Roth health savings accounts

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cswift01
Posts: 819
Joined: Thu Dec 08, 2016 10:46 am

Roth health savings accounts

Post by cswift01 »

https://www.nytimes.com/2017/02/24/your ... -what.html

Very interesting stuff. They're thinking of creating Roth health savings accounts. I'm still not sure if I would prefer the traditional vs. the Roth because with the traditional health savings account allows you to also avoid paying FICA. That's another percentage of loss from your present income. I know that many will argue, that you really need to see what your tax situation will be in the future (to make sense out of the Roth idea), but (a) I'm going to assume that today's Dollars are worth less in the future and (b) that compounding interest can have amazing effects. So, here is what I'm wondering, if maybe its best to stick with a traditional health savings account because (a) I skip the FICA part, (b) my earnings would accumulate quicker (vis-a-vis the Roth option) and (c) I could still take the money out tax-free in the future to pay for expensive healthcare expenses, even after retirement.

Any suggestions on this logic?

Best,

Me

mindofmush
Posts: 353
Joined: Mon Jul 02, 2012 1:38 pm

Re: Roth health savings accounts

Post by mindofmush »

Under the current IRS rules, you cannot contribute to an HSA if you accept Medicare coverage. (The IRS assumes you accepted Medicare coverage if you recieve SS payments, whether you filed for Medicare or not.)
So I'm all for another option to save money for retirement health care and for possible nursing home expenses (LTC).

It does make sense, though, to take advantage of any tax breaks while they are available.
mo meng, mo ching (which loosely means: no money, no life)

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cswift01
Posts: 819
Joined: Thu Dec 08, 2016 10:46 am

Re: Roth health savings accounts

Post by cswift01 »

mindofmush wrote:Under the current IRS rules, you cannot contribute to an HSA if you accept Medicare coverage. (The IRS assumes you accepted Medicare coverage if you recieve SS payments, whether you filed for Medicare or not.)
So I'm all for another option to save money for retirement health care and for possible nursing home expenses (LTC).

It does make sense, though, to take advantage of any tax breaks while they are available.


Dear MoM,

Yeah, that's the only downside, however, my understanding is that you can retain your HSA, you just cannot add to it. So, if you contribute 15 to 20 years to an HSA and then bring it with you into retirement, then you have some additional cash to pay for healthcare expenses tax-free.

Does that make sense?

I'm curious to see if others have opinions about the Roth vs. traditional HSA.

Best,

Me

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