As inflationary pressures drive up household expenses, many employees are working past the traditional retirement age to help ends meet. Employers and employees looking for innovative ways to supplement traditional retirement saving strategies should evaluate health savings accounts (HSAs). HSAs, which must accompany a high deductible health plan (HDHP), allow for tax-deductible contributions, up to $4,150 annually for individuals and $8,300 for families in 2024. HSA account balances can be a financial lifeline during the golden years.
While HSAs are widely known for their ability to use pre-tax dollars to pay for qualified health purchases, they can also have a positive effect on an individual’s retirement outlook. It is common knowledge that health issues increase with age. Health care needs can quickly drain financial resources. If health care expenses haven’t been accounted for in a household’s retirement calculation, there could be a financial strain. Ensure you can afford quality care in the future by increasing contributions and saving while your health costs are comparatively lower.
HSA funds can also cover certain Medicare and long-term care premiums, and Medicare supplement coverage. Additionally, once an individual turns 65 HSA funds can be used for purchases that fall outside the bounds of qualified medical expenses, although those distributions will be subject to state and federal taxes. Unlike traditional IRA and 401(k) accounts, which require minimum distributions starting at 73, HSAs are not subject to a requisite distribution at any age.
Learn how the tax advantages of an HSA can fortify a more secure financial future for your team.
Employees looking for more ways to tap into savings should check out our Fast Facts on these lesser-known eligible expenses.
Employers who are considering offering an HDHP and HSA option should consult with a Bukaty benefits expert.
