As I understand it, even when we are no longer employed, we can contribute up to $6350 this year (each), with $1000 “catch-up” because we’re both over 55.
Not exactly. The $6,350 allowable contribution for 2022 (indexed each year) is probably not ‘each’ assuming you are married*. If you are covered by a family plan, a married couple can only contribute a total of $6,350 for the allowable contribution. That $6,350 can be split between HSAs for each one, or contributed fully to an HSA belonging to one or the other. Plus each person over 55 can contribute $1000 in catch-up contributions to their own HSA. So a couple MFJ can contribute a total of $8,350 of which at least $1000 has to be contributed to each person’s HSA.
*There is a loophole for unmarried domestic partners who get family coverage - they can each contribute the $6350 to their own HSA.
I will point out that you will also have to maintain HSA compliant insurance, often known as an HDHP (High Deductible Health Plan), in order to continue making contributions. So if you’re keeping your employer’s HDHP insurance in retirement, you will still be able to make HSA contributions. If you’re getting other insurance, you will need to be sure it’s an HDHP before you make contributions to your HSA. And contributions for any years that you have HDHP coverage for only part of the year must be pro-rated. See IRS Pub 969 https://www.irs.gov/pub/irs-pdf/p969.pdf for details
I’m wondering how beneficial this will be, though. It’s HSA Bank. Banks pay crap rates. Sure, for pre-tax money it’s fine. Basically like an FSA that rolls-over. But money from savings? Not sure that would make sense.
I haven’t looked into HSA Bank for a while, but at the time I did, I think it was because they offered investment options through Vanguard. I don’t know if they still do offer these investment options, or if this plan is through your employer, if your employer would have had to make this a specific offering of their plan. If you don’t recall seeing any investment options on your HSA Bank account, those issues may be the reason. I also seem to remember that HSA Bank charged monthly or annual fees to have some of the account invested.
You are always free to change HSA administrators, even while you are still employed by the company sponsoring the HSA. Fidelity offers an HSA with investment options that doesn’t charge any fees, and I’ve heard good things about them: https://www.fidelity.com/go/hsa/why-hsa?imm_pid=700000002058… I think there are other HSA administrators that offer no fee investing, too.
Or am I overlooking something? Most of the stuff I’m reading is about HSA while employed, and before Medicare.
You don’t have to be employed to make contributions to an HSA - you just have to have HSA compliant insurance (see above). That said - much of the insurance in the US is tied to employment, and many employers offering HDHP insurance provide an HSA through payroll deductions, so that’s probably why what you’re reading ties HSAs to employment. If you make HSA contributions through payroll deductions, your contributions are exempt from SS and Medicare payroll taxes. But if you don’t like the HSA account that your employer offers, you are free to start an HSA with another administrator, although that generally will mean missing out on the payroll tax savings and any contribution your employer would have made. (Some employers offer to send HSA contributions from payroll to an administrator you choose, so you could still get the payroll tax savings - most don’t.)
If you have an HSA, but no longer have HSA compliant insurance, you can still use the HSA to pay for (or be reimbursed for) most eligible medical expenses without incurring taxes or penalties. I say most because pre-Medicare medical insurance premiums, other than COBRA premiums or premiums paid while you are receiving unemployment benefits, are not HSA eligible expenses, even though they are eligible medical expenses when figuring Schedule A deductions. Some Medicare insurance premiums are also eligible for HSA reimbursement.
After the date you opened your HSA account, you can also save documentation for health care expenses that you pay out of pocket, and get reimbursed from the HSA at a later date. So if you can afford your co-pays and deductibles now, but may want tax-free income in the future, just save your receipts.