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February 2007 | Volume VI, Issue 2 |
Making HSAs Work For You:Health Savings Accounts (HSAs) give workers the opportunity to save tax-free for routine expenses, the security of insurance against major illness, and the freedom of knowing they can take their account with them whenever they change jobs. Through reduced premiums and lower administrative overhead, HSAs can save employers from 10% to 30% on health care costs while expanding the range and quality of health care choices. HSAs provide participants with three ways to save on taxes. Contributions to an HSA can be made tax-free, earnings (interest) on the funds are tax-free, and withdraws for qualified medical expenses are tax-free. An HSA puts the consumer in charge of their own health care by adding the power of a financial tool. HSAs help consumers to be healthy, wealthy, and wise about their health care investment. When you have an HSA, you essentially attach an individual savings plan to a qualified health plan. The ability of HSAs to alleviate rising health care costs rests not only on their inherent tax advantages but also on the optimized implementation and administration of such accounts. HSAs are looking more attractive, but they still may not be powerful enough to cover all of your health care costs in retirement. Most people don’t realize how much money they could need to fund their retirement health-care costs. Despite the fact that Medicare pays for many health costs for seniors, someone who retires today at 65 and lives 20 more years could need $84,000 to $164,000 to pay for uncovered medical expenses, according to a report by the nonprofit Employee Benefit Research Institute, and that is not counting long term care costs. Findings from PNC's third annual Wealth and Values Survey showed that more than four in 10 (43 percent) respondents with assets of $500,000 to $999,999 said, "healthcare costs will ultimately consume a major portion of my financial assets," a number that rose significantly from a year ago, when 36 percent expressed the same concern. HSAs are also another savings vehicle for retiree medical expenses. By leaving the money in the HSA, the participant can accumulate interest and investment returns. Projected HSA growth from US Treasury:
Click here for more information on Health Savings Accounts. |
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LEGAL DISCLAIMER: Material contained in
this newsletter is not legal advice, and should not be construed as
legal advice. If you need legal advice upon which you can rely, you
must seek a legal opinion from your attorney. © DataPath, Inc. 2007 |