Anybody Using Or Planning To Use An Hsa In The Philippines

[davewe]

This is a US only thing, so I don't expect other expats to understand.

 

About a year ago my employer shook up all our insurances and I now have what is considered a high deductible insurance with an HSA (Health Savings Account). At 1st I was pissed but the more I reviewed it the better I liked it. One thing I like is that I can save (pre-tax money) in the HSA and then after I retire use that money to pay for out of pocket medical expenses. In addition, I may be able to pay insurance premiums using the HSA.

 

Is anyone already doing this in PI? I see no restrictions that don't let me do this. So my plan is to fund my HSA as much as I can over the next couple years until I retire.

 

So far the only disadvantage I see is that my HSA debit card, which functions like a VISA would no doubt charge me a fee for international transactions.

 

Any opinions? This seems like a nice way to save that medical emergency fund using untaxed money.

Edited September 28, 2014 by davewe

[intrepid]

That's interesting.  I did not know you could use it for long term after retirement.

Since I retire in about 10 months I don't have much time to save.  I wonder if I could transfer some of my pre-taxed savings into an authorized medical savings account?  It may be time to have another talk with a CPA tax adviser. 

[davewe]

That's interesting.  I did not know you could use it for long term after retirement.

Since I retire in about 10 months I don't have much time to save.  I wonder if I could transfer some of my pre-taxed savings into an authorized medical savings account?  It may be time to have another talk with a CPA tax adviser. 

Well the advantage of the HSA is that like a 401k, it is pre tax money. But beyond the 401k which eventually you will have to pay taxes on (when you start collecting), in the case of the HSA, as long as the expense is a covered medical expense (doctors, hospitals, prescriptions drugs, etc.) then you will never be taxed on the money.

[earthdome]

When I retired early 2013 I elected to use a high deductible health insurance with an HSA. You can fund your HSA yourself as needed. That money then becomes non taxable so the money you spend from the HSA is before tax. I can't use the HSA debit card in the Philippines so I just keep the receipts for covered expenses and enter them online to get reimbursed by my HSA, the reimbursement is deposited electronically in my bank account.

[intrepid]

When I retired early 2013 I elected to use a high deductible health insurance with an HSA. You can fund your HSA yourself as needed. That money then becomes non taxable so the money you spend from the HSA is before tax. I can't use the HSA debit card in the Philippines so I just keep the receipts for covered expenses and enter them online to get reimbursed by my HSA, the reimbursement is deposited electronically in my bank account.

earthdome,

So do you have to scan the receipts or just enter the info?  Can you use your HSA to also pay your high deductible insurance. 

My employer offers HSA but I have not used it yet.  Now I will check to see if I can retain it after retirement and use similar to you in the PI.  Another advantage would be to help lower my retirement income. 

[Gator]

One of the many hats I wore before selling off my company was "health plan administrator" for my company. In 2004 in order to save costs for both me and my employees, as well as to offer a better plan to my company employees and to 100+ "subcontractors" (I paid them on a 1099) I had working for me, I switched over to and offered a High Deductible Health Plan/HSA. To qualify for an HSA you must have an HDHP, currently it must have a min deductible of $1,250 / $2,500 (Individual / Family) and they can be with separate institutions (i.e.: a Blue Cross health plan and an HSA with Wells Fargo Bank). You are also allowed to earn interest on the HSA or invest it (Vanguard has over 2 dozen qualifying mutual funds available - note that I am not recommending them; and Wells Fargo offers some options as well). As long as the interest earned, when added to the contribution, is below the max allowable annual amount (see below) then it too remains tax free.

 

Once you either go onto Medicare or turn 65 the HSA basically becomes an IRA; but the main difference is that if you use it for qualified med expenses the money is tax free; if used as income then it's subject to income taxes. The keywords are qualified medical expenses; until recently you could use your HSA debit card for OTC meds, dental expenses and even prescription glasses / contact lenses. Currently you can use it to pay your health care premiums (all or any part of) or for supplemental insurances once you switch over to Medicare, but that may change too.

 

Most HSA account's provide you with a VISA backed debit card, which can also be used as a credit card, so yes, it can be used in the Phils anywhere VISA is accepted. But remember, only for qualified medical expenses otherwise it's considered as taxable income. Due to international and terminal fees it might not be practical to use it there for smaller qualified purchases, such as meds, however it could be useful if you need it to pay a larger hospital or ER bill.

 

Typically once you cancel your HDHP then your HSA is automatically converted to an IRA. It's "locked" until you turn 65 and subject to the same early withdrawal penalties imposed on an IRA too. I strongly suggest you review your plan with your administrator, or call your provider, before going to the Phils. In addition, you may want to consult with your tax advisor too.

 

 

 

 

So my plan is to fund my HSA as much as I can over the next couple years until I retire.

 

For 2014 the max tax free amount you can contribute is: Individual = $3,300; Family = $6,550. If your 55 or older you can contribute an extra "catch-up" amount of $1,000 per annum until you hit 65. You can contribute more then the amount(s) listed, but it would subject to income tax.

 

 

 

So far the only disadvantage I see is that my HSA debit card, which functions like a VISA would no doubt charge me a fee for international transactions.

 

Not only that, but you could be hit with terminal fees as well and, depending on the financial institution you have your HSA at, a crappy exchange rate too. Best if you have another account you can electronically transfer it to, then withdraw from in the Phils or perhaps even do an annual wire transfer to your Phils based account; just be sure to keep you med receipts as non med withdrawals would subject to income tax.

 

 

 

I did not know you could use it for long term after retirement.

 

Yes, but it's only tax free if used for qualified med expenses. If not, then it's treated the same as withdrawals from an IRA.

Edited September 29, 2014 by Gator

[intrepid]

Gator,

Thanks so much for all the info.  I was just reading my employers Flex spending plan and then the details from Bank of America.  BoA or one you mentioned would be much better for me since my employer does not allow end of year carry over.  I am currently reading over IRS Publication 969.  Trying to determine if I could use a HSA for paying insurance premium for insurance bought outside the US,...like in the Philippines.   I'm thinking not.  But still reading.  Do you happen to know the answer?

[OnMyWay]

I had an HSA but I started too late to get much into it, so I used it up and closed it after I retired.

 

It is a good plan but you need to get it going for a while and invest the monies so you profit from the tax free returns.  I think in our plan we could not invest the money for the first year.  Also, Chase, the bank they used, charged a lot of fees.  I think the last part of my account was piddled away in monthly fees.

[Gator]

Gator,

Thanks so much for all the info.  I was just reading my employers Flex spending plan and then the details from Bank of America.  BoA or one you mentioned would be much better for me since my employer does not allow end of year carry over.  I am currently reading over IRS Publication 969.  Trying to determine if I could use a HSA for paying insurance premium for insurance bought outside the US,...like in the Philippines.   I'm thinking not.  But still reading.  Do you happen to know the answer?

Your welcome. I thought FSA's were a thing of the past :).

 

As far as I know for tax year 2014 and onwards you can no longer use an HSA to pay for HMO's or any other type of insurance. My tax advisor is pretty good, but even she is confused when it comes to a lot of the recent and upcoming changes with our beloved "Obama care" and it's effects on HSA's. Publication 502, which deals with HSA's, has not yet been updated for 2014 so who knows what the IRS will finally do.

 

As long as you have an HDHP you can open an HSA with any financial institution that offers it. Personally I like Wells Fargo for a few reasons, their interest rate was higher then most of their competitors on a regular HSA account, their admin fees were the lowest at the time and they offer the possibility to invest in other markets (like mutual funds) once your HSA balance hits a certain amount; it was $1,500 to make sure you had enough to always cover your deductible, but I think it may be higher now.

 

Note: I sold my company 2 years ago and I don't really keep up on the changes too much anymore; so again I strongly recommend consulting a tax advisor or your company's health plan administrator.

Edited September 29, 2014 by Gator

[earthdome]

 

When I retired early 2013 I elected to use a high deductible health insurance with an HSA. You can fund your HSA yourself as needed. That money then becomes non taxable so the money you spend from the HSA is before tax. I can't use the HSA debit card in the Philippines so I just keep the receipts for covered expenses and enter them online to get reimbursed by my HSA, the reimbursement is deposited electronically in my bank account.

earthdome,

So do you have to scan the receipts or just enter the info?  Can you use your HSA to also pay your high deductible insurance. 

My employer offers HSA but I have not used it yet.  Now I will check to see if I can retain it after retirement and use similar to you in the PI.  Another advantage would be to help lower my retirement income. 

 

 

I just have to enter the info on the HSA website. I do keep the receipts just in case. I keep a spreadsheet to enter the data including the FX rate that day if needed to convert from peso to USD. In my case the HD insurance is paid for by my employer as part of my retirement.