Are your clients searching for a way to reduce the $369,000, on average, they’ll spend on health care during retirement?
A health savings account (HSA) is one of the most efficient savings vehicles that an individual can take advantage of, and the only type dedicated to long-term consumer health.
While your client does need a qualified high-deductible health plan (HDHP) to be eligible to contribute to an HSA, once established, it’s an invaluable savings tool with benefits for life.
(Related: HSA Provider Raises $27 Million)
Are your clients wondering whether an HSA is right for them?
Of course, here’s an essential disclaimer: The content presented in this article is for informational purposes only. It is not, and must not be considered investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action.
Investors should consult all available information, including fund prospectuses, and consult with appropriate investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.
Financial professionals like you should make sure you’ve talked to the people on your own tax and compliance teams, to make sure you know what you can say about HSAs and HDHPs, and how.
Once you’ve gotten your advisors’ blessing, here are five lesser-known HSA benefits to share with your clients.
1. HSAs are stealth retirement accounts
As soon as HSA owners reach the age of 65, they’re able to use the funds in the account for anything, health care or otherwise. Funds spent on qualified medical expenses are tax-free, however, funds withdrawn for any other use are taxed the same as non-qualified withdrawals. The tax shelter for health care expenses, in addition to the ability for the owner to withdraw funds as if the HSA were a 401(k) plan, makes an HSA a great tool for supplementing retirement savings.
Health needs can change year-to-year, so a high-deductible health plan may not be the right fit at every stage of life. Clients who can take advantage of a high-deductible health plan can put even greater savings away towards their health care and retirement savings.