Financial Insights

Health Savings Accounts 2.0

We’ve written about Health Savings Accounts in the past, which you can reference here and here.  An HSA is a great way to create a nest egg for healthcare expenses in retirement.

The basics are that HSA account holders can contribute up to $3,600 individually or $7,200 as a family for 2021 as long as you are enrolled in a high deductible health plan (HDHP).

For a health plan to be eligible as an HDHP, it must have minimum individual and family deductibles of $1,400 and $2,800, respectively, and maximum individual and family out-of-pocket amounts (deductibles and co-payments) of $7,000 and $14,000.

HDHPs have grown in popularity given that they generally offer annual premiums that are 36% lower than low-deductible plans (think of raising the deductible on your auto insurance policy in order to lower the annual premium).  As a result, HDHP enrollment has grown by 43% over the past five years, to the point that 51% of the U.S. workforce was enrolled in a HDHP in 2019.

These statistics (from State Health Compare and the CMS) beg consideration for opening or funding an HSA if you can afford it while you are working in order to sock away some funds to use for medical expenses later in life.

HSAs offer triple tax benefits in that the contribution is deductible for income tax purposes (federally and most states), the account balance grows tax-free and withdrawals are not taxed as long as they are used for qualified medical expenses.

Unlike a Flexible Spending Account (FSA) that may be offered through an employer, HSA balances carry over year to year and can be invested to grow for years.

There a couple of additional HSA perks to add to our previous postings.

We keep coming back to the HSA as it remains one of the best retirement planning tools available.  As always, if you have questions, please reach out to your ACM Wealth Advisor.

The foregoing content reflects the opinions of Advisors Capital Management, LLC and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.


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