| News from Washington |
| Why the IRS Doesn’t Believe Your Doctor’s Note for Tax-Free Health Items The IRS says some companies are misleading consumers about what is and is not eligible under the rules of HSAs and FSAs, which allow consumers to use pretax dollars for various health needs. At the heart of the issue are companies that provide consumers with “letters of medical necessity” — essentially a doctor’s note — to purchase health-related items. Even though these notes are written by doctors, the IRS is questioning the validity of their advice. Read More |
| HSA Studies & Analysis |
| Inspira Report: Gen Z Lags in Health Savings Account Usage, Misses Retirement Boost Inspira Financial released a report exploring how four generations (Gen Z through baby boomers) are using HSAs and how employers can proactively tout their HSA benefit to boost their employees’ retirement savings. The report finds that young employees, in particular, lack the financial literacy to fully take advantage of the benefit. Read More |
| Good Satisfaction With Health Plans, but Out-of-Pocket Costs Could Be Hurting HDHPs Consumers are largely satisfied with their health plans, according to a new survey by the Employee Benefits Research Institute. But the overall satisfaction for health plans showed some variation. While 62% of enrollees in traditional plans said they were extremely or very satisfied with their health plan overall, that number was 46% for HDHP enrollees. The report also suggested that enrollees could use more guidance on HSAs. Read More |
| HSA Compliance Corner |
| What to Know About HSA Tax Prep In order to enjoy the full tax benefits of an HSA and stay compliant with IRS rules, you need to complete and file Form 8889 each year you contribute to or withdraw money from your HSA. It’s also very important to read the instructions for this form carefully. You’ll also need two other tax forms — 5498-SA and 1099-SA — so be on the lookout for them. Read More |
| Yes, HSA Providers Can Limit Acceptance of Your Debit Card Most leading HSA providers limit debit card purchases to certain qualified items and merchants, but they must also offer you an alternative method to withdraw funds. Your account provider must honor all requests for withdrawals from the account and can’t limit distributions to qualified expenses only. Read More |
| Market Trends |
| Millennials Are Using This Tax-Savvy Investment Vehicle Better Than Anyone Else Millennials are making use of Health Savings Accounts and investing those funds for the long-term, new research shows. According to Bank of America’s 2023 Participant Pulse report, millennials (Americans born between 1981 and 1996) saved more of their HSA contributions than any other generation. Read More |
| HSAs & Retirement |
| The Vast Majority of Older Americans Say They Worry About Health Care Costs in Retirement — Here Are 3 Easy Steps to Take Now if You’re One of Them When it comes to retirement planning, one of the the most common areas of concern is the possible medical expenses that loom on the horizon, according to a new survey from Nationwide. If you’re worried, here are three steps you can take now to fend off the financial fears and face the future with far less stress. Step #1 — start a Health Savings Account. Read More |
| Can You Afford Health Care in Retirement? At age 65, some couples may need as much as $413,000 to cover health care costs in retirement. Your costs will depend on your insurance choices, your health, your prescription drugs and your city. As you approach retirement, try these tactics to get a handle on future health care expenses. For example, if you have access to a Health Savings Account, max it out. Read More |
| How Much Will You Need to Save for Healthcare in Retirement? The dream is that you will eventually turn 65, and all your healthcare expenses will be covered by Medicare. In reality, healthcare costs in retirement can take a ridiculously large chunk out of your retirement income. Try not to get discouraged. If anything, use this as motivation to start saving today. Some people are using HSAs like an additional retirement account by letting the account grow until much later in life. Read More |
| Maximizing Your HSA |
| Are Taxable IRA Distributions Better Than HSA Withdrawals? As more articles tout Health Savings Accounts as the “tax-perfect retirement account,” the idea of withdrawing balances from these accounts to pay for all qualified medical expenses in retirement has become accepted wisdom. But there may be a situation when you might be better making a taxable withdrawal from your IRA. It may sound counterintuitive, but here’s why. Read More |