way, depending on how the limits are rounded to $50.

This could be a decision point in selecting Family vs. two self-only HDHP plans.
Over $50?

Decisions like how deductibles aggregate family vs. self-only would seem to move the needle quite a bit more.....
Well, this is Bogleheads... :happy
mikep
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Re: HSA contribution increases for 2024

Post by mikep »

That is a large increase. Would we suspect similar increases to FSA, 401k and IRA limits as well?
director84
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Re: HSA contribution increases for 2024

Post by director84 »

OrangeKiwi wrote: Wed May 17, 2023 8:58 am Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
Just wanted to second this
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OuterBanks
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Re: HSA contribution increases for 2024

Post by OuterBanks »

Weathering wrote: Wed May 17, 2023 10:40 am I'm happy about the increase in HSA contribution limits. However, I wish the minimum deductible requirement wouldn't increase so much. My deductible has increased by >80% over the past seven years (from $1,800 to next year's $3,200). If my deductible goes above $4,200, I will need to re-evaluate a PPO.
My HSA eligible healthcare plan deductible is now $5,000, it was $4,000 last year.
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southerndoc
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Re: HSA contribution increases for 2024

Post by southerndoc »

I saw an article recently (can't remember where) that said you could contribute >$10k as a family. $8300 family contribution limit plus extra $1,000/year for those above age 55. That's $9300, or is it $1,000/year per family member over the age of 55? In other words, if a married couple are >55 years of age, is the limit $10,300?
Malum Prohibitum
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Re: HSA contribution increases for 2024

Post by Malum Prohibitum »

southerndoc wrote: Thu May 18, 2023 8:33 pm I saw an article recently (can't remember where) that said you could contribute >$10k as a family. $8300 family contribution limit plus extra $1,000/year for those above age 55. That's $9300, or is it $1,000/year per family member over the age of 55? In other words, if a married couple are >55 years of age, is the limit $10,300?
Only the account holder, and not the account holder's spouse.

Married and have separate accounts? Then each can take advantage of the catchup provision if 55 and over. That requires self only coverage, however. Both have to be eligible individuals.
Kidarado
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Re: HSA contribution increases for 2024

Post by Kidarado »

OrangeKiwi wrote: Wed May 17, 2023 8:58 am Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
Lively HSA allows investing via Ameritrade which ive been taking advantage of the last few years. Livelyme.com
TetrisCollider
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Re: HSA contribution increases for 2024

Post by TetrisCollider »

Malum Prohibitum wrote: Thu May 18, 2023 8:38 pm
southerndoc wrote: Thu May 18, 2023 8:33 pm I saw an article recently (can't remember where) that said you could contribute >$10k as a family. $8300 family contribution limit plus extra $1,000/year for those above age 55. That's $9300, or is it $1,000/year per family member over the age of 55? In other words, if a married couple are >55 years of age, is the limit $10,300?
Only the account holder, and not the account holder's spouse.

Married and have separate accounts? Then each can take advantage of the catchup provision if 55 and over. That requires self only coverage, however. Both have to be eligible individuals.
The IRS also has a special rule for married people who have coverage together under an HDHP. If you are married, and both of you are 55 or older, then you and your spouse can each make an additional contribution of $1,000.

- If you're the account holder, and turned 55 or older by December 31 of the tax year, and are not enrolled in Medicare, you're eligible to contribute an additional $1,000 to your HSA for that year above your annual max.

- If you're married and both you and your spouse have separate HSAs, each of you are eligible to make $1,000 catch-up contributions.

So in this situation, yes, both spouses (with only ONE spouse as the owner of the HDHP) can individually contribute $1,000 catch-up contributions, as long as each has a SEPARATE HSA account.

Here is a link to IRS publication - https://www.irs.gov/publications/p969#e ... 1000204055

- Look under Additional Contributions
- Please note that this publication is for 2022 Tax Year (that's why the Max Family contribution is $9,300). For 2023, it is $9,750.
For some reason, people that know nothing, seem to know everything...
Devdabz
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Re: HSA contribution increases for 2024

Post by Devdabz »

JD2775 wrote: Wed May 17, 2023 10:07 am
bg5 wrote: Wed May 17, 2023 8:57 am The HSA should be the very first thing that any investor maxes out (Assuming the investment options and fees are normal). The fact that you can never get taxed on these earnings is amazing and I am lucky enough to have VTSAX as an option for my HSA
I do get taxed on them (living in CA) but I still max it out every year in a S&P 500-index fund.

That's a nice limit jump next year :)
Same strategy! I max HSA in CA with ITOT, sure tax implications in state, headache on tax return, but here we go!
masteraleph
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Re: HSA contribution increases for 2024

Post by masteraleph »

mikep wrote: Wed May 17, 2023 12:11 pm That is a large increase. Would we suspect similar increases to FSA, 401k and IRA limits as well?
I suspect the others are going to be lower. HSA COLAs are calculated on a different, earlier date than 401k etc, and inflation in the last 6 months has been lower than inflation in the prior 6 months. Unless we get another spike in inflation, they should be lower. The good news is that the 401k, IRA, etc COLA for 2023 already had some of those earlier, higher inflation numbers in it, so you're already getting the benefit of the larger increase.
Grump99
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Re: HSA contribution increases for 2024

Post by Grump99 »

OrangeKiwi wrote: Wed May 17, 2023 8:58 am Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
Fortunately my employer's plan offers a vast array of investment options. Currently we have our contributions routed to Vanguard 2040 target date fund with a 0.08 ER. Would there be any benefit in moving this to Fidelity? We are 46 years old if that matters. Thanks!
Grump99
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Re: HSA contribution increases for 2024

Post by Grump99 »

OrangeKiwi wrote: Wed May 17, 2023 8:58 am Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
Fortunately my employer's plan offers a vast array of investment options. Currently we have our contributions routed to a Vanguard 2040 target date fund with a 0.08 ER within my plan. Would there be any benefit in moving this to Fidelity? We are 46 years old if that matters. Thanks!
Lyrrad
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Re: HSA contribution increases for 2024

Post by Lyrrad »

Grump99 wrote: Fri May 19, 2023 8:18 am Fortunately my employer's plan offers a vast array of investment options. Currently we have our contributions routed to Vanguard 2040 target date fund with a 0.08 ER. Would there be any benefit in moving this to Fidelity? We are 46 years old if that matters. Thanks!
I moved a few months after Fidelity HSAs became available. A few years after I transferred my HSA to Fidelity, my employer stopped covering the investment fees, so I would have had to pay a a significant amount in CA capital gains taxes to move since I could not transfer it in kind to Fidelity.
willyd123
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Re: HSA contribution increases for 2024

Post by willyd123 »

OrangeKiwi wrote: Wed May 17, 2023 8:58 am Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
Lively HSA is as good as Fidelity viz HSA administration.
meadowrue
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Re: HSA contribution increases for 2024

Post by meadowrue »

willyd123 wrote: Sat May 20, 2023 7:10 am
OrangeKiwi wrote: Wed May 17, 2023 8:58 am Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
Lively HSA is as good as Fidelity viz HSA administration.
What about BenefitWallet? Has anyone had them as their HSA custodian? New employer and trying to figure out whether I should transfer to Fidelity or stick with employer-linked BenefitWallet. Right now, I have Payflex and UMB Bank HSAs, in addition to the soon-to-be BenefitWallet one, and really need to consolidate!!
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jumbo shrimp
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Re: HSA contribution increases for 2024

Post by jumbo shrimp »

How common is it for an employer to contribute to the employee's HSA? I get $500 per year which I like, but I'm wondering what else is out there and how common.
pasadena
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Re: HSA contribution increases for 2024

Post by pasadena »

jumbo shrimp wrote: Sat May 20, 2023 10:37 am How common is it for an employer to contribute to the employee's HSA? I get $500 per year which I like, but I'm wondering what else is out there and how common.
I get $1,000 a year (single, I think it's twice as much for family accounts). My previous employer contributed $500 IIRC.
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Re: HSA contribution increases for 2024

Post by BernardShakey »

jumbo shrimp wrote: Sat May 20, 2023 10:37 am How common is it for an employer to contribute to the employee's HSA? I get $500 per year which I like, but I'm wondering what else is out there and how common.
My company kicks in $1,250 every January (I have spouse + two dependents). $2,850 deductible.
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Re: HSA contribution increases for 2024

Post by sailaway »

About 2/3 of employers who offer HSA also offer seed money.

At Megacorp, the amount of seed money depends on the plan you choose. Individuals and families get the same amount, but there is a plan specific to the city where HQ is that gets 2x the seed money as the plans that are available to employees in other offices. We actually chose one of those plans with smaller seed because we live quite a ways out and travel a lot, so we wanted a broader coverage area

There are also incentives. We get $1500 if we both go for a health screening, then much smaller amounts for jumping through hoops like meeting with a personal trainer or taking an online suicide intervention course or making a financial plan at Fidelity.

There was one year that a single employee would not be able to take advantage of everything. Except we accidentally found out one year that they do a true up. As long as you are making payroll deduction HSA contributions, they manage it beautifully. Their automated processes are spot on, just don't ask HR to do anything outside of those processes...
JD2775
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Re: HSA contribution increases for 2024

Post by JD2775 »

jumbo shrimp wrote: Sat May 20, 2023 10:37 am How common is it for an employer to contribute to the employee's HSA? I get $500 per year which I like, but I'm wondering what else is out there and how common.
My company contributes $600 every January to the HSA for that year.
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Re: HSA contribution increases for 2024

Post by TropikThunder »

Malum Prohibitum wrote: Thu May 18, 2023 8:38 pm Only the account holder, and not the account holder's spouse.

Married and have separate accounts? Then each can take advantage of the catchup provision if 55 and over. That requires self only coverage, however. Both have to be eligible individuals.
That’s not correct. A spouse is an eligible individual if they are covered by a family plan, whether it’s their plan or their spouse’s.
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inspector00
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Re: HSA contribution increases for 2024

Post by inspector00 »

jumbo shrimp wrote: Sat May 20, 2023 10:37 am How common is it for an employer to contribute to the employee's HSA? I get $500 per year which I like, but I'm wondering what else is out there and how common.
my company gives $600 for single and $1200 for family in January.
cshell2
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Re: HSA contribution increases for 2024

Post by cshell2 »

bg5 wrote: Wed May 17, 2023 8:57 am The fact that you can never get taxed on these earnings is amazing and I am lucky enough to have VTSAX as an option for my HSA
Assuming you use it for medical expenses of course.
CorradoJr
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Re: HSA contribution increases for 2024

Post by CorradoJr »

cshell2 wrote: Thu May 25, 2023 11:22 am
bg5 wrote: Wed May 17, 2023 8:57 am The fact that you can never get taxed on these earnings is amazing and I am lucky enough to have VTSAX as an option for my HSA
Assuming you use it for medical expenses of course.
I contribute some to my HSA, but do not fully max it out.
I do max out my 401k and IRA.

I'm still young and healthy (knock on wood) and unlike 401ks or IRAs that can be withdrawn for any reason, the idea that I'm saving money to be used 40 years down the road for medical expenses seems dubious to me. The fact that I'm supposed to keep receipts to claim these expenses against is a hassle and I'm not saving any receipts for now.

Of course a $100 Dr. office visit today might be $300 in 2063 so maybe when I get closer to actually needing to use HSA funds, I'll get that shoebox out for receipt collection.
Onlineid3089
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Re: HSA contribution increases for 2024

Post by Onlineid3089 »

My hospital contributes $500 with the first paycheck in January every year. Same amount regardless of if your insurance is single or family.
cshell2
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Re: HSA contribution increases for 2024

Post by cshell2 »

CorradoJr wrote: Thu May 25, 2023 12:00 pm
cshell2 wrote: Thu May 25, 2023 11:22 am
bg5 wrote: Wed May 17, 2023 8:57 am The fact that you can never get taxed on these earnings is amazing and I am lucky enough to have VTSAX as an option for my HSA
Assuming you use it for medical expenses of course.
I contribute some to my HSA, but do not fully max it out.
I do max out my 401k and IRA.

I'm still young and healthy (knock on wood) and unlike 401ks or IRAs that can be withdrawn for any reason, the idea that I'm saving money to be used 40 years down the road for medical expenses seems dubious to me. The fact that I'm supposed to keep receipts to claim these expenses against is a hassle and I'm not saving any receipts for now.

Of course a $100 Dr. office visit today might be $300 in 2063 so maybe when I get closer to actually needing to use HSA funds, I'll get that shoebox out for receipt collection.

I would still max the HSA first. At age 65 you can withdraw the HSA money penalty free for anything. You would just pay regular income tax on it the same as your 401K, so it can be just considered extra 401K space with the added bonus that if used for medical it's 100% tax free and there are no RMDs on HSA funds.

I don't keep any receipts. I use the HSA funds for current medical and I figure there will be plenty of future as well, and it can be used for medicare supplemental premiums and COBRA.
slickracer
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Re: HSA contribution increases for 2024

Post by slickracer »

Great news, thankfully my bank offers a HSA investment account with Vanguard index funds as the investment options. Any funds in the cash account over $2,500 sweep to the investment account on a monthly basis. I max out each year and pay out of pocket expenses from cash.
N.Y.Cab
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Re: HSA contribution increases for 2024

Post by N.Y.Cab »

HSA becomes taxable to non-spouse beneficiary in the year of death instead of stretching over 10 years like IRA so I rather set aside extra money for more Roth conversions.
Visitor76
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Re: HSA contribution increases for 2024

Post by Visitor76 »

TropikThunder wrote: Sat May 20, 2023 4:08 pm
Malum Prohibitum wrote: Thu May 18, 2023 8:38 pm Only the account holder, and not the account holder's spouse.

Married and have separate accounts? Then each can take advantage of the catchup provision if 55 and over. That requires self only coverage, however. Both have to be eligible individuals.
That’s not correct. A spouse is an eligible individual if they are covered by a family plan, whether it’s their plan or their spouse’s.
Where did you get that information? That's good news.
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MP123
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Re: HSA contribution increases for 2024

Post by MP123 »

Visitor76 wrote: Wed May 31, 2023 2:16 pm
TropikThunder wrote: Sat May 20, 2023 4:08 pm
Malum Prohibitum wrote: Thu May 18, 2023 8:38 pm Only the account holder, and not the account holder's spouse.

Married and have separate accounts? Then each can take advantage of the catchup provision if 55 and over. That requires self only coverage, however. Both have to be eligible individuals.
That’s not correct. A spouse is an eligible individual if they are covered by a family plan, whether it’s their plan or their spouse’s.
Where did you get that information? That's good news.
Actually, if one spouse is covered by a Family plan then both spouses are considered to be covered by a Family plan, as long as both are HSA eligible individuals.

For example, if spouse 1 has a Family HDHP and spouse 2 has a self-only HDHP then both have Family coverage and can split up the Family contribution any way they'd like.

But if spouse 1 has Family coverage and spouse 2 has Medicare (i.e. not HSA eligible) then only spouse 1 has Family coverage and spouse 2 can't make a contribution.

See Pub 969:
https://www.irs.gov/publications/p969#e ... 1000204059
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Re: HSA contribution increases for 2024

Post by Glockenspiel »

CorradoJr wrote: Thu May 25, 2023 12:00 pm
I'm still young and healthy (knock on wood) and unlike 401ks or IRAs that can be withdrawn for any reason, the idea that I'm saving money to be used 40 years down the road for medical expenses seems dubious to me. The fact that I'm supposed to keep receipts to claim these expenses against is a hassle and I'm not saving any receipts for now.

Of course a $100 Dr. office visit today might be $300 in 2063 so maybe when I get closer to actually needing to use HSA funds, I'll get that shoebox out for receipt collection.
I would still max out your HSA over anything else. You can use HSA funds towards Medicare premiums and deductibles and can also withdraw the money without penalties at anytime in the future, you'd just pay regular income tax, which would make it more like a 401k at that point.
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Re: HSA contribution increases for 2024

Post by upekkha »

OrangeKiwi wrote: Wed May 17, 2023 8:58 am Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
I didn't know one could do this. Thank you for the info. I'll research further.

I was directed by HSA Bank to open a TD Ameritrade Account once I exceeded a $1,000 threshold, which I did. Unfortunately, TD Ameritrade doesn't allow the purchase of partial shares. With Schwab taking over TD Ameritrade, I hope this changes. Regardless, I plan to max out my HSA for as long as possible.
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Re: HSA contribution increases for 2024

Post by upekkha »

jumbo shrimp wrote: Sat May 20, 2023 10:37 am How common is it for an employer to contribute to the employee's HSA? I get $500 per year which I like, but I'm wondering what else is out there and how common.
My employer contributes $200 per year.
"The greatest enemy of a good plan is the dream of a perfect plan." - Carl Von Clausewitz
OrangeKiwi
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Re: HSA contribution increases for 2024

Post by OrangeKiwi »

Grump99 wrote: Fri May 19, 2023 8:19 am
OrangeKiwi wrote: Wed May 17, 2023 8:58 am Everyone should be transferring their funds yearly from their employer’s HSA custodian to Fidelity HSA or whoever can offer similar brokerage services for cheap so they can invest in whatever they want. No one other than Fidelity can though, that I am aware of. Surprised the other brokerages like Schwab have not jumped on this opportunity.
Fortunately my employer's plan offers a vast array of investment options. Currently we have our contributions routed to a Vanguard 2040 target date fund with a 0.08 ER within my plan. Would there be any benefit in moving this to Fidelity? We are 46 years old if that matters. Thanks!
Maybe not, depends on your goals. I just like having as much control as possible over my funds, and because of the triple tax advantage, I would prefer to be 100% equities rather than invest it in a target date fund.
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Re: HSA contribution increases for 2024

Post by stoptothink »

inspector00 wrote: Thu May 25, 2023 11:03 am
jumbo shrimp wrote: Sat May 20, 2023 10:37 am How common is it for an employer to contribute to the employee's HSA? I get $500 per year which I like, but I'm wondering what else is out there and how common.
my company gives $600 for single and $1200 for family in January.
My wife's employer gives $4k, but they no longer cover 100% of the premium as of this year. I think she pays like $240/month for our family HDP now; not much, but worse than the $0 we had for the previous 6yrs (between 2 separate employers).
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Re: HSA contribution increases for 2024

Post by grabiner »

OrangeKiwi wrote: Wed May 31, 2023 4:49 pm Maybe not, depends on your goals. I just like having as much control as possible over my funds, and because of the triple tax advantage, I would prefer to be 100% equities rather than invest it in a target date fund.
One part of the triple tax advantage has already happened when you made the contribution. A dollar in an HSA is no better than a dollar in a Roth IRA; putting the dollar into the HSA was better because you got the tax deduction.

Therefore, if you are investing your HSA for medical expenses in retirement, it makes sense to invest the HSA as if it were part of your Roth IRA. (My own HSA is all stock, but since it is a very small part of my portfolio, I hold the same stock asset classes in other accounts.)
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TropikThunder
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Re: HSA contribution increases for 2024

Post by TropikThunder »

Visitor76 wrote: Wed May 31, 2023 2:16 pm
TropikThunder wrote: Sat May 20, 2023 4:08 pm
Malum Prohibitum wrote: Thu May 18, 2023 8:38 pm Only the account holder, and not the account holder's spouse.

Married and have separate accounts? Then each can take advantage of the catchup provision if 55 and over. That requires self only coverage, however. Both have to be eligible individuals.
That’s not correct. A spouse is an eligible individual if they are covered by a family plan, whether it’s their plan or their spouse’s.
Where did you get that information? That's good news.
It’s in the HSA publication linked above:
Qualifying for an HSA Contribution
To be an eligible individual and qualify for an HSA contribution, you must meet the following requirements.

- You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.
- You have no other health coverage except what is permitted under Other health coverage, later.
- You aren’t enrolled in Medicare.
- You can’t be claimed as a dependent on someone else’s 2022 tax return.
It doesn’t say the coverage has to be in your name.
tines
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Re: HSA contribution increases for 2024

Post by tines »

Can you explain HSAs to me? We have a high deductible health plan but are not maxing out our HSA contribution. My husband is under the impression that he needs to decide his HSA contribution during his benefit elections. Is that true? Can we open a fidelity HSA now and do our max contribution and claim it on our taxes?

For those that move their contributions from their work-affiliated HSA to a Fidelity HSA instead of just directly contribution to the Fidelity HSA is it because it is automatically deducted from paycheck, etc?
jumbo shrimp
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Re: HSA contribution increases for 2024

Post by jumbo shrimp »

tines wrote: Thu Jun 01, 2023 5:20 pm Can you explain HSAs to me? We have a high deductible health plan but are not maxing out our HSA contribution. My husband is under the impression that he needs to decide his HSA contribution during his benefit elections. Is that true? Can we open a fidelity HSA now and do our max contribution and claim it on our taxes?

For those that move their contributions from their work-affiliated HSA to a Fidelity HSA instead of just directly contribution to the Fidelity HSA is it because it is automatically deducted from paycheck, etc?
For what I can tell you, I recommend maxing the HSA if you have the money. I am quite certain I can change my contribution amount whenever.

Yes you can open a Fidelity HSA at any time. My employer uses a Health Equity HSA. I contribute through my employer and then transfer to my Fidelity HSA. I do this because I pay less tax. The following is from the Boglehead HSA webpage.

"If your employer allows it, you can make your own contributions through pre-tax payroll deduction; this has the potential advantage that these contributions, like pre-tax insurance premiums, are not subject to Social Security and Medicare taxes..."
cshell2
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Re: HSA contribution increases for 2024

Post by cshell2 »

tines wrote: Thu Jun 01, 2023 5:20 pm For those that move their contributions from their work-affiliated HSA to a Fidelity HSA instead of just directly contribution to the Fidelity HSA is it because it is automatically deducted from paycheck, etc?
If you have the money withdrawn via payroll deductions you don't pay SS and Medicare tax on the HSA contributions either. So, another 7.5% tax savings.
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Darth Xanadu
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Re: HSA contribution increases for 2024

Post by Darth Xanadu »

N.Y.Cab wrote: Mon May 29, 2023 3:42 pm HSA becomes taxable to non-spouse beneficiary in the year of death instead of stretching over 10 years like IRA so I rather set aside extra money for more Roth conversions.
This is an important point for married couples that are building HSA savings for future use. It probably make sense for a surviving spouse to aggressively draw down HSA balances to minimize amounts that end up being inherited by a non-spouse. This could be via saved receipts or current expenses, although I believe previously incurred qualified medical expenses for the deceased spouse lose their qualified status upon death. I could be wrong about that so hopefully someone will correct me. [Corrected by MP123 below, thank you!]

And, depending on tax brackets for the surviving spouse and the expected non-spouse heir (and other factors), one could argue penalty-free withdrawals by the surviving spouse makes sense even if counted as ordinary income.

Something good to put in a "death book" for those that keep one.
Last edited by Darth Xanadu on Tue Jun 06, 2023 11:26 am, edited 1 time in total.
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MP123
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Re: HSA contribution increases for 2024

Post by MP123 »

Darth Xanadu wrote: Tue Jun 06, 2023 10:30 am This is an important point for married couples that are building HSA savings for future use. It probably make sense for a surviving spouse to aggressively draw down HSA balances to minimize amounts that end up being inherited by a non-spouse. This could be via saved receipts or current expenses, although I believe previously incurred qualified medical expenses for the deceased spouse cease lose their qualified status upon death. I could be wrong about that so hopefully someone will correct me.
QME for the decedent can be paid by a non-spouse beneficiary for up to one year following the date of death. I don't think there is any restriction if the account is inherited by a spouse.

So there's a little flexibility there, but an HSA inherited by a non-spouse can certainly be an issue.

See Sec 223: https://www.law.cornell.edu/uscode/text/26/223
(ii)Special rules
(I)Reduction of inclusion for predeath expenses
The amount includible in gross income under clause (i) by any person (other than the estate) shall be reduced by the amount of qualified medical expenses which were incurred by the decedent before the date of the decedent’s death and paid by such person within 1 year after such date.
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