Group HSA Health Saving Account 

 

Health Savings Accounts (HSA) programs, both group and individual, are a unicorn in the financial world.  No other account in the financial world can call itself “triple tax free if the HSA dollars/accounts are used to pay for medical expenses.  The money going in to the HSA is deductible, the money inside the HSA grows tax deferred and then the money can be used tax-free for medical expenses Not all companies elect to offer a HSA which is a mistake for multiple reasons.

 

If you would like to know more about HSA’s or any other service on the site, please fill out an inquiry, send us an email or give us a call. A professional from our team will reach out.

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Companies can elect to offer a HSA vendor relationship for ease of deferral for its employees, but they do not have too.  Anyone can go to a bank that offers HSA’s with a HSA compatible plan and open a HSA.  Either way the money funded in a HSA is owned and controlled by the insured.

To take advantage of a HSA account one must have a HSA compatible health plan aka a High Deductible Health Plan (HDHP). For many years only a FSA (Flexible Spending Account) plans could boast virtually the same triple tax free status, only the stars had to align to fully take advantage of a FSA and even this falls short of a HSA.

First with a FSA your employer would have to offer a FSA, then one would have to declare up to $2,500 maximum 1 time per year, exactly how much to deduct/defer over the proceeding 12 months.  With a FSA the monies would not accumulate and grow tax deferred in investment accounts which they can in a HSA.  With a FSA any dollars not spend over the 12 month deferral period are forfeited over $500.  This makes it difficult to know if you really should fund all $2,500?

With a HSA individuals can defer $3,350 at any time during a year or $7,100 for a family for 2020.  And a extra $1,000 if your over 55.  The best part is the monies can grow tax free in investments and spent tax free for medical expenses,  hence Triple Tax Free.  FSA’s do go in pre-tax like HSA dollars, but don’t grow in market risk/reward type accounts offered by HSA vendors.

Any unused dollars left in your HSA can be taken out as if it were a IRA at age 65 rather than 59 1/2, which is a small price to pay to fund this tax savvy vehicle when used appropriately.

We at CBB like to call HSA accounts medical IRA accounts or medical war-slush fund accounts.  Why over pay year after year when you can over pay a lower premium and pocket (deduct)  the saving for the rainy day and fund a HSA?

Ask for one of our experience brokers to help you evaluate if a HSA or FSA or both make more sense for you and or your company.

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