Do you know the HSA triple tax advantage?
Many members with HSA eligible High Deductible Health Plans (HDHP) do not sign up for, contribute to or understand how to best take advantage of HSAs. This presents a great opportunity for advisors to demonstrate their value and build relationships with employers, employees and families across their communities.
HSA’s can be used to accrue tax-free savings to pay for health care expenses, which typically saves 25% in federal taxes on every eligible claim. Everyone should be seeking to save 25%, especially for cost sharing expenses when they are responsible for the deductible.
HSA’s offer a triple tax advantage:
- Pre-tax contributions – every $4000 dollars in contributions equals $5000 in spending power.
- Tax free earnings – many HSA’s offer interest, and even moderate interest rates can add up and boost money to cover out-of-pocket medical costs.
- Tax free withdrawals – keep receipts from qualified medical expenses and withdraw money tax free at any time in the future.
Making maximum–or any–contributions adds up over time and may be one of your clients’ most valuable assets. Maximum contributions in 2020 for individuals is $3550 and $7100 for families (over 55’s can make an additional contribution of $1000 per year – known as the annual catch-up). In just a few years, families and individual can have significant sums and be financially confident about future medical expenditure.
One reason why many members with HSA-eligible plans do not contribute is they didn’t spend time with their advisor to set up an account. When selecting plans, members often have a choice between a HDHP or a copay plan. If they are not going to set up and contribute to an HSA, they would be better advised to select a copay plan. With a copay plan, they can at least visit their PCP or a specialist for a modest copay rather than being responsible for the full cost until their deductible is met.
HSA’s are a strategic choice and a fundamental decision that require the guidance, advice and education of a health insurance professional.
Advisors can get appointed for Further through LeClair Group and be rewarded for signing your clients up for an HAS. To get appointed, contact Michelle Weiss.
Further is bringing back HIPAA-compliant text messaging for HSA transactions – click here for more information from Further.