Health Savings Account
For the “Medical Emergencies” portion of emergency fund, the HSA seemed like a good idea given that its pre-tax and when maxed out you can transfer over to an investment fund.
- Publication 969 (2014), Health Savings Accounts and Other Tax-Favored Health Plans
- Health Savings Accounts @ Treasury.gov
This Health Account Can Add to a Nest Egg Too http://www.nytimes.com/2015/03/12/business/this-health-account-can-add-to-a-nest-egg-too.html
"The funds are tax-advantaged accounts that have been available since 2003 to taxpayers with high-deductible health plans (currently plans with deductibles of at least $1,300 for individuals and $2,600 for families). They were intended to cover out-of-pocket medical expenses, yet H.S.A.s have lesser-known advantages. They can be used to supplement retirement savings, providing tax benefits not only when you contribute but also, in many cases, when you withdraw money. You can also take them with you if you change jobs."
"The Internal Revenue Service limits the amount of H.S.A. contributions and deductions, as it does with all tax-deferred vehicles. For 2015, taxpayers with individual medical coverage can invest and write off $3,350."
"That is why it is probably worth shopping around, comparing several providers to check performance of various funds and vet any fees charged for administration and investment management.
David Lyon, chief executive of Main Street Financial in Chicago, who owns an H.S.A., suggests checking with banks or other financial institutions where you may already do business because they “may offer low-cost mutual funds” within such an account."
“Deposits to an HSA may be made by any policyholder of an HSA-eligible high-deductible health plan or by their employer, or any other person.”
Health Savings Accounts and Other Tax-Favored Health Plans
To be an eligible individual and qualify for an HSA, you must meet the following requirements.
- You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month.
- You have no other health coverage except what is permitted under Other health coverage, later.
- You are not enrolled in Medicare.
- You cannot be claimed as a dependent on someone else's 2013 tax return.
High-Deductible Health Plan @ Wikipedia; the minimum deductible for an HDHP in 2015 is $1,300.
"HSA -- health savings account which you can set up with monthly tax free deductions from your paycheck for a maximum of 3500 per year (a limit set by the IRS). This HSA does not "use it or lose it" like the Flex Spending Account; it rolls over year to year like your ATT minutes.
You can save into it until you die, and name beneficiaries. Beneficiaries must use it for health costs. These health costs are broadly intepreted -- not just co pays and co insurance but also contact lens solution and pharmaceuticals.
Interest rates suck -- .1 up to .3 depending on how much you have in account."
Penn State's HSA offering: http://ohr.psu.edu/benefits/insurance/health/hsa/