Health Savings for Seniors Act - Medicare HSA funding

[Yagents]

I sure hope this doesn't pass........I'm hoping to use my HSA for Medicare premiums, and as a back up retirement plan.

https://www.cnbc.com/2022/04/18/med...-put-money-in-hsa-plans-under-house-bill.html

The bill does come with a tradeoff: It would remove the ability to use HSA withdrawals to pay for Medicare premiums — something that’s currently allowed. It also would eliminate penalty-free withdrawals for nonmedical expenses in the 65-and-older crowd as now permitted.

 

[Travis Price]

I sure hope this doesn't pass........I'm hoping to use my HSA for Medicare premiums, and as a back up retirement plan.

https://www.cnbc.com/2022/04/18/med...-put-money-in-hsa-plans-under-house-bill.html

The bill does come with a tradeoff: It would remove the ability to use HSA withdrawals to pay for Medicare premiums — something that’s currently allowed. It also would eliminate penalty-free withdrawals for nonmedical expenses in the 65-and-older crowd as now permitted.

I was trying to think through this logically, to see if I could see the benefit... here's what I came up with:

It will reduce the overall tax burden of the seniors if they contribute, especially for SS benefits. Anything over 34k annually is taxed at like 85%. Between 25-34k is 50%. Diverting that income to medical expenses, and growth would reduce taxation of those benefits.

Technically, you could treat it as a taxable self-insurance life insurance fund. for a non-spouse beneficiary, or transition it to your spouse (who can use it for expenses tax-free as well)

Outside of that, limiting seniors use of funds (maybe not the non-medical expenses, but definitely for premiums for Part A-D) doesn't really offer helpful utility.

Most seniors on Medicare aren't going to have the funds to contribute to an HSA. So.. how does this help them again?

 

[Yagents]

Why should I be penalized to buy a boat with my HSA after age 65?

They are just trying to find the $$$ to offset the loss of tax revenue.
I think everyone should be able to fund an HSA account.
Regardless of plan type or age.

 

[Travis Price]

Why should I be penalized to buy a boat with my HSA after age 65?

They are just trying to find the $$$ to offset the loss of tax revenue.
I think everyone should be able to fund an HSA account.
Regardless of plan type or age.

Well, because HSA's weren't really meant to be retirement accounts.. They were meant to be vehicles to pay for medical expenses due to HDHP... It's why you get triple tax advantages. It's the same reason why there are limits on a Roth.

If you want to use your funds tax-free, there are other avenues. Such as borrowing against appreciating assets in an interest-only loan.

I'm not saying that changing this law is good or makes sense... and under the current law you can use those funds however you want after 65. Considering the last time they tried to sell this it didn't even get out of committee..

There are benefits.. but They're not the best in the exchange.. considering most seniors aren't stashing money in retirement. That's what the other 47 years are for...

 

[Helpico_Insure]

I sure hope this doesn't pass........I'm hoping to use my HSA for Medicare premiums, and as a back up retirement plan.

https://www.cnbc.com/2022/04/18/med...-put-money-in-hsa-plans-under-house-bill.html

The bill does come with a tradeoff: It would remove the ability to use HSA withdrawals to pay for Medicare premiums — something that’s currently allowed. It also would eliminate penalty-free withdrawals for nonmedical expenses in the 65-and-older crowd as now permitted.

All long term plans are postponed especially from people over 62. HSA and MSA are niche products and if the government is touching them , it means it is bagging for money. How bad the financial situation really is???