3 Takeaways From HSA Day That You Need to Know
October 16, 2019
While Health Savings Account (HSA) assets have grown nearly tenfold in the last 10 years, there still remains confusion with these accounts. To help participants better understand the benefits of an HSA, WEX hosted the first National HSA Awareness Day (or HSA Day) on October 15. Jean Chatzky, who is the host of the HerMoney podcast, took questions and hosted a roundtable during the live broadcast. We’ve compiled three HSA Day takeaways to help you better understand these accounts.
There are three ways to use an HSA
HSA contributions, earnings and withdrawals for eligible expenses are all tax-free. This triple-tax advantage is a big reason why these accounts are emerging as a popular healthcare and retirement-planning solution. The account’s versatility is enticing to three types of HSA participants:
- The spender, who has an account balance of less than $1,000 and generally uses their HSA to save on immediate healthcare needs.
- The saver, who maintains a larger balance but isn’t investing their funds. They’ll pay for expenses out of pocket when they can afford it so they can build up their savings.
- The investor, who invests to build up their balances even faster than they would by simply accruing interest.
“Free money” via employer contributions
Many employers contribute to their employees’ accounts to make them even more attractive to their employees. When your employer provides a contribution, you’ll have available funds in your account while you’re still building up your balance with your own contributions. Chatzky called these contributions “free money” that you don't want to miss out on.
All funds carry over
The average retired couple age 65 is expected to need $285,000 just for medical expenses in retirement. Fortunately, HSAs are tailor-made to help you achieve your retirement goals. HSAs are employee-owned accounts, and all funds carry over from one year to the next. And, once you turn 65, you can use your HSA funds on any expenses without a tax penalty (although purchases on non-eligible expenses are still subject to income taxes). “That money is yours to own, even if you switch employers, at any time,” Chatzky said.
Would you like to learn more about HSAs? Submit the HSA Day registration form to view a replay of the broadcast.
Please note: Discovery Benefits cannot provide investment advice and encourages its participants to seek guidance from a financial adviser for help with investment decisions.