Health Savings Accounts Not Just for Today s Health Expenses

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1 Health Savings Accounts Not Just for Today s Health Expenses Presented by: Timothy M. Shirk, CFP Money Advisor Francis Investment Counsel LLC Our Agenda 1

2 PLEASE WATCH FOR AN WITH OUR SURVEY LINK Or complete the survey at: surveymonkey.com/r/moneyu Health Care According to the Boston College Center for Retirement Research: Total amount needed for a 65 year old married couple to cover Medicare Premiums Co-pays Deductibles Out-of-Pocket expenses Average - $197,000 5% Risk - $311,000 _of_lifetime_health_costs_from_age65.pdf HSA: The Triple Crown of Tax Breaks Pre-tax deposits Tax-deferred growth Tax-free withdrawals Rethink of this account as a retirement savings vehicle!! 2

3 HSA vs. IRA or Roth IRA Pre Tax Deposits Tax Deferred Growth Tax Free Withdrawals Traditional IRA X X Roth IRA X HSA X X X* *Savings must be used for qualified expenses Who Can Save? Must be covered by High Deductible Health Plan = HDHP High Deductible Health Plan = $1,300 annual deductible for individual coverage $2,600 annual deductible for family coverage Ineligible for contributions if you Are enrolled in Medicare (any portion) Have secondary coverage (non-hdhp) There are other causes for ineligibility for HSAs, this list is not exhaustive. What Can You Save? There are savings limits, just like IRAs Pay for today s health expenses out of pocket to allow your HSA to grow for later use 2018 HSA Limits Contribution Limit (you and employer combined) Additional Catch up (for each person age 55+) Self only $3,450 $1,000 Family $6,900 $1,000 - Limits vary based on age, type of plan, and eligibility date. 3

4 How Can You Save? Balance grows from year to year, versus the Use it or Lose it rules of a Flexible Spending Account (FSA) Payroll deduction/direct deposit Personal, not company account Lump Sum Must contribute by tax filing deadline What if I contribute too much? Excess contributions are not deductible, and will be charged a 6% excise tax each year they remain in the account To avoid excise tax Withdraw excess contribution prior to tax filing deadline Withdraw earnings on excess contributions and include in income for the year contributions are withdrawn Who Gets it When You Die? HSA continues to surviving spouse if spouse is named as beneficiary If no spouse as beneficiary, the account will no longer be considered an HSA and balance will be taxable to estate or named beneficiary 4

5 Seed by Transfer from Your IRA? May make a one-time transfer from IRA to HSA up to one year s contribution Can only do this once in your life Where can You Open an HSA? Can open one anywhere but your company contribution direct deposit may be limited to specific providers Not a recommendation. Providers listed for illustration purposes only. Want to Change Providers? You can roll over amounts from Archer MSAs and other HSAs into an HSA Must rollover within 60 days of receipt Limited to one Rollover per year You may make unlimited direct transfers from one HSA provider to another 5

6 How to Invest your HSA First, decide how much you wish to keep liquid for today s expenses Then, invest the rest based on your risk tolerance and time horizon When to Spend the Money Can be used for any health expense income taxfree! (except Medigap premiums) Withdrawals for non-medical expenses before age 65 are taxed and there is an additional 20% penalty Can be used or non-medical expenses after age 65 but gains will be taxable (taxed like your traditional 401(k)) Icing on the Cake! An eligible expense is NOT just today s health expenses! Past year expenses count too! 6

7 Call or visit moneyadviceatwork.com/learnmore to schedule a personal MoneyAdvice session. Francis Investment Counsel does not provide legal or tax advice. As investment returns are variable, we cannot guarantee any certain investment return or result. Historical performance information has been compiled from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. Past performance is not a guarantee of future Moneyadviceatwork.com/learnmore 7

8 Meet our Advisors! Kelli Send Creative and Fun Educator, Master Helper Tim Shirk Surprised by Life, Ready to Help Liz Aidoo La diversidad es nuestra fortaleza Diversity is our Strength Art Harris Hopeful Helper Eric Hencley Financial Adventurer, Slayer of Pessimism Matt Vandre Optimistic Doer, Lively Encourager Jay Voigt Money Sherpa, Strategy Guru For illustration purposes only. Past performance is not an indication of future performance. 8