These US healthcare systems are effectively scams. Yes in theory they can save you money, however in theory there is no difference between theory and practice, while in practice there is.
Haven’t had the time to watch the entire video yet, but is there an actual mention of HSA? The video seems to be specifically about FSA and its use-it-or-lose-it policy. I’m currently on an HSA as it seems to be the best option in the current system for someone who is still relatively healthy and doesn’t get sick or need to go to the doctor often. I’d be curious to know what the risks are.
Unfortunately his talk is almost entirely about FSA. Here’s a word of caution about HSA from CNBC: 91% of people with health savings accounts make this mistake
- Just 9% of health savings account owners invest a portion of their funds, according to the Employee Benefit Research Institute. The rest, 91%, hold cash.
- Ideally, savers would treat HSAs like a retirement account, by investing for future health costs in old age.
- However, HSA investing may not be available to everyone. Doing so would mean paying out of pocket for short-term health expenses to let money grow.
The private financial company—which you don’t get to choose—gets its cut as well, in fees, some which are hidden.
I’m currently on an HSA as it seems to be the best option in the current system for someone who is still relatively healthy and doesn’t get sick or need to go to the doctor often.
It’s a gamble we shouldn’t have to be making. We’re healthy until we’re suddenly, unexpectedly not.
this is ridiculous. hsa funds are used by people of modest means in the year it is taken out. If any is saved its in simple interest or very conservative investments. if you lucky enough to not have health care costs for enough years, then you can start investing like its an ira which it actually is. In retirment it can be used for any purpose.
The private financial company—which you don’t get to choose—gets its cut as well, in fees, some which are hidden.
Not disagreeing with anything, but people should know that even if you’re locked into a crappy HSA provider through your employer, like BenefitWallet, you can and should still open an HSA with a good provider, like Fidelity, and max out and invest contributions there.
Just don’t forget to save all the receipts for out-of-pocket health expenses.
You can also transfer your funds from you company’s shit provider to your own HSA account.
I didn’t watch the entire video either, but early he talks about HSAs in the context of which types of FSA is available for people on high- deductible plans with an HSA.
Weird FSA trick tho; if you borrow from an FSA, spend it in full in, say… the first month of the year, quit your job. You never have to pay it back.
Happened to me by accident. I started a plan to pay for LASIK. Got it. Had no way of knowing back then I’d be made another job offer. Took it and expected to get dinged with the entire amount. Nope. FSA plan eats the loss.
So all you gotta do is plan very specifically months ahead and triple down by orchestrating a job change all to save $2k :) easy.
This is an actual FSA ‘loophole’. Easily searchable.
It’s the analog to how the industry lobbies to get preferential tax treatments for these accounts. 99% of the time your employer or the insurer keeps money at the end of the year. If you’re smart about when you leave your employer though(leave after exhausting your FSA early in the year), or have advance notice of it, you can walk away and beat the game.
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When you start an FSA the funds are front loaded. You can immediately spend everything. But you pay it back over the course of the year. So if you leave and all the funds are spent - you don’t owe them a repayment and they can’t exactly keep deducting from your paycheck.
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Maybe so! The one at mine worked like this:
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You elect in advance how much you want to fund your FSA in the next upcoming period (year)
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On day 1 of that period the FSA is available to you to spend on eligible expenses. Within 2 weeks I spent the full years elected amount (one surgery).
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For the duration of the period they deduct (pre-tax) the total FSA election / pay periods (ie. $2000/24 in my case). And that would repeat through the full period (year).
So in my case, leaving after paycheck 1 of that period, but spending 100% of the elected funds means I paid: 1x(2000/24)= $83. But I spent $2000. Upon leaving that meant they did not collect $1917.
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Of course it’s a scam. “We’ll keep your money for ourselves and never give it back if you don’t spend it this calendar year”? Get the fuck out of here! That’s not to mention the hurdles they make you jump through every time you actually use it, having to upload or mail receipts, fill out forms, etc…
It works incredibly well for my family. We can put $3,200 in the FSA next year and not get taxed on it as well as spend the money tax free. You can buy cold medicine, advil, go to the dentist, go to the doctor, etc.
Same. I put in $1,500 last year and saved like $450 in taxes. I just elected to put in $2,000 next year. It’s totally worth the few seconds it takes to snap a pic of a receipt in an app to save $450 or more.
Why are your health expenses taxable in the first place?
Don’t fall for “orphan crushing machine” policies.
I’m not saying we have a good system. I mean a better system would be to write off medical expenses when you file your taxes after the end of the year rather than this awkward in-advance thing. I’m just saying that FSAs are not a scam in that they’re intentionally designed to fleece you. The whole system sucks.
If you follow the intentionally onerous rules, you might get to spend some of your own money on healthcare without being taxed.
Ask yourself why you had to jump through those hoops in the first place.
These are policies created by bad people to rip off ordinary Americans. Making healthcare appear affordable also deflects calls for universal healthcare like they have in every other developed country.
Basically HSAs are a scam put out by health insurance lobbyists.
I’ve only been at two jobs that offered an FSA but both had resources explaining clearly that it is use it or lose it. And my personal risk aversion is why I chose an HSA instead. But it seems like a good idea for people to be able to save money by saying “This isn’t really income, since I am confident it’s only going to a demonstratable health expense. So don’t tax me on it.” It’s like a business expense can be tax deductible, and you are in the business of living. But then you don’t get to take home extra money for being under budget. When used correctly, it’s a tool to drive down living expenses and is more efficient for lower incomes since it uses a flat max annual deduction.
I don’t want to victim blame people that lose money by overcommitting, but it’s not like this is in fine print. You can get short articles that explain it in simple terms just by googling “fsa” before committing thousands of dollars to something. If you don’t have much idea what your minimum spending on healthcare will be, just keep it as income for full freedom or use a different tax-advantaged option. It’s just meant to be an option for people with good awareness of budgetting to save some money.
It’s not even necessarily by calendar year, as Breunig and many others find out the hard way.
It’s not a scam, it’s just a pain in the ass. If you use it right, you end up saving money.
If you’re interested in taking advantage of one but skeptical, try funding it with only the amount you can roll over and then you won’t lose any at the end of the year. My FSA (FSA feds, the one in the video) has an app that you use to take pictures of receipts to get reimbursed.
I think the real use case for FSAs is people who have regular or predictable health care costs. If you know that, every month, you need $500 for insulin, or every year you have two $200 dentist visits that aren’t covered by insurance, then paying those expenses with pre-tax money can be a big savings - saves federal tax, payroll tax, and state tax. If you’re a young, healthy person whose biggest health expense is hangover advil, then FSA is not for you.
The vlogger’s problem is he was putting money into the FSA “just in case,” and got screwed because he didn’t have need. I’m sure there are tons of HR departments out there that do a terrible job of explaining the use-it-or-lose-it nature of FSAs, so it’s valuable to have the rant out there, but they are good accounts for the people that benefit.
Well I have a kid and a wife. I don’t have “regular” healthcare costs but I know damn well we’ll be shelling out some bucks on sunscreen, bandaids, ibuprofen and Tylenol, contacts and solution, etc etc. Sometimes we’ll budget more of we know we’ll need new glasses or something. I mean, yeah, it’s a guessing game, but that you can roll over $610 you don’t have to nail it to the penny. Totally worth the few hundred dollars we’re saving in taxes.
A system designed to make ordinary people lose their own money for not following paperwork IS a scam.
Lol never fund more than ur deductible through your FSA. This is obvious.
They are a scam, but they are also yet another tax loophole for people that are rich enough to be unconcerned with the broken healthcare system. They are pushed by the investment banks that actually manage all that money and large corporations sign their employees up for these plans because they count as “providing healthcare,” so they aren’t penalized, also the various HR departments and other C-Suite execs get huge kickbacks and bonuses for cutting employee costs.
They suck in more ways then just stealing people’s money.
What’s funny is that, if you’re rich enough to take advantage of it, the advantages that it provides are kinda small potatoes, especially considering the BS paperwork they require.
That is true. But if you are rich enough to take advantage of it, you aren’t necessarily handling your own finances personally. This doesn’t mean you are a billionaire, merely a <10millionaire or “middle-class” as the Democrats would say. The same people who were clamoring for pell grants for entrepreneurs who operate a business in a disadvantaged area for 3 years. Or the people who can afford to “run” a non-profit while they are attending Harvard or whatever.
Basically if you don’t need it, it’s trivial to benefit from it.
