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HSAs For Retirement

Health Savings Accounts:  For Today and Your Retirement Years.

If you are not contributing to your health savings account (HSA), you miss out on a great way to save for health care expenses now and during retirement. HSAs allow your money to grow tax-free. Like traditional investments, some HSAs provide fund choices to increase accumulations.  With health care costs continuing to grow year over year, saving into an HSA plan makes sense.  If you are like most people, you may think an HSA is solely a way to pay for current-year qualified medical expenses, but did you know it can also be used as a long-term investment vehicle that can play an even greater role in your overall wealth and retirement strategy?

HSAs are triple tax-advantaged:

  • Contributions to HSAs are tax-deductible.
  • Contributions receive capital gains, dividends, and interest, which is tax-free.
  • You pay no tax on withdrawals used for supplemental insurance and medical expenses.
Unlike other accounts, an HSA is one of the only savings vehicles that allows you to put money in on a before-tax basis and grow your savings tax-free (interest and investment earnings are not taxed), and take the money out income tax-free for qualified medical expenses - generally 100% income tax-free.

HSA qualified expenses include co-insurance, dental, vision, prescriptions, insurance plan deductibles, and other costs not covered by your health insurance. 

Your HSA goes with you!

As you change jobs during your working years, your employers may have different health savings account plans.  The funds you have contributed into your health savings account (HSA) are always yours to keep, regardless of your employment status or insurance coverage.  Unlike Flexible Spending Accounts (FSAs), which are usually "use it or lose it," money saved in health savings accounts doesn't need to be spent by a certain date.  If you change jobs or health plans, you keep your HSA and spend your funds on qualified medical expenses as usual.

HSAs and Medicare:

Once you enroll in Medicare, you can no longer contribute to your HSA - but you can still use your HSA funds income tax-free to pay for qualified medical expenses.  You can also use it to pay for Medicare premiums and qualified out-of-pocket expenses including deductibles, copay, and coinsurance.

Using an HSA as a Retirement Account:

If you can afford it, by paying medical expenses without tapping into your HSA, your account has the opportunity to grow.  If this happens you'll have money available for retirement needs or unexpected health care needs.  Your account can grow by continuing to contribute and investment growth.

Financial planning involves planning for health-related expenses and making sure you prepare for any unforeseen financial impact through insurance coverage. If you have any questions regarding HSA accounts or other employment benefits such as your retirement account, contact our office anytime. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.