The US government does offer a massive carrot for people to choose high deductible health plans, in the form of the most tax advantaged account you can have, a Health Savings Account.
The root problem is most Americans are too poor to afford healthcare at the current prices of doctors/medicines/medical equipment/liability protection/etc, period.
Using an HSA can be a pain in the ass. On multiple occasions I’ve had to go back and forth with the provider and HSA to get an acceptable receipt. I ended up just giving up in one case because it was a small amount and not worth fighting phone reps and automated systems.
Depending on the specifics of your financial situation, age, and healthcare utilization, it can actually be in your best interest to pay more out of pocket and save your HSA money for retirement.
I do not know why that would be difficult, I have never had an issue getting a receipt with patient name, charges, and the amount on it.
Also, the ideal way to use an HSA is to not use it. Every year, transfer the HSA funds to Fidelity, invest in VOO or whatever, and let it ride as long as you can. PDF all the receipts, and then pay yourself with tax free income when you finally need to.
I don't want to google the incorrect information. Can you provide a link that elaborates on this? I have an HSA (~20k right now), don't use it to invest at all, but it is investable within their system, using some preselected mutual funds. I've just been too much of a wimp to risk losing anything.
> Fidelity offers HSAs for employers and, as of November 2018, individuals.[36] Individual HSAs have no account opening or transaction fees.[37] In a favorable review of the Fidelity HSA's features, the The Finance Buff wrote: "No other HSA provider comes close to what Fidelity offers."[38]
I would go to Fidelity.com/toa and start a transfer of assets from your current HSA. If it is an employer sponsored HSA where your employer contributes to it, then leave $25 to avoid it getting closed. But every year, move the remainder to Fidelity and invest the remainder like any other IRA.
> pay yourself with tax free income when you finally need to
My understanding's that direct withdraws are possible after 65, taxed as income. Does your "when you finally need to" mean only withdrawing for healthcare reasons or is there a way to transfer or withdraw without a tax hit, besides for health costs?
Yes, worst case scenario, it performs as an IRA/401k.
But pretty much everyone will incur healthcare costs as they get older, so you should be able to withdraw tax free for those. And all healthcare costs incurred by your family during your lifetime while you had an HSA are eligible for reimbursement.
Quite frankly, I do not know how auditable a 40 year old medical receipt is. Is the IRS' plan to just take everyone's word for it?
Never needed it, so don't know all the rules are, but I'd imagine the IRS gets a lot of fraud through it (since hospitals wouldn't report from their side).
But how would they audit it, if the healthcare provider has retired or deleted their records from 40+ years ago? Are healthcare providers keeping records that long?
I thought the whole point of an HSA was to be used as a tax shelter. I didn't get one because it seemed way too complicated and also I don't make nearly enough money to set aside money in an HSA but that's what I remember when looking up on it a little.
I think you're not supposed to use it actually for healthcare, at least not in your young age.
Who's administering your HSA that you have to provide specially-formatted receipts?!
Every HSA I've had[0], I just reimbursed myself for eligible expenses[1] by transferring from the HSA to my regular bank account. That amount then gets reported on line 15 of form 8889[2] the following April. If it's not an eligible expense, that's between me and the IRS—not the bank at which my HSA is held.
[0]: I highly recommend Fidelity, for anyone reading this and thinking they need a better option.
The ultimate root of the problem is thinking healthcare works like a bakery: if the bread is too expensive i'll go shopping elsewhere or even choose something else besides bread. This last option is basically off the table in healthcare: you either get healthcare or die. Which in the usa seems to be the options indeed.
For these kinds of relatively low-cost interactions, the HSA is even more of the same problem as health insurance: It's for people who find paperwork to be a fun hobby.
Just tell me how much money I owe you and let me pay. When I find myself at a clinic, I tell them I don't want to use health insurance to pay. They just give me a bill and I give them money.
The root problem is most Americans are too poor to afford healthcare at the current prices of doctors/medicines/medical equipment/liability protection/etc, period.