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Health Savings Account with high medical expenses

I am on Cal-COBRA after working for a small employer. I have an HSA- compatible policy and an HSA, but my premiums are high (because of my age) and I use up my deductible and out-of- pociet maximum every year, and also have a lot of uncovered health expenses because some of my doctors are out-of-network.

As a result, I can count on my medical expenses exceeding the 8% threshold for deductibility every year.

ISTM to me that the Health Savings Account is actually not saving me any money -- I put $3500 (pre-tax) into the HSA and then take it out again (untaxed), but that $3500 is just $3500 less in deductions once I exceed the deductibility threshold. But maybe the tax experts here have a different view?

If it makes a difference, I live (and pay taxes in) California. And I expect my combined state & federal "next dollar" tax rate to be about

20-25% for the next 3 years (until I start getting Social Security at age 66).
Reply to
Barry Gold
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"Barry Gold" wrote

For one, the pre-tax lowers your AGI, so you can deduct more medical and possibly other expenses that may be AGI sensitive.

I'd keep doing it.

Reply to
paulthomascpa

More specifically, you can deduct an additional $280 in out-of-pocket expenses (8% of $3500), on top of the effective $3500 deduction from this being pre-tax money.

Reply to
Barry Margolin

The threshold is 7.5%, or did it change to 8% in one of the recent tax bills?

Also, under AMT, only deductions in excess of 10% are allowed.

Like stimulus checks, homebuyer's credit, deduction for misc expenses, phaseout of itemized deduction, AMT exemption, etc.

That should be $262.50, assuming 7.5%.

Reply to
removeps-groups

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