This will be the last of three blog posts concerning health care. I just completed truck research and will get that posted soon. I’ve come up with a short list of trucks I’m interested in as well as an idea of how we intend to purchase one and when.
On the home front, Karen now has an Instant Pot and loves it. Three people at work also bought one and we all plan to share recipes. Karen made the best spaghetti she has ever made, browning the meat, putting in the sauce and noodles without dirtying any other dishes. And the chicken wings she cooked up were as good as any restaurant.
Now on to health care. I want to mention a few notes about legislature that’s in the works as well as a seldom known way to fund a Health Savings Account if you have a high deductible health insurance plan.
In an earlier post I mentioned how a co-worker uses a doctor who does not except insurance. His doctor is following this blog. On Dr. Rigg’s website there is a link to the Primary Care Enhancement Act of 2017 as well as a host of information concerning health care reform.
Per congress.gov “this bill will permit an individual to pay primary care service arrangement costs from a health savings account; and allow an eligible taxpayer enrolled in a high-deductible health plan to take a tax deduction for cash paid into a health savings account, even if the taxpayer is simultaneously enrolled in a primary care service arrangement. Under a primary care service arrangement, an individual is provided coverage restricted to primary care services in exchange for a fixed periodic fee or payment for such services. For the purposes of certain tax-deductible expenses for medical care, the bill expands the definition of “medical care” to include periodic provider fees, including: (1) periodic fees paid to a primary care physician for a defined set of medical services or the right to receive medical services on an as-needed basis; and (2) pre-paid primary care services designed to screen for, diagnose, cure, mitigate, treat, or prevent disease and promote wellness.”
If I understand it correctly, this would allow an individual to pay a monthly fee to their doctor who provides primary care services for basic medical needs. And one could make the payments from a tax-exempt Health Savings Account (HSA) which might be a reason it is contested. In other words, this would become a form of health insurance whereby the darn insurance company (and their profits) are taken out of the equation.
Regarding funding a Health Savings Account (HSA): Karen and I are doing this through a plan at work whereby my employer also contributes money. At retirement, I hope to have built the account up. I’ll turn 55 years of age next year and will take advantage of the catch-up rule where I can contribute an additional $1,000 on top of the maximum allowed for a family. I just found out the law allows a once in a lifetime contribution to an HSA from an IRA. I think this one-time transfer would be rarely used but might be a way to fund an HSA if one does not have the cash during a given year to make a contribution to an HSA. Here are my notes:
One time transfer of IRA money to a HSA account. The once-in-a-lifetime transfer from an IRA to an HSA does not increase the maximum you can transfer is your normal HSA contribution limit. In other words it’s not on top of your normal contribution limit. If you do the transfer, it reduces dollar-for-dollar the amount you can contribute in other ways, either directly or through your employer. The transfer from your IRA to your HSA is not taxable, but you also lose the tax deduction you otherwise would get if you contribute normally. If you do the transfer you must also commit to staying with an HSA-eligible high deductible health plan for 12 months. If you fail the commitment, the transfer becomes taxable and you’d have to pay a 10% penalty. The benefit is that the transferred funds and all earnings thereon could eventually come out tax-free, provided they are used for medical expenses. A qualified transfer from an IRA to HSA once you are on Medicare is not allowed.
- As a side note, government rules allow an investor to distribute IRA funds to pay for medical expenses. The 10% early distribution penalty may be avoided if proceeds are distribution prior to 59½. So you don’t need to move money from an IRA to an HSA to use it for medical expense. However there are special rules such as if you spend out of the IRA that years medical expenses must be at least 10% of your adjusted gross income.
- For 2017 the IRS defined “high deductible” as any deductible higher than $1,300 for an individual or $2,600 for a family, so your health insurance plan has to meet that threshold for you to qualfy for an HSA.
- My HSA has investment options so I would not be losing what the IRA savings would have earned through investment.
Do your own homework before you decide to transfer money to an HSA from an IRA.