Demographics:Single, over 55. Typical out of pocket medical expenses are $3000.
Insurance options:
A. High deductible plan that is HSA-eligible.
B. High deductible plan that is not HSA eligible because it includes a $600 HRA (health reimbursement arrangement) and FSA option.
The premiums and deductibles for plan A and B are identical but the stop-loss for plan A is slightly higher because the IRS keeps increasing it.
I have been taking plan B. The HRA covers $600 of my out of pocket expenses (free money from my employer) and I have a $2400 FSA, so my other expenses are pre-tax, but I don't accumulate anything. If I switch to plan B in 2025, I could contribute $5300 to an HSA. I lose the $600 in free money, but I would accumulate $2000 per year in an HSA that I could keep after retirement. However, age 65 is only about 8 years off, so my maximum holdover HSA would be $16,000. In order to get the extra pre-tax $3000 to contribute to the HSA (over the $2400 I already put in an FSA) I would have to reduce my Roth IRA contribution by $2100 per year.
Every time open enrollment comes around and I think about this, I always decide that the $600 of free money and putting extra money in the Roth IRA is better than accumulating an HSA, especially given the short time frame. Do you agree, or am I missing something?
