Health savings accounts (HSA) were created to help create a savings pool to help with paying higher health deductibles and are one of the best tax advantaged savings accounts that are available today. You can contribute to an HSA if you have a high deductible health care insurance plan and you are employed or self-employed. A high deductible health care plan is one that has a deductible of $1300 or more. For family coverage the minimum deductible is $2600. Your maximum contribution for 2017 is $3400 for single coverage and $6750 for family. There is an additional catch up contribution of $1000 once you reach age 55. Additionally, spouses can also make a catch up contribution once they reach age 55.
Webb Financial works with Health Savings Administrators to provide this service to our clients. An HSA is an individual account similar to an IRA. Even though your employer may offer a vendor through payroll deduction, you can select and use your own vendor. We’ve selected Health Savings Administrator because it allows us to create model portfolios to manage your account. They also provide a lineup of low cost Vanguard funds to keep investment costs low.
One of the best ways to utilize an HSA is to grow your balance in the account as much as possible and delay using those funds until retirement. This will allow you to reduce the amount of money you need to take out of your IRA to pay for medical costs in retirement. Out of pocket health care costs for a couple retiring in 2017 are estimated to be over $200,000. Using pretax dollars from your HSA is a great way to get an advantage to help pay for those expenses. If you would like to hear more about HSA investing, please contact your advisor.