NEW YORK, Dec. 28, 2018 /PRNewswire/ -- HSA administration company, Clarity, emphasizes the importance of HSA accounts for retirement.
Health Savings Accounts (HSAs) allow employees to save money for medical expenses—now and in retirement. Employees enrolled in a High-Deductible Health Plan (HDHP) qualify for an HSA. This year, the IRS has established an annual deductible of at least $1,350 for an individual and a maximum deductible and other out-of-pocket expenses of $6,750. For a family, the minimum annual deductible is $2,700, and the maximum annual deductible and other out-of-pocket expenses is $13,500. Employees can contribute up to $3,450 for an individual and $6,900 for a family. For employees who are age 55 or older, an additional $1,000 can be contributed each year, with the funds able to be used toward eligible medical expenses into retirement.
Employees do not have to withdraw HSA funds if they do not want to, so they can grow over the years. Employees who are financially stable may opt to pay for medical expenses with cash and allow that balance to keep increasing so medical costs are covered in retirement. This money is tax-deductible, so the funds keep growing tax-free. Plus, some accounts allow unused funds to be invested in stocks or mutual funds. If HSA funds are used for reasons that don't qualify as eligible medical expenses, the monies will be taxed.
Monies withdrawn from HSAs are tax-free, as long as the funds are being used for eligible medical expenses. This is also the case in retirement, which sets HSAs apart from traditional IRAs. It will not interfere with a retiree's Social Security retirement benefits.
Employees who may be concerned about losing their HSAs if they switch jobs before retirement need not worry. Employees own their HSA account, which means they can make contributions throughout their career, as long as they continue to be registered in a HDHP. Employees can also designate an account beneficiary to have access the funds for health care costs.
Now is the time for employees to start using and contributing to HSAs. They should contribute as close to the annual limit as possible and try not to tap into the accounts too soon. This way, the money will accumulate—tax-free.
About Clarity Benefit Solutions: Clarity Benefit Solutions HSA Administration provides technology that makes the health insurance plan selection process fast, easy, and straightforward. For over two decades, we have provided clients with industry-leading technology, compliance, and exceptional customer service. Our offering is designed to save time and lower the costs of managing benefits while also promoting employee self-service and automated ACA compliance.
SOURCE Clarity Benefit Solutions