Weekly HSA News – February 5, 2024

IRS Announces Tax Relief for Taxpayers Impacted by Severe Storms, Flooding and Tornadoes in Rhode Island
The Internal Revenue Service announced tax relief for individuals and businesses in parts of Rhode Island affected by severe storms, flooding and tornadoes that began on September 10, 2023. These taxpayers now have until June 17, 2024, to file various federal individual and business tax returns, make tax payments, and make 2023 contributions to their IRAs and HSAs.   Read More
Correcting Mistaken HSA Distributions
How can employees correct a mistaken HSA distribution for non-medical expenses to avoid income taxes and the 20% additional tax? In general, employees can work with the HSA custodian to return the mistaken distribution by the following April 15. The correction process of returning the funds to the HSA allows employees to avoid taxation and the 20% additional tax that would otherwise apply for a non-medical distribution.   Read More
Can Debit-Card Issuers Limit Acceptance to Certain Sites?
Most leading HSA providers configure their debit cards to limit purchases to certain qualified items and merchants, following industry best practices. Your account provider must offer you an alternative method to withdraw funds. The most common options are a distribution form, an online request to send funds to you, or direct deposit. Your account provider must honor all requests for withdrawals from the account and can’t limit distributions to qualified expenses.   Read More
Tech-Savvy Younger Clients Can Find HSAs a Strategic Tool
Health care preferences are rapidly evolving among younger generations. As Generation Z and millennials prioritize accessibility, convenience and cost-efficiency, there is a greater demand for telehealth and the ability to research and shop for health care options online. Brokers, aiming to cater to this tech-savvy demographic, can leverage HSAs as a strategic tool. Highlighting the following benefits can help brokers effectively position HSAs for modern generations.   Read More
With Its Triple-Tax Benefits, the Humble HSA Emerges as a Retirement Savings Powerhouse
Over the past two decades, HSAs have grown into a huge industry, surpassing $100 billion in assets in 2022, as more Americans have taken advantage of the plans. Increasingly, benefits brokers and personal-finance experts are advising people to consider using cash to pay for health care and investing the HSA funds for decades. Why? Because investing HSA funds for the long term can leverage so-called “triple-tax” benefits, which can stretch money even further.   Read More
Health Care Costs in Retirement for Medicare Beneficiaries Rises Again
Another reminder that health care expenses need to be factored into retirement planning comes in the form of a new research report published by the Employee Benefit Research Institute. The report says that a couple enrolled in a Medigap plan with average premiums would need $351,000 to have a 90% chance of covering their expenses (up from $318,000 last year).   Read More
66% Believe a Retirement Crisis Is Looming
According to a new survey, 66% of current retirees believe the U.S. is in a retirement crisis, as 19% of those surveyed have already blown through their retirement savings, and 40% are concerned their savings won’t last their lifetime. While the average retiree has $142,500 in savings, that’s not enough to keep up with the rising cost of living and exorbitant healthcare expenses retirees can expect to face in their later years.   Read More
4 Common Myths About HSAs
If you have a high-deductible health plan, you might also have the option to use a Health Savings Account. HSAs are a powerful tool for reducing your tax liability, but they are often misunderstood. Here are some common myths about HSAs and the truth about these accounts.   Read More
Using an HSA to Pay for Medicare Premiums
After you enroll in Medicare, you’re not allowed to make any future contributions to an HSA. But there’s good news. You can withdraw funds tax-free to pay for qualified medical expenses even after you enroll in Medicare. You can even use your HSA to pay for some Medicare expenses including your Medicare premiums, deductibles, copays and coinsurance.   Read More
Distribution Tax Status When You’re No Longer HSA-Eligible
Distributions from an HSA for qualified medical expenses are always excluded from taxable income once you’ve established your account. You face no tax consequences when you withdraw funds for these items and services, and it doesn’t matter whether you remain eligible to fund your HSA. Eligibility is relevant only to opening and funding your account.   Read More
Do You Have Multiple HSAs Open? You Have Options
The average person changes jobs multiple times over their career. Since HSAs are employee-owned, they stay with you even when you leave your employer. The funds are yours. As you change jobs, you may have several of these accounts open. Here are a few options for what you can do with multiple HSAs.   Read More
Few Americans Know How Much Their Healthcare Costs
Only seventeen percent of U.S. adults report they know how much their healthcare products or services will cost before receiving them. Results are similar across key demographic groups, suggesting a society-wide lack of awareness about one’s healthcare costs, regardless of personal background.   Read More