Stableford Capital Insights

Why Your Insurance Planning Should Include Health Savings Accounts

The rising cost of healthcare continues to dominate the headlines. You’ve likely experienced this, as well, with prescription drug prices, specialist co-pays, and other out-of-pocket expenses increasing each time you or a family member needs care. Today, it’s essential that insurance planning includes effective strategies to pay healthcare costs. And this is where Health Savings Accounts shine.

Health Savings Accounts, At Work Or On Your Own

You’re likely familiar with Health Savings Accounts (HSAs) and know they’re a great way to pay for healthcare costs while saving you money on taxes.

health savings account is effective insurance planning HSA sign on top of money with calculator

HSAs are relatively simple. You’re eligible to contribute to an employer’s HSA if you participate in a high-deductible health insurance plan that meets current guidelines. You choose investments from the HSA plan’s available insurance planning options, regularly save money in your account via payroll deduction — and then take the money out when you need it for healthcare expenses.If you’re healthy and have other money earmarked for these costs, you may not need to tap the HSA. That’s a smart strategy because HSA balances roll over each year and your account balance can continue to grow. If you happen to change jobs or retire, HSAs are yours to take with you.

Stableford Capital’s Managed HSAs

Employer-sponsored HSAs are just one option. You can also set up and contribute to an HSA outside your workplace. And, beginning this year, Stableford Capital’s clients now have the option for us to manage the investments in their HSA accounts, as part of the overall investment strategy.

2020 HSA Guidelines and Limits

insurance planning with high deductive health plan wooden blocks and bag of money and heart

According to the IRS, a high-deductible health plan (HDHP) is a health plan with an annual deductible that’s not less than $1,400 for self-only coverage or $2,800 for family coverage — and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) don’t exceed $6,900 for self-only coverage or $13,800 for family coverage.Additionally, the IRS sets the annual limit on contributions for an individual with self-only coverage under an HDHP at $3,550. For an individual with family coverage under an HDHP, it’s $7,100. Those that are age 55+ can contribute an additional $1,000 above the limits as well.

Triple-Tax Benefits of HSAs

Many high-net-worth individuals consider HSAs to be an essential component of their financial plan because the plans offer three tax-advantaged benefits:

  • You pay no taxes on the money you invest in your HSA which lowers your taxable income.
  • Your earnings in an HSA account grow tax-deferred.
  • You pay no taxes on the money you take out to pay for healthcare expenses, now or in the future.

Key Difference with HSAs

insurance planning with an HSA dollar bills going into white piggy bank

HSAs are similar to retirement plans in that the money you regularly invest can add up over time, just like other monies you save for the future. And the longer your HSA funds grow tax-free, the more you can benefit. At age 65, you can withdraw money from an HSA for non-medical related expenses without penalty and pay just the tax as you would with a traditional IRA.But here’s a key difference with HSAs — and it’s a great one: When you reach retirement age, there are no required minimum distributions with HSAs, unlike other retirement accounts you have.

Stableford Capital, Your HSA and Insurance Planning Partner

How you save, invest and spend funds in a HSA should be taken into consideration as part of your financial plan — and that’s where we come in. Stableford Capital can help you get the right HSA plan and strategy in place, helping to make sure this unique “retirement plan” meets your financial goals and objectives and aligns with your other retirement savings strategies.For more information on smart insurance planning and the triple-tax benefits of HSAs, contact us.

Nathan Faldmo
Nathan is Stableford Capital’s Director of Advisory Services. Before joining Stableford, he was a Senior Associate with Bernstein Global Wealth Management and he served the U.S. House of Representatives as an intern for the Committee on Ways & Means. Nathan is a Certified Financial Planner.