HSAs or Health Savings Accounts are gaining popularity among consumers and professional financial advisers. Spencer Crow, Senior Vice President at Financial Engines and a Certified Financial Planner, says funding your HSA should be considered a top priority. According to Spencer, retirement accounts (like IRAs or 401ks) should only be funded after you have maxed out your HSA and have a six month emergency fund saved.
People are frustrated with the current state of affairs in medicine, particularly where insurance is concerned. For those of us that don’t utilize medicine outside of emergencies and routine check-ups, it seems like money is being flushed down the drain each month. The HSA is a great way to maintain insurance coverage and save what you don’t use for a rainy day. Here’s how HSAs work:
HSA accounts are available through most major insurance carriers such as Aetna, Blue Cross Blue Shield, Humana, etc. You pay a monthly premium just like other insurance plans, but the HSA allows you to add money to an account (up to $3400/year) that you can use as an investment vehicle. If you don’t use all (or any) of the $3400 that year, don’t worry! It rolls over indefinitely! You can even invest the money in index funds, mutual funds, etc. like any other retirement account. Until age 65 you must use the money only for medical/dental/chiropractic etc. or face a 20% tax penalty for non-medical usage. After age 65 you can draw from your HSA tax free. This means that the money you put in will NEVER BE TAXED if you wait until you are 65! This is HUGE! And another thing, after age 65 you can use your HSA to pay for your monthly insurance premiums as well.
HSA is different from a FSA (Flexible Spending Account). With a FSA you have to “guess” how much you spend on healthcare each year and if you don’t use it you end up losing it. Why would anyone want to pick a FSA and leave money on the table? The HSA is a much better option.
Are you tired of insurance dictating what it will/won’t pay for? As a Chiropractor I have patients that become frustrated when their insurance won’t cover care, and that is becoming more and more common. The HSA account gives you the freedom to decide how to use your money on healthcare, whether it be for Chiropractic, massage, dental, etc. For people that like to invest in a more proactive approach to healthcare it makes much more sense. For more information on HSAs take a look at this article:
I hope this article helps you understand the potential for a HSA account to help you manage your finances, and as always feel free to contact the clinic via email or phone if there is any way that we can be of service to you. ~Dr. Murray