It’s that time of year again-Open enrollment for changing insurance and deciding if you will do pretax.
Last year, I just didn’t bother, but for 2015, I’m considering setting up a pre-tax health account. These are usually called an FSA or HSA. (Flexible or Health Spending Account).
Depending upon your tax bracket, you could save $495-1320 for a single person or up to $2620 for a family.
For many, this is set up by an employer, but if that option is not available, you can set one up through your bank. Chase, for example, offers this. http://www.chasehsa.com
I was informed last year that if your employer offers the FSA, you cannot have an HSA. This is a bit crap because while the FSA does not allow rollover and investment growth, the HSA does. I surely would like the option to build a healthcare investment vehicle for retirement 😦
Some $ sites suggest that the 401k can do a better job with this (I still don’t get the choice of mutual funds here but I could roll it over into another IRA where I get to choose.
Chase mentions auto deduction from paycheck, so perhaps they handle the tax bit.
For the self-employed, you can deposit to an HSA and then probably handle come tax time.
For the retired, once you sign up for medicare 3 months before age 65, you are no longer eligible.
I’m going to look further into the gap at retirement. Suppose I retire at age 55 instead of 65. 10 year gap. I suppose i could set up an HSA, but it’s not crystal clear. Reading the irs.gov website is a bit like being on the Monty Python Holy Grail bridge and having to answer “what is your quest?!”
For this year, how do I know how much to reserve?
I will look at these websites to tally Rx and doctor visits:
My insurance .com
Don’t forget about compounding pharmacies:
An easier way is if you have been keeping track with a budget-just multiply times 12 and add $200 for emergency or urgent care.
There will always be some kind of urgent care. I had my nose broken by my donkey a few years ago-yes really.
And UTI’s happen.
Broken limbs are easy to come by, so plan for it.
Over the counter items are getting harder to be covered, so I just estimate about $100 here. Cvs computers usually know which items are eligible and automatically deduct at the register.
The best part of the savings account is if a debit card for it is offered-convenient and easy!
You can compound your savings if you have a chronic medication. Ask your doc for 90 day or more Rx that you can fill through OptumRx or ExpressScripts. The savings are huge.
So, hop to it before it’s too late.
This can be part of your financial “defense”.