On Thu, Sep 18, 2008 at 2:05 PM, Curtis Griesel <cwgriesel at gmail.com> wrote: > > Sure, I could use the money I put into the HSA, but that also defeated the >> purpose of having it IMO. Because the money you deposited into the HSA was >> deductible as was the money you spent on medical expenses (so long as they >> met IRS requirements). >> > > I'm not an accountant, but a little clarification might be useful. Money > put into an HSA is not deductible from your taxes, it is completely tax > free. It is not counted as earned income for tax purposes. Money spent on > healthcare after it has been taxed as income is deductible, but only on a > percentage bases. > > So even if you spend your entire HSA on your deductible, you still end up > ahead tax-wise because you paid no income tax on the money in your HSA. If > you used non-HSA taxed income to pay your medical bills, you can deduct that > expense from your taxes, but only as an itemized deduction which reduces, > but does not eliminate the tax on that income. > Yes, there's a difference between pre-tax income and deductions. However, in the simple scheme of things, they're roughly the same when it comes to paying less taxes. I was attemtping to simply it, and not over analyze the mess. Here's the point I was attempting to make: Let's say I have a $5,000 deductible on my HSA plan. This means that I have a $5K HSA deposit limit. You can either deposit the money and use it to pay for medical expenses. Or, you can deposit it and pay for your medical expenses out of pocket to take advantage of the HSA deposit as well as the medical deductions. Which of those two options gives you the best tax write off? Personally, I wish they'd just get rid of the whole overly complex tax laws/code BS and go with a straight flat percentage of your annual income. But, that's another rant... One other important factor about having HSA's: The money you deposit into it carries over year after year. It does not disappear if unused like an FSA. Once you reach a certain age, you can no longer deposit into the HSA and the money reverts to being an account you can use for long term care if need be. As to your comment regarding getting rid of the administrative overhead... To a point I will agree. However, the problems like so much deeper than just administrative BS and the shenanigans the insurance and medical industries play on all of us. There's far too deep of a problem with the health industry as a whole. -- -Shawn -------------- next part -------------- An HTML attachment was scrubbed... URL: http://mailman.mn-linux.org/pipermail/tclug-list/attachments/20080918/95b30ead/attachment.htm