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 And, importantly, if money is withdrawn for qualified long-term care expenses, the growth and withdrawals are tax-free.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.
com.