Many investors can expect a portion of their retirement savings to be diverted to pay for healthcare costs. With a health savings account (HSA) in place, individuals who also have a high deductible health insurance plan can make tax-deferred contributions to their retirement savings plan and make tax-free withdrawals for qualified current and future medical expenses.
HSAs must be are paired with High Deductible Health Plans (HDHPs) to offer multiple benefits, including:
Tax efficiency: HSAs offer a triple tax advantage allowing pre-tax contributions, tax-free growth of funds, and tax-free fund withdrawals (regardless of age) for medical expenses.
Significant savings potential: The ability to accommodate investment options in addition to cash—and the absence of a “use-or-lose” clause—can result in significant savings accumulation over time.
Flexibility: Account owners are empowered to determine how their HSA funds are used for future retirement expenses. HSA funds can also be used to pay for Medicare premiums and other medical expenses not typically covered by Medicare, such as eye glasses, hearing aids and dental care.
Full portability: HSA account holders own their accounts outright and can elect to roll them over to other HSA custodians, with certain restrictions.
A retirement healthcare benefit: As life expectancy increases, so will potential medical costs during retirement, which HSAs can help cover. As a savings vehicle for retirement healthcare, HSAs can help reduce the erosion of retirement income and promote financial wellness.
The “shoebox” benefit: With HSAs, you can incur a medical expense today, pay for it out-of-pocket and put the receipt in the proverbial “shoebox.” Account owners can let their HSA dollars continue to grow and then reimburse themselves in the future. The shoebox benefit offers a lot of flexibility with respect to how HSA funds can be used.
Oppenheimer funds are available on the Health Savings Administrators HSA xChange platform. Click here for more information.
Click here for a list of available Oppenheimer funds.
Click here for a Financial Advisor overview on HSAs and the benefits of incorporating HSAs into their practice.
Click here for an educational brochure you can share with plan sponsors and investors on the benefits of HSAs.
These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.