Healthcare reform is underway in Washington as the Trump administration works
to repeal and replace Obamacare. How this will end up is anyone’s
guess right now. There are a few themes that seem to be gaining
traction and will likely be part of the new healthcare reform. Because
insurance rates have increased so much over the last year, you can
assume that coverage levels are going to have to be reduced in order
for premiums to become more affordable for consumers. What that
means is more out of pocket cost for you!
Accumulating a balance in your health savings account (HSA) is
becoming one of the most effective retirement strategies available to people that
still have employment income. The triple tax free advantage can’t be beat by 401k
plan, IRAs or pensions. Contributions are made pretax giving you an immediate
tax savings. Withdrawals are tax free as long as they are used to pay for medical
dental or other health care expenses. Withdrawals can also be used to pay for long
term care insurance premiums. With out of pocket costs increasing, there is talk
of increasing the yearly contribution limits to over $10,000 per family. We’ll have
to wait and see what is decided later this year but HSA’s are here to stay.
As I mentioned last quarter, we have set up a new vendor for HSA administration.
They provide us with access to a low cost investment menu of Vanguard funds.
Just like we do with your retirement accounts, we can create an investment
portfolio to help you grow the account for your retirement. When you grow the
balance in your HSA account, it reduces the amount of money you’ll need to
withdraw from your IRA in retirement which reduces your income taxes.
You can have multiple HSA accounts set up for you or your spouse. If you have a
balance in your current account that you’d like us to help manage, please contact
your advisor. If you’re 55 or older, you can make an additional $1000 catch up
contribution for you and/or your spouse. We can help you get started on your
way to saving for your health care costs in retirement with an HSA.