Saturday, September 17, 2011


Remember the switch to the Health Savings Account?

I emailed the partner in charge of payroll and told him I wanted to contribute $512.50 per month including the firm's $87 portion. Well, he must have read my email too quickly (or maybe he just wanted to make me sweat). Because out of my semi-monthly paycheck they took $512.50! That's $300 more out of my check than I was expecting!!

But after sleeping on it, I've decided I'm going to try and leave it like it is. I'll end up putting in $4,100 before the end of the year. And the firm will contribute an additional $348. That goes a long way towards the $5,000 deductible we now have. And if we go four months without approaching that deductible, this might be my "forced savings" way for the upcoming orthodontist expenses.

I didn't have any real plans to SPEND that money. It would have gone into a holding pattern to hopefully put into my Roth. But braces are in the 9 yr. old's future.....I might as well face it. We have our initial consultation with the orthodontist next month....I'll know more then what I'm up against. At least it won't be such a sticker shock knowing that gobs and gobs of money are being set aside right now for it!!!


  1. Not sure about them all but my health savings plan had to be used by the end of each year. If not, I lost the money and the plan would begin again the following year. Just checking.

  2. Thanks for checking on me Rita. I'm guessing you're talking about a Flexible Spending Plan. Those are definitely use it or lose it.

    A Health Savings Account is a little different animal. You can only open one if you have a High Deductible insurance plan (our deductible is $5,000 for the family). And for the family you can set aside a maximum of $6,150 per year pre-tax to offset those costs. If you don't use it, it carries over. You can even carry it from job to job. I think when you hit age 55 you can even put in an additional $500 or $1000 per year. Then as long as you use that account solely to reimburse medical expenses, it's tax-free on the withdrawal and all the earnings are tax-free. You can withdraw to reimburse yourself for any medical expenses incurred after the date you started the High-Deductible Plan. So you can reimburse yourself 3 years from now for a qualified medical expense that might happen today. You can even pay long-term care premiums or COBRA coverage with it. It's kind of like an IRA for medical expenses.

    If, after age 65, you decide to make withdrawals for non-medical reasons, you can still pull out the money penalty free, you would just pay tax at your normal tax rate....exactly like an IRA.

    I'm just planning on using it as a short-term vehicle to get those braces paid for on a completely pre-tax basis. I have two who are going to need braces. And I won't be one bit shocked if the first one's end up in the $8,000 range. Her teeth are SOOOO bad.