Tax Relief and Health Care Act of 2006

[James]

OR as an investment.....

I would say Savings not Investment. Savings such as those that can pay medical bills that the money in a IRA can not. Savings that can pay for LTCi, savings that can fund Optical and Dental. Yet, some bozoo will come around and call it a "Investment", and then wants to push their ethics and morality on others. CFP forums are all buzzing about how they will get paid and if their B/D will allow them to sell HSA's and obviously force those buying HSA's to go thru them. No doubt this is creating some anxiety such as those rasically EIA's! In fact I imagine some companies are planning on rolling out the HSA/EIA or EIUL!

 

[Crabcake Johnny]

Is anyone gonna address liquidity? Or the fact that you actually want your money to be there instead of punching into your HSA account that's attatched to a mutual fund and seeing that you're down 20%?

HSA accounts, as far as I'm concerned, are NOT for investing. After all, once your out of pocket limit is reached all care is 100% paid. So I'm failing to see the need for $20,000 in a HSA that has a $5,000 deductible.

I advise my clients to fund their account until their OOP is reached - then invest their money elsewhere. I do this. I have my HSA fully funded. Just why would I put another nickle in my account?

 

[James]

Is anyone gonna address liquidity? Or the fact that you actually want your money to be there instead of punching into your HSA account that's attatched to a mutual fund and seeing that you're down 20%?

HSA accounts, as far as I'm concerned, are NOT for investing. After all, once your out of pocket limit is reached all care is 100% paid. So I'm failing to see the need for $20,000 in a HSA that has a $5,000 deductible.

I advise my clients to fund their account until their OOP is reached - then invest their money elsewhere. I do this. I have my HSA fully funded. Just why would I put another nickle in my account?

I can think of a lot of reasons. Dental work, cosmetic surgery, eye surgery and on and on. For every exclusion there is a reason to have money in a HSA. Outside of that I still don't get this investment thing? Is there any difference in your mind between savings and investment?

Main Entry: 2investment
Function: noun
Etymology: 2invest
: the outlay of money usually for income or profit : capital outlay; also : the sum invested or the property purchased

Main Entry: 1saving
Function: noun
Etymology: Middle English, from gerund of saven to save
1 : preservation from danger or destruction : DELIVERANCE
2 : the act or an instance of economizing
3 a plural : money put by b : the excess of income over consumption expenditures -- often used in plural c : a usually specified lower cost -- often used in plural <a>

One doesn't invest to retirement one saves. I think the word of investment or investments have been taken way out of context of what they really mean.

 

[Crabcake Johnny]

People simply have to be smart. You can go ahead and tie up $20,000 in a HSA for some cosmetic dental procedure but clients have to understand that they have no access to that money (unless they want to pay the penality) if it's not an eligible expense.

There's a lot of things clients need to do before hording money into a HSA after the OOP is reached:

1) Max out their 401K
2) Max out their IRA
3) Have six months of liquid funds available for emergencies

After that then go ahead and shovel money into the HSA after you've already covered the deductible.

 

[James]

People simply have to be smart. You can go ahead and tie up $20,000 in a HSA for some cosmetic dental procedure but clients have to understand that they have no access to that money (unless they want to pay the penality) if it's not an eligible expense.

There's a lot of things clients need to do before hording money into a HSA after the OOP is reached:

1) Max out their 401K
2) Max out their IRA
3) Have six months of liquid funds available for emergencies

After that then go ahead and shovel money into the HSA after you've already covered the deductible.

Why? If what we think is going to happen, happens the HSA is going to be invested just like the 401, IRA or whatever yet with more liquidity then the others as in medical expenditures. If money is taken out that is not covered it appears the very same penalities will be levied, I simply don't see a difference.

 

[Crabcake Johnny]

So what you're saying is that like an IRA a client could use HSA funds for a 1st time home buying situation or for college?

 

[James]

So what you're saying is that like an IRA a client could use HSA funds for a 1st time home buying situation or for college?

Of course not but people save for various of reasons. Are you saying people have to save for things you approve of? Obviously the HSA has to be look at on a individual basis, some will see the use in it, others will not.

 

[STIBROKER]

Of course not but people save for various of reasons. Are you saying people have to save for things you approve of? Obviously the HSA has to be look at on a individual basis, some will see the use in it, others will not.

yea John you silly billie.....you have to get inventive......then the next thing you know it get shut down or capped......you know like pumping money into a life insurance plan......back in the day there was no MEC.....

 

[James]

Of course not but people save for various of reasons. Are you saying people have to save for things you approve of? Obviously the HSA has to be look at on a individual basis, some will see the use in it, others will not.

yea John you silly billie.....you have to get inventive......then the next thing you know it get shut down or capped......you know like pumping money into a life insurance plan......back in the day there was no MEC.....

If I'm not mistaken those old contracts were "Grandfathered" and continue as they were first written. Which was a great deal, now this just adds to the selling point, buy now and be grandfathered in later. Listen, that was quite creative of you coming up with that!

Yet lets face it, the idea of the government relaxing savings is not over just becuase the Dem's won Congress. Hell most of the new Dem's are very conservative as in Heath Shuler, what a bozoo yet he is conservative. In other words the Dem's are changing not the conservative trend started back in the Reagen days.

 

[Crabcake Johnny]

Sorry - for a second there I thought you were gonna tell people that a HSA account was going to act almost like an IRA in flexability.

What I fear is going to happen is clients using or thinking of their HSA account as an investment tool. People think if IRAs as investments (unless you just have money markets or government notes) so they're prepared for short-term market fluctuations for the realization of long-term gains.

But you want your HSA money to be there when you need it. You don't need to get to the $5,000 yout put into your account just to find out you only have $3,200 available because you're in a mutual fund.

I think HSA money needs to be liquid - at least to cover the OOP.