December is birthday month for the health savings account (HSA)!
Seventeen years ago, on December 8, 2003, the Medicare Prescription Drug, Improvement, and Modernization Act was signed into law. This legislation replaced the old medical savings account system with the more powerful HSA. Since then, millions of Americans have used the HSA to take control of their healthcare and build health savings.
To celebrate, we at HealthEquity are sharing five ways to help your HSA perform even better1. Mark the birthday of your favorite health savings tool by learning new ways to save better and spend smarter!
1. Take advantage of your employer's total hsa benefit
Are you getting all you can out of your HSA benefit? Aside from simply offering an HSA-qualified health plan, your employer may provide further incentives or financial contributions for your account.
If your employer offers an HSA match, consider increasing your contributions to get the full value of that benefit. According to internal HealthEquity data, employees who have access to an employer match have higher balances than those who only receive a seed contribution.
Also make sure to take advantage of any wellbeing incentives your employer offers. You may be able to receive even more HSA contributions by documenting and submitting your good behavior.
Altogether, these actions should lead to a healthier bottom line for your HSA.
2. make sure your savings balance reflects your family's needs
One reason to build health savings is to prepare for any major expenses you need for yourself or your family. With an HSA, you can use your savings on any individual you claim as a dependent on your taxes2.
Perhaps your family has grown since you first opened your account. Or, perhaps the needs of your individual family members have changed. If that’s the case, now is a great time to create a contribution strategy that reflects the needs of your household.
Work with your family to get a rough idea of the health savings balance you’d need to feel secure. Then, devise a combination contribution-and-investment strategy that will help you get there. If you need, you can work with a personal financial or investment advisor3 to get professional advice.
3. create a contribution plan for retirement
Another important use of the HSA is to fund healthcare expenses in retirement. While individuals with an HSA are more confident in their knowledge of what they’ll need to afford healthcare after retirement, it’s still a good idea to develop a plan and ensure you’re on track.
According to EBRI estimates, the average American couple could need $301,000 to have a 90 percent chance of covering healthcare expense in retirement – even with Medicare. And many express concern that they aren’t saving enough now to prepare for that future.
Your HSA is the perfect answer. Because your account funds have no expiration date, everything you save can be used in retirement4 for qualified medical expenses.
Take the time now to calculate your expected needs and develop a contribution-and-investment plan that will keep you on schedule.
4. Consider investing your hsa funds
One of the most powerful ways to increase your HSA balance is also one of the most underutilized.
HSA users who invest their funds have account balances that are an average six times larger than those of non-investors. Yet across the industry, only five percent of accountholders do so.
Although you may feel some nervousness about investing your HSA dollars, it may advance your savings goals quickly and meaningfully. With HealthEquity, you can get connected to investment services and advisors that will help you learn how to invest and grow your balance3.
That may mean more savings for your family and your future retirement.
5. if you're going to spend, price shop first
Although HSAs are primarily intended to be a savings tool, you may want to use your funds on immediate healthcare needs. If that’s the case, you should do your homework to make sure you’re getting the best deal.
According to a Modern Healthcare report, comparing prices among healthcare providers can reduce up to seven percent of overall healthcare spend. Sixty-five percent of HSA users responding to a recent HealthEquity survey say they already do this. But there’s room to improve that number.
If you don’t already price shop, use the HSA birthday to commit to it. Before you book an appointment or fill your prescription, spend time researching how you can use your funds most efficiently.
Not only will you pay less now, but you’ll also be preserving savings for the future.
let healthequity help you make the most of your hsa
Not sure where to start on one or more of these items? Let HealthEquity help.
Our remarkable Purple service team is available 24 hours a day, seven days a week, 365 days a year to answer your questions and ensure you’re meeting all your health savings goals.
It would be a great way for all of us to celebrate 17 years of the HSA.
1HealthEquity does not provide legal, tax or financial advice. Always consult a professional when making life-changing decisions.
2HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-deductible with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.
3Investments available to HSA holders are subject to risk, including the possible loss of the principal invested and are not FDIC or NCUA insured, or guaranteed by HealthEquity, Inc. HealthEquity, Inc. does not provide investment advice. HealthEquity Advisors, LLC™, a wholly owned subsidiary of HealthEquity, Inc. and an SEC-registered investment adviser, does provide web-based investment advice to HSA holders that subscribe for its services (minimum thresholds and additional fees apply). HealthEquity Advisors, LLC also selects the mutual funds offered to HSA holders through the HealthEquity, Inc. platform. Investing through the HealthEquity investment platform is subject to the terms and conditions of the Health Savings Account Custodial Agreement and any applicable investment supplement. Registration does not imply endorsement by any state or agency and does not imply a level of skill, education, or training. HSA holders making investments should review the applicable fund’s prospectus. Investment options and thresholds may vary and are subject to change. Consult your advisor or the IRS with any questions regarding investments or on filing your tax return.
4After age 65, if you withdraw funds for any purpose other than qualified medical expenses, you will be subject to income taxes. Funds withdrawn for qualified medical expenses will remain tax-free.