April 13, 2022

At a time when employee benefits are more important than ever in attracting and retaining top talent, organizations should “review how they are positioning a Health Savings Account (HSA) offering, to ensure that employees correctly view the HSA … as a useful tool for building overall financial wellness,” according to BenefitsPro.

If you don’t personally have a HSA, ask your employer about your options. If you already have an HSA, maximize it as an investment tool — a pre-tax and pre-FICA fund that can be used to save for “rainy day” medical expenses.

If the funds are not used, the money continues to grow over time creating a bit of a cushion for unforeseen expenses. For example, if you spend $700 a year on healthcare costs, anything you contribute above that is money invested for your future.

The HSA is a wise investment tool, not only for healthcare needs, but also for long-term financial health and retirement planning.

Maximum allowable contributions enhance this opportunity further, particularly for those investing at a younger age. And since an HSA can be invested in the market just like a 401(k), with tax-free interest, the opportunity for long-term growth is exponential.

More Features and Benefits of an HSA

  • The HSA fund is tax-deductible, compounds tax-free interest and is tax-free to withdraw for medical bills.
  • Some organizations make contributions toward the HSA for employees who contribute to a HSA. This is basically “free money.”
  • People ages 55 to 64 can make additional contributions called “catch-up payments” to their accounts to accelerate the rate of savings.
  • Under the CARES Act, qualified medical expenses were expanded to include over-the-counter (OTC) drugs, along with menstrual care products (read more here).

Consumer-driven financial tools like HSAs encourage the development of families and communities that are incentivized to better manage health expenditures. This in turn facilitates a focus on healthier lifestyle choices, which ultimately takes some of the burden off the healthcare system. It only works because individuals and families have something to gain financially that also leads to living a longer, healthier life.

At any income level, a savings account that simultaneously drives participants to save money, live a healthier lifestyle and make better healthcare decisions is a truly valuable resource.

HSAs are wise investment tools that effectively fund health care needs now and in the future. It’s a win-win for you as the consumer, as well as your employer and the community.

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