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Affordable Care Act Plan: Do you still need an HSA with unemployment?

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There should never be a time when someone should refrain from saving money. It's not necessary to be absolutely broke waiting until retirement, but it certainly helps to keep money for a rainy day and still be able to live a decent lifestyle. But what happens when your comfortable lifestyle turns upside down and health insurance becomes an issue? You'd depended on your employer's health insurance, and now you have to battle it out with the Affordable Care Act website after being laid off or fired.

COBRA or Affordable Care Act Health Insurance

The answer for which insurance package to choose is a personal decision. Check the rates. Compare co-pay amounts and deductible rates. If you can find a new health insurance plan that meets the same goals as your health insurance, why possibly pay more for COBRA with your old plan? You will be held responsible for the entire payment instead of tag-teaming with your employer to pay a portion of your health care coverage.

Unemployed or Self-Employed: Is HSA Necessary?

The only way to sign up for an HSA is to have a high-deductible plan. And if your deductible is high, you may want that savings cushion in case of emergency. Self-employment checks are nowhere near an amount to live lavish on so if you cannot afford to have a health insurance plan, handle bills in your everyday life and have an HSA plan, choose between the three. Everyday bills should come first. The Affordable Care Act is law so that will have to be a close second, especially in 2014.

If you're self-employed or an independent contractor, consider setting aside some of that money for an HSA plan if you feel that's necessary. If not, just pay the extra health charges with your current or upcoming health insurance plan. No matter where the money comes from, health providers will want their money for any services.

Health Savings Account: Close It Or Keep It Open

Pay attention to the fees associated with closing the account early. For example, with BenefitWallet, if you deduct funds before age 65, any withdrawn money will be taxable. However, programs like this do give members the option to roll the funds over to another HSA plan. The money just can't be rolled over into a 401(k) plan, IRA or other retirement savings plan.

Other HSA plans: Where to Start

The most convenient place to look for alternate HSA plans, assuming you don't want to stay with the same company, is your bank. Chase bank currently has an HSA plan, and they also offer the option to have your funds rolled over into their accounts. However, keep in mind that the fees may be different. To enroll in Chase's HSA plan, there's $20 paper application processing fee. The first checkbook with sites like The hsa Solution provide the first checkbook for free. Chase encourages using your debit card so you don't have to pay their rates of $0.65 per request. The hsa Solution charges $2.25 monthly service fee for monthly balances of $3,000 or less. Chase charges $2.50 every month.

However, The hsa Solution charges $25 to stop a payment and Chase charges $20. An excess contribution reimbursement is a $25 fee with The hsa Solution and $20 with Chase. Check each fee line by line between your old HSA plan and your potential new one. Decide which fees you can comfortably either avoid or afford to pay.

Drain the HSA Money from Your Account

Unless you go to the doctor's office on a regular basis, don't make a special trip just to blow your money trying to close the account without paying the withdrawal fee. Considering HSA plans are not flexible spending accounts and roll over until you use them, there's no rush to jump head first into using the income in the account unless the fees will drain it dry. Ask how much is the taxable rate to withdraw the money. You can compare that amount with the taxable charge.

Follow Shamontiel on Pinterest for all her latest Chicago finance, employment and savings tips, or subscribe to her Chicago Personal Finance channel at the top of this page.

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