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It’s Springtime! What Can You Grow?

It's Spring! A time when many of us consider growth-not just of gardens and flowers but also growth for securing our future. According to the Devenir 2021 Year-End HSA Survey, plenty of people are doing just that. Americans had invested more than $100 billion in more than 333 million health savings accounts as of the end of January 2022. As the Care Planning Team (CPT) discovers, a Health Saving Account (HSA) is a very effective funding mechanism for health-care costs. And, importantly, if money is withdrawn for qualified long-term care expenses, the growth and withdrawals are tax-free.

-Excerpt from "How Not to Tear Your Family Apart"

Having piqued everyone’s interest, Jodi throws out a

second question. “How would anyone who is not contributing

to an FSA account open an HSA account?”

“You better just tell us, Mom.” Nicole is ready for

more details.

Jodi explains, “Actually, there are two ways to open an

HSA account. Since the HSA belongs to the individual

and not the employer, as long as you are covered by a high

deductible health plan, or HDHP, you may open and

contribute to an HSA. The other way is how Dad and I

did it. Since we have a qualifying HDHP through work,

we were also able to open an HSA through our employer.”

Nicole continues her inquiry. “What if my employer

doesn’t offer an HSA account? Where can I open one on

my own?”62

Jodi answers, “First, remember that you cannot contribute

to both an HSA and FSA. From what I read, Nicole,

you may want to check first with your human resources

department since my employer, like others, contributes

money to my HSA. I suspect that my employer may pick

up the fees as well. If that’s not an option, when I was

reading about funding a long-term care policy with HSA

funds, I came across an online search site to help you find

an HSA administrator.63

You can compare fees and investing options. I’m sure

there are other such sites as well.”

“For what it’s worth, let me pitch in here.” All eyes shift

to Doug. “I opened an HSA account at my company,

and I have my contribution deducted from my pay. Since

I contribute to my HSA via pretax payroll withholding

through my employer’s Section 125 plan, I don’t

pay FICA taxes on those contributions. Currently, that

means an extra 7.65 percent from each contribution

comes back to me.64 And because HSAs are individually

owned, it will stay with me if I change jobs or retire.”

62 There are exceptions with regard to eligibility for opening individual an

HSA account. Someone who is already covered by another health plan or

is at least sixty-five years old and enrolled in Medicare, or is claimed as a

dependent on someone else’s tax return, cannot open an HSA.

63 HSA Search (website), accessed November 21, 2020, http://www.hsasearch.


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