Medical Savings Goals and Your HSA

Build Investment Portfolios for your Savings Goals

Not all medical savings goals are the same. The time horizon for when you need your HSA funds could vary, so you may want your investment portfolio1 to reflect this. For instance, you might want to save and invest a specific amount for a planned surgery or procedure, while also maintaining a separate investment balance for future expenses in retirement. The amount of risk you’re willing to take for each of these goals could be different.

Special HSA Investment Feature

Your BenefitWallet HSA investment account has a special feature which allows you to create unique portfolios to invest for different goals. You can easily build each portfolio within the HSA investment platform – giving a unique name to the portfolio and creating an asset allocation that reflects the risk tolerance and length of time specific to your goals.

Three Savings Goals to Consider

Think about building HSA investing portfolios for one or more of these goals, depending on your needs and financial ability to do so.

  • Retirement Medical Expenses

    Did you know that the average retired couple will need $370,000 for their share of medical expenses in retirement2 – above what Medicare pays? A critical component of your retirement planning should be focused on medical savings. Your HSA is the ideal tool for this because the money is always tax-free – going in, investment gains, and coming out – unlike any other account in America. Think of your HSA as a 401(k) for health care expenses, and begin saving as early as you can . Time is your most powerful ally in potential long-term returns, and generally with a longer-term time horizon you can choose more aggressive investments.

  • Your Annual Health Plan Maximums

    Your health plan has a high annual deductible and out of pocket (OOP) maximum. The deductible is the portion of costs that you would pay first in any given year before the health plan pays. The OOP is the most you’d pay in any given year. Consider building a portfolio for these specific amounts, perhaps with a lower risk profile since you may need the funds shorter-term.

  • A Specific Upcoming Procedure

    Plan ahead for an upcoming procedure, such as a knee surgery or Lasik; your share of these costs could be $5,000 or more. Save and invest in a portfolio set aside just for a planned expense, and choose investments that meet your timeframe and goals.

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Extra tips

  1. Max out your HSA every year and pay yourself back 30 years from now (or whenever). Save all your receipts but don’t use your HSA funds; pay with other income. You can always “pay yourself back” tax-free from your HSA. As long as you have the related receipts, you can reimburse yourself anytime.
  2. Once you turn 65, you can use your HSA for ANY expense and pay only regular income tax, just like an IRA or 401(k). The 20% penalty for using your HSA on non-qualified expenses goes away at 65.
  3. Spend the money anytime. Remember, unlike money you save in your IRA or 401(k), you have the flexibility to spend your HSA funds anytime from today through retirement, tax-free on qualified expenses.
  4. Name your beneficiary. If it’s your spouse and you pass away, your HSA becomes their account, tax-free, and they can continue to spend from it. If it’s your kids, your HSA funds pass to them as part of your estate.

Whatever you decide to do with HSA investing, remember to take a holistic view of all your investments, and review your portfolio regularly. We encourage you to speak to a licensed financial advisor who can help you develop savings goals that reflect your personal financial situation.

Footnotes:

  1. BenefitWallet is not recommending any investment, nor can it assure you of a profit or protect you against any loss on any investment made via the BenefitWallet investment platform.
  2. HealthView Services, 2018 Retirement Health Care Costs Data Report.