this post was submitted on 15 Nov 2023
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Matt Breunig on HSA ＆ FSA: The Welfare System Stole $2k From Me (www.youtube.com)
submitted 2 years ago* (last edited 2 years ago) by davel@lemmy.ml to c/personalfinance@lemmy.ml
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These US healthcare systems are effectively scams. Yes in theory they can save you money, however in theory there is no difference between theory and practice, while in practice there is.

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[–] orion2145@lemmy.world 11 points 2 years ago* (last edited 2 years ago) (2 children)

Weird FSA trick tho; if you borrow from an FSA, spend it in full in, say… the first month of the year, quit your job. You never have to pay it back.

Happened to me by accident. I started a plan to pay for LASIK. Got it. Had no way of knowing back then I’d be made another job offer. Took it and expected to get dinged with the entire amount. Nope. FSA plan eats the loss.

So all you gotta do is plan very specifically months ahead and triple down by orchestrating a job change all to save $2k :) easy.

[–] orion2145@lemmy.world 3 points 2 years ago (1 children)

This is an actual FSA ‘loophole’. Easily searchable.

[–] pdxfed@lemmy.world 4 points 2 years ago

It's the analog to how the industry lobbies to get preferential tax treatments for these accounts. 99% of the time your employer or the insurer keeps money at the end of the year. If you're smart about when you leave your employer though(leave after exhausting your FSA early in the year), or have advance notice of it, you can walk away and beat the game.

[–] Anticorp@lemmy.ml 4 points 2 years ago* (last edited 2 years ago) (3 children)

Of course it's a scam. "We'll keep your money for ourselves and never give it back if you don't spend it this calendar year"? Get the fuck out of here! That's not to mention the hurdles they make you jump through every time you actually use it, having to upload or mail receipts, fill out forms, etc..

[–] ioslife@lemmy.sdf.org 5 points 2 years ago (1 children)

It works incredibly well for my family. We can put $3,200 in the FSA next year and not get taxed on it as well as spend the money tax free. You can buy cold medicine, advil, go to the dentist, go to the doctor, etc.

[–] deegeese@sopuli.xyz 1 points 2 years ago

If you follow the intentionally onerous rules, you might get to spend some of your own money on healthcare without being taxed.

Ask yourself why you had to jump through those hoops in the first place.

These are policies created by bad people to rip off ordinary Americans. Making healthcare appear affordable also deflects calls for universal healthcare like they have in every other developed country.

Basically HSAs are a scam put out by health insurance lobbyists.

[–] KombatWombat@lemmy.world 4 points 2 years ago

I've only been at two jobs that offered an FSA but both had resources explaining clearly that it is use it or lose it. And my personal risk aversion is why I chose an HSA instead. But it seems like a good idea for people to be able to save money by saying "This isn't really income, since I am confident it's only going to a demonstratable health expense. So don't tax me on it." It's like a business expense can be tax deductible, and you are in the business of living. But then you don't get to take home extra money for being under budget. When used correctly, it's a tool to drive down living expenses and is more efficient for lower incomes since it uses a flat max annual deduction.

I don't want to victim blame people that lose money by overcommitting, but it's not like this is in fine print. You can get short articles that explain it in simple terms just by googling "fsa" before committing thousands of dollars to something. If you don't have much idea what your minimum spending on healthcare will be, just keep it as income for full freedom or use a different tax-advantaged option. It's just meant to be an option for people with good awareness of budgetting to save some money.

[–] davel@lemmy.ml 2 points 2 years ago

It’s not even necessarily by calendar year, as Breunig and many others find out the hard way.

[–] Dkarma@lemmy.world 0 points 2 years ago* (last edited 2 years ago)

Lol never fund more than ur deductible through your FSA. This is obvious.

[–] PowerCrazy@lemmy.ml -1 points 2 years ago (1 children)

They are a scam, but they are also yet another tax loophole for people that are rich enough to be unconcerned with the broken healthcare system. They are pushed by the investment banks that actually manage all that money and large corporations sign their employees up for these plans because they count as "providing healthcare," so they aren't penalized, also the various HR departments and other C-Suite execs get huge kickbacks and bonuses for cutting employee costs.

They suck in more ways then just stealing people's money.

[–] davel@lemmy.ml 4 points 2 years ago (1 children)

What’s funny is that, if you’re rich enough to take advantage of it, the advantages that it provides are kinda small potatoes, especially considering the BS paperwork they require.

[–] PowerCrazy@lemmy.ml -3 points 2 years ago* (last edited 2 years ago)

That is true. But if you are rich enough to take advantage of it, you aren't necessarily handling your own finances personally. This doesn't mean you are a billionaire, merely a <10millionaire or "middle-class" as the Democrats would say. The same people who were clamoring for pell grants for entrepreneurs who operate a business in a disadvantaged area for 3 years. Or the people who can afford to "run" a non-profit while they are attending Harvard or whatever.

Basically if you don't need it, it's trivial to benefit from it.