Need advice on dealing with big medical bills and a health savings account (funds, HSA)

[syanosy]

Last year my husband and I got a new high deductible health plan with a health savings account. We have lots of medical bills. For 2011 and 2012 I am trying to plan our expenses in a way to maximize our tax savings.

In 2011 we have already hit our HDHP deductible of $6,150 due to extensive testing before we undergo IVF and knee surgery. My husband has the heath savings account funds taken out of his paycheck before taxes on a regular basis ($236 every two weeks for the annual maximum of 6150). We have been paying with our HSA funds up until now, but since I just had surgery we have huge bills and won't have all the money in our HSA until the end of the year. As of now I was planning to pay the bills with my savings and then reimburse ourselves from the HSA account at the end of the year, withdrawing the rest of the 6150.

However, we are about to start doing IVF, which is going to run us anywhere from $20k to $40k. This is not covered by insurance, we will just be paying for it with our savings, not the HSA since the HSa money is only enough to cover the non-IVF bills we already have. So it occured to me that because our 2010 adjusted gross income will be about $80K, making the medical expense deduction minimum about $6000, our medical expenses for the IVF alone would make it worthwhile to itemize on our 2011 taxes rather than take the standard deduction as we always have in the past.

So my question is, should we just stop paying for our medical bills with the HSA funds altogether and just let that account grow? This way we could add the amount of the bills we pay with our savings (about $3000) to our medical expenses deduction. If we reimburse ourselves for them with the HSA funds they don't count toward the medical expenses deduction. We hope to be having a baby next year so we could use the leftover HSA funds to pay medical bills in 2012.

Any thoughts on this are appreciated. Am I missing or forgetting something? I am pretty good at financial stuff but with all the doctor's bills and insurance headaches, adding in the tax implications make my head spin. Thanks in advance!

[bradykp]

Originally Posted by syanosy

Last year my husband and I got a new high deductible health plan with a health savings account. We have lots of medical bills. For 2011 and 2012 I am trying to plan our expenses in a way to maximize our tax savings.

In 2011 we have already hit our HDHP deductible of $6,150 due to extensive testing before we undergo IVF and knee surgery. My husband has the heath savings account funds taken out of his paycheck before taxes on a regular basis ($236 every two weeks for the annual maximum of 6150). We have been paying with our HSA funds up until now, but since I just had surgery we have huge bills and won't have all the money in our HSA until the end of the year. As of now I was planning to pay the bills with my savings and then reimburse ourselves from the HSA account at the end of the year, withdrawing the rest of the 6150.

However, we are about to start doing IVF, which is going to run us anywhere from $20k to $40k. This is not covered by insurance, we will just be paying for it with our savings, not the HSA since the HSa money is only enough to cover the non-IVF bills we already have. So it occured to me that because our 2010 adjusted gross income will be about $80K, making the medical expense deduction minimum about $6000, our medical expenses for the IVF alone would make it worthwhile to itemize on our 2011 taxes rather than take the standard deduction as we always have in the past.

So my question is, should we just stop paying for our medical bills with the HSA funds altogether and just let that account grow? This way we could add the amount of the bills we pay with our savings (about $3000) to our medical expenses deduction. If we reimburse ourselves for them with the HSA funds they don't count toward the medical expenses deduction. We hope to be having a baby next year so we could use the leftover HSA funds to pay medical bills in 2012.

Any thoughts on this are appreciated. Am I missing or forgetting something? I am pretty good at financial stuff but with all the doctor's bills and insurance headaches, adding in the tax implications make my head spin. Thanks in advance!

i'm no expert, but i think your thought process sounds logical. since you can keep the HSA for as long as you want either way, and spend it when you're 70 if you want to....you don't have to spend it all like i have to spend my FSA.


just as an aside...i'm not trying to tell you what to do or not to do, so don't take me giving you this article to read the wrong way...this struck me as interesting and i happened to read it yesterday, so it came to mind when i read your post. it has to do with some of the things associated with IVF that folks often aren't aware of, or don't keep in mind, because of the obvious emotional aspects of the process. so like i said, please don't take this the wrong way...it's just good information i'd like to share:

Taming The Twin Trend From Fertility Treatments : NPR

good luck! i know through close friends how difficult emotionally the process can be! wish you the best.

[syanosy]

Thanks for your opinion, no offense taken on the IVF article...nothing wrong with sharing information