Overfunding of HSA

[big-papa]

We started HSAs in 2013 as that was the first time it was an option. I looked ahead at when to spend them down. Medicare premiums looked like the best way for us given the amounts we were likely to have saved. Plus easy to document annually. We pay premiums directly from the HSAs. It’s bridging the gap to SS payments taking over plus a bit more.

Similar. 2017 was the first year I worked somewhere with an HSA-eligible health plan. So we're in the $50K-$100K category in the poll. Medicare doesn't start for one of us until next year, then the other the year after, but our plan is the same as yours. Reimburse medicare premiums. We're considering also using the allowed amount for LTCi premiums as well, also easily documented.

Cheers.

 

[HenryD]

Are you referring to the issue that that beneficiary (non-spouse?) will not be able to use receipts for reimbursement?

The seemingly open questions on that, and the taxes being due so quickly. Our executor will have enough on his plate to sort out if DW and I expire early.

 

[Exit 2024]

On your second question, you can't contribute to an HSA unless you're only on an HDHP. Since pretty much everyone goes on Medicare at age 65, contributions to an HSA at age 65 and later is generally not possible. RMDs currently start between 73 and 75. What sorts of actions do you think you might be able to take at that point?

I probably should have been more clear on that bullet.
My thinking is that at age 65 I may need to re-evaluate balance of HSA and decide if it is worth starting to take money out for non-health related expenses and pay taxes.
Can not do that earlier but at 65 if balance is still "too high" will need to figure out how to fit HSA withdrawals with continued conversion to Roth IRA and hopefully stay in lowest IRMAA tier at the same time.

 

[SecondCor521]

I probably should have been more clear on that bullet.
My thinking is that at age 65 I may need to re-evaluate balance of HSA and decide if it is worth starting to take money out for non-health related expenses and pay taxes.
Can not do that earlier but at 65 if balance is still "too high" will need to figure out how to fit HSA withdrawals with continued conversion to Roth IRA and hopefully stay in lowest IRMAA tier at the same time.

Ah, thanks, that makes sense.

 

[Zathras]

My mother is fighting Cancer (and has been for years), my step mother has Parkinson’s, my in-laws are in assisted living.
I have Diabetes, Rheumatoid Arthritis (also affecting my lungs). So my answer is colored by my own experiences.

No, you are not overinvested. I have <$5000 in our HSA right now. Every year we basically use it all.

People become destitute due to high medical costs. Is that guaranteed to happen to you? No.
It does happen a lot more than people think.

 

[Exit 2024]

Ok, 60 votes and still 10% have $200k or more - I would not consider that
"corner case" by any means and believe that number of people with large HSA balance will keep increasing going forward.
So having at least some strategy in terms of tax optimization really worth the discussion and its own place in Bogleheads.org Wiki.

 

[SevenUp]

Ok, 60 votes and still 10% have $200k or more - I would not consider that
"corner case" by any means and believe that number of people with large HSA balance will keep increasing going forward.
So having at least some strategy in terms of tax optimization really worth the discussion and its own place in Bogleheads.org Wiki.

Don't think anyone suggested not mentioning the possible issue in that wiki article, especially if the first 90% of the article covers the issues faced by 90% and the potential over-contribution is covered in the last 10%.