Transition Yourself from Spender to HSA Saver
June 22, 2017
Are you looking for an easy way to save on healthcare costs that can also provide investment opportunities? One way is with a Health Savings Account (HSA).
HSAs empower consumers to put aside money tax-free for eligible medical expenses. The funds you invest in an HSA are great for helping you cover healthcare costs in a pinch. But, because HSA funds carry over from year to year, they’re also a smart tool for savings and investment opportunities.
There are steps you can take to save money with your HSA
- Develop a plan. Start with a small goal, such as trying to save enough money to reach your health plan’s deductible. From there, set loftier goals for where you want your balance to be next year, two years from now and so on.
- Save HSA dollars when possible; spend them if necessary. Pay for smaller healthcare costs out of pocket if you can afford it, leaving your HSA funds available to you in case a big medical event crops up. You can always draw from your HSA later.
- Invest HSA funds. When you first start saving with your HSA, keep the focus on health costs. But, once you feel you have those covered, turn your focus to growing your HSA dollars by investing in mutual funds, like you would with a 401(k).
- Seek advice. Like with other retirement accounts, consult a trusted professional or financial adviser on how to best invest your HSA funds. The more information that you gather, the better prepared you’ll be now and going forward.
- Keep your eyes on retirement. Medicare won’t cover all of your post-retirement healthcare costs. The average 65-year-old couple retiring in 2016 will need an estimated $260,000 to cover healthcare costs in their retirement years. Build a nest egg in your HSA as you grow older. And, once you've turned 65, HSA funds can be used for any purpose – without penalty!
Remember these important facts about HSAs
- HSAs are portable! They’ll follow you, even if you switch jobs.
- You’re only eligible for an HSA if you’re also enrolled in a high-deductible health plan.
- You can’t be enrolled in both an HSA and a Medical Flexible Spending Account, but you can enroll in an HSA alongside a Limited FSA.
Want to learn more about saving with your HSA? Watch this video.