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PDtax
PDtax, CPA, MBA
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Experience:  Tax professional and business consultant for 35 years.
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My sister is enrolled in the affordable care act. Can she

Customer Question

Hi again,My sister is enrolled in the affordable care act. Can she establish a health savings account to reduce her MAGI? I read where HDHPs are the only plans that allow an enrollee to contribute to a health savings account (HSA). Is she eligible? Thanks.
Submitted: 11 months ago.
Category: Finance
Expert:  PDtax replied 11 months ago.

Hi again. PDtax here.

It might be late to do this, but that would work. It reduces w-2 wages and must be done through her employer.

Expert:  PDtax replied 11 months ago.

The plan is likely to late to meet your needs, as the employer needs to establish the plan and there is an effective start date for contributions. I don't think this will work either.

Thanks again. Please rate to close out your question. I'm PDtax.

Customer: replied 11 months ago.
She does not work, and her husband's employer has such poor health insurance that she chose to be insured under the ACA since its inception. Can she set up her own HSA; e.g., from a bank, fund it, and reduce the amount from her MAGI?"Health savings accounts are tax-advantaged savings plans that allow people to make tax-deductible contributions towards their health-care costs. Withdrawals, including investment earnings, are tax-free, provided the money is used to pay qualified medical expenses. Your employer may provide an HSA for you. If not, you can set an HSA up on your own."Read more : http://www.ehow.com/how_5729250_set-up-hsa-account.html
Customer: replied 11 months ago.
Key being: you can set an HSA up on your own
Expert:  PDtax replied 11 months ago.

Yes, but you need to pair it with a hdhp insurance plan. If her employer offers it, and she is enrolled, this could work. The contribution would reduce MAGI, but the HSA needs to be opened and funded quickly, and only if her health insurance qualifies.

Customer: replied 11 months ago.
http://www.einsurance.com/journal/aca-and-your-hsa-in-2015/
What Happens If You Move Your HSA to a Plan You Buy on an Exchange?You may be able to find a plan on an Obamacare exchange such as Healthcare.gov with deductibles and out-of-pocket limits that are HSA-compatible.
Expert:  PDtax replied 11 months ago.

I don't think this applies.

Expert:  PDtax replied 11 months ago.

You need to have a HSA plan to move it. Sorry.

Customer: replied 11 months ago.
right, but the articles state that you can set up your own HSA.
Customer: replied 11 months ago.
Further, as cited above, "You may be able to find a plan on an Obamacare exchange such as Healthcare.gov with deductibles and out-of-pocket limits that are HSA-compatible."
Customer: replied 11 months ago.
Health Savings Accounts for the Self-EmployedIf you hold a traditional job, chances are you get your health insurance from your employer. But if you are self-employed, you have no such luxury. Self-employed individuals must make arrangements for their own heath care, and buying a health savings account can be a smart move for those entrepreneurs.Other People Are Reading
How Does a Health Savings Account Lower Health Insurance Costs?
Can You Deduct Insurance Premiums If You Are Self-Employed?HDHPBefore you can open a health savings account you must first have a high deductible health plan in place. When you shop for individual health care plans, be sure to let the agent know that you need a plan that is HSA-eligible. Not all plans qualify. As of 2011, eligible plans must have a minimum deductible of at least $1,200 for an individual or $2,400 for a family.Health Savings AccountsOnce you have your HDHP in place, you can start shopping around for a health savings account. You can find health savings accounts at a number of places, including banks, brokerage firms and mutual fund companies. Choose the administrator that offers the best range of investment options for you. Also look for an HSA that does not charge excessive setup charges or ongoing fees.Tax SavingsAs a self-employed individual, you want to reduce your taxes as much as possible. The self-employed are subject to a number of taxes not borne by regular employees, so tax savings are even more important. When you open a health savings account, you can take a tax deduction for that contribution, which can lower the amount of your self-employment income subject to taxationRead more : http://www.ehow.com/info_7942305_health-savings-accounts-selfemployed.htmlRead more : http://www.ehow.com/info_7942305_health-savings-accounts-selfemployed.html
Expert:  PDtax replied 11 months ago.

I get that. I agreed earlier. But the reality is that you need to do something before next Thursday. And your article about moving her HSA once she gets other coverage did not address solving your problem for a deduction from MAGI by next Thursday.

Expert:  PDtax replied 11 months ago.

I don't mean to reduce the value of what you suggest. But it does not help with your 2015 MAGI problem, so I suggest you return your focus to what can realistically be done now.

I suggest a startup business that could create a tax loss. Even now, a review of what someone dies through the year might generate a taxable business venture. Offer, start one now, and use a vehicle a high percentage for business. Even something like uber could create a tax loss. Which will work now.

Thanks again. I hope this points you in a productive direction. Positive feedback is appreciated. I'm PDtax.