Student loan payments: Actual numbers

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JohannDeMann
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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Tue Nov 03, 2015 11:23 pm

who in the fuck would contribute to a taxed HSA. thats just called after tax money that can be spent on anything.

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Tue Nov 03, 2015 11:25 pm

JohannDeMann wrote:who in the fuck would contribute to a taxed HSA. thats just called after tax money that can be spent on anything.

i get an employer contribution, didn't know it was taxed. glad i never contributed anything. that is the dumbest shit i have ever heard.

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Tue Nov 03, 2015 11:33 pm

fats provolone wrote:
JohannDeMann wrote:who in the fuck would contribute to a taxed HSA. thats just called after tax money that can be spent on anything.

i get an employer contribution, didn't know it was taxed. glad i never contributed anything. that is the dumbest shit i have ever heard.

Same. It's still free money at this point so whatever but now I know not to contribute my own funds.

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Tue Nov 03, 2015 11:34 pm

Danger Zone wrote:
fats provolone wrote:
JohannDeMann wrote:who in the fuck would contribute to a taxed HSA. thats just called after tax money that can be spent on anything.

i get an employer contribution, didn't know it was taxed. glad i never contributed anything. that is the dumbest shit i have ever heard.

Same. It's still free money at this point so whatever but now I know not to contribute my own funds.

Yea I imagine many people don't know in advance that if they work/file in CA or NJ then their contributions will be taxed.

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SemperLegal
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Re: Student loan payments: Actual numbers

Postby SemperLegal » Wed Nov 04, 2015 8:16 am

JenDarby wrote:
Danger Zone wrote:
fats provolone wrote:
JohannDeMann wrote:who in the fuck would contribute to a taxed HSA. thats just called after tax money that can be spent on anything.

i get an employer contribution, didn't know it was taxed. glad i never contributed anything. that is the dumbest shit i have ever heard.

Same. It's still free money at this point so whatever but now I know not to contribute my own funds.

Yea I imagine many people don't know in advance that if they work/file in CA or NJ then their contributions will be taxed.

Is growth? Other than the free match, the best thing about a good HSA is that it can be used as a back door retirement account.

patentlitigatrix
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Re: Student loan payments: Actual numbers

Postby patentlitigatrix » Tue Nov 10, 2015 4:21 pm

I have read a lot about high-deductible plans with HSAs, in case my firm ever goes to that being the only option like some firms are starting to do. Currently have a decent HMO. With an HSA, what happens if you have enormous unanticipated medical expenses? Like traumatic injury, cancer, etc.? Your/your firm's contributions to an HSA obviously cannot cover those kinds of expenses, which could easily hit 6 figures in a year.... I just don't get it.

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Tue Nov 10, 2015 4:48 pm

patentlitigatrix wrote:I have read a lot about high-deductible plans with HSAs, in case my firm ever goes to that being the only option like some firms are starting to do. Currently have a decent HMO. With an HSA, what happens if you have enormous unanticipated medical expenses? Like traumatic injury, cancer, etc.? Your/your firm's contributions to an HSA obviously cannot cover those kinds of expenses, which could easily hit 6 figures in a year.... I just don't get it.

uh the HSA isn't the limit of your coverage. what do you think the deductible is for? once you reach your deductible the plan starts paying for expenses, and generally there is a total insured contribution cap for the year.

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Tue Nov 10, 2015 4:58 pm

patentlitigatrix wrote:I have read a lot about high-deductible plans with HSAs, in case my firm ever goes to that being the only option like some firms are starting to do. Currently have a decent HMO. With an HSA, what happens if you have enormous unanticipated medical expenses? Like traumatic injury, cancer, etc.? Your/your firm's contributions to an HSA obviously cannot cover those kinds of expenses, which could easily hit 6 figures in a year.... I just don't get it.

High deductible =/= no deductible

totesTheGoat
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Re: Student loan payments: Actual numbers

Postby totesTheGoat » Tue Nov 10, 2015 5:02 pm

patentlitigatrix wrote:I have read a lot about high-deductible plans with HSAs, in case my firm ever goes to that being the only option like some firms are starting to do. Currently have a decent HMO. With an HSA, what happens if you have enormous unanticipated medical expenses? Like traumatic injury, cancer, etc.? Your/your firm's contributions to an HSA obviously cannot cover those kinds of expenses, which could easily hit 6 figures in a year.... I just don't get it.



In my experience (Had a high deductible PPO with HSA prior to law school, and have one through my job presently), the deductible isn't killer. I had a $5000 deductible and a $8000 total out of pocket PPO plan with an HSA that my employer contributed $500/year to when I worked in engineering. I had saved up $1000 entirely from employer contributions and it had grown in the market to $1200 or so. Now I have a $10,000 deductible and $15k?? out of pocket with no employer contribution to my new HSA. Thankfully, I still have $1100 from my old HSA, so I just make minimal contributions to the new one.

If I get hit by a bus, I'm at most $10k in the hole minus whatever my HSA balance is at the time. It certainly hurts, but it's not "decades to recover" type debt.

patentlitigatrix
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Re: Student loan payments: Actual numbers

Postby patentlitigatrix » Tue Nov 10, 2015 5:45 pm

totesTheGoat wrote:
patentlitigatrix wrote:I have read a lot about high-deductible plans with HSAs, in case my firm ever goes to that being the only option like some firms are starting to do. Currently have a decent HMO. With an HSA, what happens if you have enormous unanticipated medical expenses? Like traumatic injury, cancer, etc.? Your/your firm's contributions to an HSA obviously cannot cover those kinds of expenses, which could easily hit 6 figures in a year.... I just don't get it.



In my experience (Had a high deductible PPO with HSA prior to law school, and have one through my job presently), the deductible isn't killer. I had a $5000 deductible and a $8000 total out of pocket PPO plan with an HSA that my employer contributed $500/year to when I worked in engineering. I had saved up $1000 entirely from employer contributions and it had grown in the market to $1200 or so. Now I have a $10,000 deductible and $15k?? out of pocket with no employer contribution to my new HSA. Thankfully, I still have $1100 from my old HSA, so I just make minimal contributions to the new one.

If I get hit by a bus, I'm at most $10k in the hole minus whatever my HSA balance is at the time. It certainly hurts, but it's not "decades to recover" type debt.


Oh, I think I get it now. Thanks guys. Still seems a little scary compared to a traditional PPO or even HMO, but yeah, what worried me was "decades to recover" type debt.

totesTheGoat
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Re: Student loan payments: Actual numbers

Postby totesTheGoat » Tue Nov 10, 2015 5:58 pm

patentlitigatrix wrote: Still seems a little scary compared to a traditional PPO or even HMO, but yeah, what worried me was "decades to recover" type debt.


If you can get a PPO or HMO with an HSA, that's the best of all worlds. You get your traditional coverage, but your co-pays come out of the HSA instead of out of pocket (but it still counts toward your out of pocket maximum). It's increasingly hard to find those plans, though.

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Tue Nov 10, 2015 6:02 pm

at my firm, we can choose between an HMO or HDHP+HSA. the HDHP is way more fucking expensive than the HMO. like, the total premiums for the HDHP are probably almost double the premiums for the HMO, even after the employee HSA contribution.

am i missing something or is this just batshit insane? i understand the benefit of a non-HMO plan generally is you get to choose your doctor from a larger network. but if i'm just paying that doc out of pocket until i hit some absurdly high deductible, what the fuck am i paying for? the right to have an HSA? the right to choose what doctor i go to if i get cancer?

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Tiago Splitter
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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Tue Nov 10, 2015 6:50 pm

fats provolone wrote:at my firm, we can choose between an HMO or HDHP+HSA. the HDHP is way more fucking expensive than the HMO. like, the total premiums for the HDHP are probably almost double the premiums for the HMO, even after the employee HSA contribution.

am i missing something or is this just batshit insane? i understand the benefit of a non-HMO plan generally is you get to choose your doctor from a larger network. but if i'm just paying that doc out of pocket until i hit some absurdly high deductible, what the fuck am i paying for? the right to have an HSA? the right to choose what doctor i go to if i get cancer?

The HDHP works more like a normal plan than most people realize. You shouldn't be paying whatever the doctor's normal absurd fee for uninsured people is or anything like that. You generally will have the same standard copays.

patentlitigatrix
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Re: Student loan payments: Actual numbers

Postby patentlitigatrix » Tue Nov 10, 2015 6:56 pm

fats provolone wrote:at my firm, we can choose between an HMO or HDHP+HSA. the HDHP is way more fucking expensive than the HMO. like, the total premiums for the HDHP are probably almost double the premiums for the HMO, even after the employee HSA contribution.

am i missing something or is this just batshit insane? i understand the benefit of a non-HMO plan generally is you get to choose your doctor from a larger network. but if i'm just paying that doc out of pocket until i hit some absurdly high deductible, what the fuck am i paying for? the right to have an HSA? the right to choose what doctor i go to if i get cancer?


And some HMOs aren't that bad when it comes to a choice. I had two HMO options. I went with the one that was slightly more, since that has a bigger network and I can go to any doctor at the large highly-ranked university medical center a mile from my house. So that makes the whole HDHP+HSA option seem even less appealing, particularly given that the premiums are also about double for me (not counting employee contributions).

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IrwinM.Fletcher
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Re: Student loan payments: Actual numbers

Postby IrwinM.Fletcher » Tue Nov 10, 2015 9:59 pm

JenDarby wrote:
Danger Zone wrote:
fats provolone wrote:
JohannDeMann wrote:who in the fuck would contribute to a taxed HSA. thats just called after tax money that can be spent on anything.

i get an employer contribution, didn't know it was taxed. glad i never contributed anything. that is the dumbest shit i have ever heard.

Same. It's still free money at this point so whatever but now I know not to contribute my own funds.

Yea I imagine many people don't know in advance that if they work/file in CA or NJ then their contributions will be taxed.


Taxable only for state income purposes, right?

Still a dumb policy but if it's only being taxed at 9.3% and not a combined 30+% for biglaw folks, then contributions are a win.

More than anything it's just a bookkeeping pain in the ass for dividends, interest and cap gains.

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jewkidontheblock
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Re: Student loan payments: Actual numbers

Postby jewkidontheblock » Wed Nov 11, 2015 2:48 pm

0L here currently working before starting law school next year. Current employer offers no 401k match (profit sharing instead). Should I be focusing my savings on my 401k or saving short-term to lower the amount I need in student loans?

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Nov 11, 2015 2:52 pm

jewkidontheblock wrote:0L here currently working before starting law school next year. Current employer offers no 401k match (profit sharing instead). Should I be focusing my savings on my 401k or saving short-term to lower the amount I need in student loans?


They offer no 401K, but you're considering starting out a 401K of your own? If your end goal is savings to put towards student loans after LS/tuition during LS, and you have no employer contribution (which it sounds like you don't), don't even bother with a 401K that will be taxed when you withdraw in a few years for LS payments; just get the highest interest rate savings account you can find and put money into there.

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Tiago Splitter
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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Wed Nov 11, 2015 2:53 pm

jewkidontheblock wrote:0L here currently working before starting law school next year. Current employer offers no 401k match (profit sharing instead). Should I be focusing my savings on my 401k or saving short-term to lower the amount I need in student loans?

If you're going to use the money for school then you should put it into a 401k/traditional IRA to get the tax deduction now and then take it out in 2017 when your income will presumably be at its lowest.

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Wed Nov 11, 2015 2:55 pm

Anonymous User wrote:
jewkidontheblock wrote:0L here currently working before starting law school next year. Current employer offers no 401k match (profit sharing instead). Should I be focusing my savings on my 401k or saving short-term to lower the amount I need in student loans?


They offer no 401K, but you're considering starting out a 401K of your own? If your end goal is savings to put towards student loans after LS/tuition during LS, and you have no employer contribution (which it sounds like you don't), don't even bother with a 401K that will be taxed when you withdraw in a few years for LS payments; just get the highest interest rate savings account you can find and put money into there.

i think he's asking if he should save the money to pay for tuition or, alternatively, start building a 401K (and just take loans for LS)

i'd just start contributing to 401k and take loans for school and YOLO PAYE afterward. depends if you're going at sticker or not though

patentlitigatrix
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Re: Student loan payments: Actual numbers

Postby patentlitigatrix » Wed Nov 11, 2015 3:13 pm

jewkidontheblock wrote:0L here currently working before starting law school next year. Current employer offers no 401k match (profit sharing instead). Should I be focusing my savings on my 401k or saving short-term to lower the amount I need in student loans?


I think you are saying that your employer has a 401k program, but doesn't match right? Not that there isn't a 401k at all?

Anyways, depends on so many factors. If you are high income, is it beneficial for you to use the 401k as a vehicle to lower your tax burden? Assuming you aren't contributing the max, how much more would you save post-tax is you didn't contribute to your 401k? How much is your out of pocket tuition going to be? What other debt do you have, and should you pay that off instead? Etc. Etc. Etc.

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BmoreOrLess
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Re: Student loan payments: Actual numbers

Postby BmoreOrLess » Wed Nov 11, 2015 3:15 pm

Anonymous User wrote:
jewkidontheblock wrote:0L here currently working before starting law school next year. Current employer offers no 401k match (profit sharing instead). Should I be focusing my savings on my 401k or saving short-term to lower the amount I need in student loans?


They offer no 401K, but you're considering starting out a 401K of your own? If your end goal is savings to put towards student loans after LS/tuition during LS, and you have no employer contribution (which it sounds like you don't), don't even bother with a 401K that will be taxed when you withdraw in a few years for LS payments; just get the highest interest rate savings account you can find and put money into there.


Eh, depending on what bracket you're in and what your 1L summer work is, you could save some on taxes by deducting it while working and taking it out either tax free (based on standard deduction, personal exemption, and education credits) or at a lower rate for fall of 2L. Still would have to pay attention to state taxes but it could lead to a good bit of fed tax savings.

By dumping $5k in an IRA during my last year of full time work before law school with the expectation of using it for tuition, it saved me $750 in fed taxes, and a little bit of state/local taxes from the difference of my old state and DC.

Even if you land a 1L SA, you'll probably be paying tax at the same rate you would have by not putting it into a retirement account ane paying taxes during that year.

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jewkidontheblock
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Re: Student loan payments: Actual numbers

Postby jewkidontheblock » Wed Nov 11, 2015 3:24 pm

Sorry everyone, I should probably make a few clarifications. The firm has a plan - I've chosen post-tax contributions, due to my relatively low income/tax bracket at this point. They make a contribution that would be the same regardless of what I choose to contribute.

With a limited amount of money to save, I'm wondering if it makes more sense to use it to pay for law school/living expenses next year to lower the principal/interest on my loans, or to put it into my 401k to grow.

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jewkidontheblock
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Re: Student loan payments: Actual numbers

Postby jewkidontheblock » Wed Nov 11, 2015 3:28 pm

Also, I won't have COA info until scholarship information comes in. Most of my living expenses will be covered, and I'm reasonably expecting modest scholarships from mid-lower T14.

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Tiago Splitter
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Re: Student loan payments: Actual numbers

Postby Tiago Splitter » Wed Nov 11, 2015 3:30 pm

jewkidontheblock wrote:Sorry everyone, I should probably make a few clarifications. The firm has a plan - I've chosen post-tax contributions, due to my relatively low income/tax bracket at this point. They make a contribution that would be the same regardless of what I choose to contribute.

With a limited amount of money to save, I'm wondering if it makes more sense to use it to pay for law school/living expenses next year to lower the principal/interest on my loans, or to put it into my 401k to grow.

Either strategy is fine. But if you're going to save for retirement put it into a Roth IRA or if it is available a Roth 401k. Your "post-tax" option might be Roth and if so that's great, but if it isn't then get that switched ASAP.

jewkidontheblock wrote:Also, I won't have COA info until scholarship information comes in. Most of my living expenses will be covered, and I'm reasonably expecting modest scholarships from mid-lower T14.

In that case PAYE won't do much for you so it might make sense to get your tax deduction now and use them money in 2017 like I mentioned earlier. But again none of these strategies are going to have a huge impact on your life 30 years from now so don't worry too much.

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Re: Student loan payments: Actual numbers

Postby Anonymous User » Wed Nov 11, 2015 3:31 pm

Tiago Splitter wrote:
jewkidontheblock wrote:Sorry everyone, I should probably make a few clarifications. The firm has a plan - I've chosen post-tax contributions, due to my relatively low income/tax bracket at this point. They make a contribution that would be the same regardless of what I choose to contribute.

With a limited amount of money to save, I'm wondering if it makes more sense to use it to pay for law school/living expenses next year to lower the principal/interest on my loans, or to put it into my 401k to grow.

Either strategy is fine. But if you're going to save for retirement put it into a Roth IRA or if it is available a Roth 401k. Your "post-tax" option might be Roth and if so that's great, but if it isn't then get that switched ASAP.

jewkidontheblock wrote:Also, I won't have COA info until scholarship information comes in. Most of my living expenses will be covered, and I'm reasonably expecting modest scholarships from mid-lower T14.

In that case PAYE won't do much for you so it might make sense to get your tax deduction now and use them money in 2017 like I mentioned earlier. But again none of these strategies are going to have a huge impact on your life 30 years from now so don't worry too much.


Correct - it's a Roth 401k. Thanks!




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