HSAs Can Help "Turbocharge" Retirement Savings
More and more companies are warming to the idea that health savings accounts (HSAs) can be beneficial as both long- and short-term savings vehicles—but there are still many misconceptions about HSAs.
HSAs are a powerful and important way to save and pay for health care costs because they are both “triple tax-free” and flexible, meaning the account is usable from the moment it's opened and throughout retirement. Contributions are deducted from an employee on a pre-tax basis, and employers save money by not having to pay payroll taxes. Money deposited into an HSA can be invested in mutual funds, index funds, ETFs. etc. and withdrawals for qualified expenses are tax-free.
It’s important for employers to understand how HSAs work when communicating about the benefit to employees.
One misconception is anyone can enroll in an HSA. In order to take advantage of a health savings account, employees need to first be enrolled in a high-deductible health plan (HDHP). Employers need to start their education with HDHPs, so the benefits of an HSA make sense to employees.
Another misconception is the funds will automatically be invested. Just like a retirement account, employees will need to choose how they want the money invested.
HSAs are individually owned, so employees will have the account even if they leave their employer.
Feel free to contact us with questions about Health Savings Accounts (HSAs) and how your employees might benefit from adding this to your existing benefits package.