Employer contribution - HSA or aftertax account?

[Annie7]

Another benefit selection question. 

My company will give us $1000 matching if we select one of the High deductible medical insurance plans. They can either put it into our HSA account  or into a Wellness account . The Wellness account is use it or lose it by end of year. It can be used for many things like gym membership, massages, meal kits, parent plus loan repayments, cell phone bill, etc. Which option should I choose?

I am leaning towards the Wellness account. My thinking is that I can reduce my taxable income by $1000 if I put in the $1000 into HSA myself. I can pay the aftertax expenses like my cell phone bill with the Wellness account.

Would you choose the matching go into HSA instead? If so, why?

Thanks for helping me decide.

[bean29]

Can you have both a Wellness account and an HSA?  Idk, we do not have the option of a wellness account.

We don't need my income, I really work for insurance.  Personally I would only use the Wellness account if I was already maxing my HSA, and I could do both.  HSA is tax Free going in and out, and you can leave it sit as long as you want to.  I currently have just under $17,000 in my HSA.  Family deductible is $5600, OOP max is 10,000 we have spent $5,956.60 to date, so $17,000 is not really that much in the whole scheme of medical costs these days.

My company does not give us anything for the deductible, imho this is a nice perk no matter which choice you make.

[haapai]

My company does not offer a wellness account option.  Is the employer contribution considered taxable income for the recipient?

Myself, I'd choose the HSA because it is use it or lose it and I can't see myself spending $1000 a year on the things that you mentioned.  (I live really cheaply.) 

[Annie7]

Nov 2, 2022 15:20:00 GMT -5 bean29 said:

Can you have both a Wellness account and an HSA?  Idk, we do not have the option of a wellness account.

We don't need my income, I really work for insurance.  Personally I would only use the Wellness account if I was already maxing my HSA, and I could do both.  HSA is tax Free going in and out, and you can leave it sit as long as you want to.  I currently have just under $17,000 in my HSA.  Family deductible is $5600, OOP max is 10,000 we have spent $5,956.60 to date, so $17,000 is not really that much in the whole scheme of medical costs these days.

My company does not give us anything for the deductible, imho this is a nice perk no matter which choice you make.

Yes, I can have both accounts. 

I have nearly $50K in my HSA since I've been maxing it out and luckily I've not had much medical expenses. Most of it is invested.

[Annie7]

Nov 2, 2022 15:35:54 GMT -5 haapai said:

My company does not offer a wellness account option.  Is the employer contribution considered taxable income for the recipient?

Myself, I'd choose the HSA because it is use it or lose it and I can't see myself spending $1000 a year on the things that you mentioned.  (I live really cheaply.) 

Yes, it is considered a taxable income for me.

My cell phone bill is about $100 a month. So, I can use it just for that and use up the Wellness account. I can expense my tax prep and filing fees, etc. I did look into that to make sure I can use the money by EOY without losing any. 

If I have them put it into the HSA, then I will not be able to put in the max myself since the total employee+employer = max allowed. 

It might be a wash tax-wise but I feel it might be a slight advantage to contribute to the HSA myself.

[minnesotapaintlady]

Nov 2, 2022 15:48:03 GMT -5 Annie7 said:

Nov 2, 2022 15:20:00 GMT -5 bean29 said:

Can you have both a Wellness account and an HSA?  Idk, we do not have the option of a wellness account.

We don't need my income, I really work for insurance.  Personally I would only use the Wellness account if I was already maxing my HSA, and I could do both.  HSA is tax Free going in and out, and you can leave it sit as long as you want to.  I currently have just under $17,000 in my HSA.  Family deductible is $5600, OOP max is 10,000 we have spent $5,956.60 to date, so $17,000 is not really that much in the whole scheme of medical costs these days.

My company does not give us anything for the deductible, imho this is a nice perk no matter which choice you make.

Yes, I can have both accounts. 

I have nearly $50K in my HSA since I've been maxing it out and luckily I've not had much medical expenses. Most of it is invested.

If you know for a fact you'd use it, I'd do the Wellness Credit (although I'd check if it's taxable), and still put at least $1000 of my own funds in the HSA (in fact, I'd max that before putting more than the match in any other workplace retirement).  You don't get the tax break if your employer puts the money in the HSA so unless they're taxing that Wellness Credit you're coming out ahead contributing to the HSA on your own.

[minnesotapaintlady]

Nov 2, 2022 15:58:31 GMT -5 Annie7 said:

Nov 2, 2022 15:35:54 GMT -5 haapai said:

My company does not offer a wellness account option.  Is the employer contribution considered taxable income for the recipient?

Myself, I'd choose the HSA because it is use it or lose it and I can't see myself spending $1000 a year on the things that you mentioned.  (I live really cheaply.) 

Yes, it is considered a taxable income for me.

My cell phone bill is about $100 a month. So, I can use it just for that and use up the Wellness account. I can expense my tax prep and filing fees, etc. I did look into that to make sure I can use the money by EOY without losing any. 

If I have them put it into the HSA, then I will not be able to put in the max myself since the total employee+employer = max allowed. 

It might be a wash tax-wise but I feel it might be a slight advantage to contribute to the HSA myself.

Then it probably is a wash and doesn't really matter either way.  I suppose they're offering it for the people with low medical costs that don't like "locking up" their money in an HSA. 

[haapai]

Are you over the social security max? 

I'm not, so never paying social security and medicare taxes on amounts that I contribute to an HSA is quite a sweetener for me. 

I'm also single, so building up a nice fat HSA that can be used to pay COBRA premiums is a priority.  I don't have the option of being put on a spouse's coverage. 

[haapai]

Would the HSA or the Wellness account be funded right away or bit by bit? 

[Annie7]

Nov 2, 2022 16:24:09 GMT -5 haapai said:

Are you over the social security max? 

I'm not, so never paying social security and medicare taxes on amounts that I contribute to an HSA is quite a sweetener for me. 

I'm also single, so building up a nice fat HSA that can be used to pay COBRA premiums is a priority.  I don't have the option of being put on a spouse's coverage. 

Yes, I believe I am over the SS max. I stop paying SS tax in the 3rd or 4th quarter depending on my bonus. 

I'm also single so I want a good amount in HSA. It was nearly 60K before the market downturn. Now it's down to slightly less than 50K.

They fund the Wellness account each quarter.

[Annie7]

Nov 2, 2022 16:06:18 GMT -5 minnesotapaintlady said:

Nov 2, 2022 15:58:31 GMT -5 Annie7 said:

Yes, it is considered a taxable income for me.

My cell phone bill is about $100 a month. So, I can use it just for that and use up the Wellness account. I can expense my tax prep and filing fees, etc. I did look into that to make sure I can use the money by EOY without losing any. 

If I have them put it into the HSA, then I will not be able to put in the max myself since the total employee+employer = max allowed. 

It might be a wash tax-wise but I feel it might be a slight advantage to contribute to the HSA myself.

Then it probably is a wash and doesn't really matter either way.  I suppose they're offering it for the people with low medical costs that don't like "locking up" their money in an HSA. 

Thanks MPL