Health Savings Accounts: Qualified Plans, Taxpayers, and Expenses; Reporting Distributions; Retirement Funding

This course will explore the advantages of health savings accounts (HSAs), including plan and participant requirements, contributions and limits, and using an HSA to supplement retirement plans. Our panel of HSA experts will explain the overlooked opportunities these plans provide.

HSAs benefit taxpayers in many ways, including providing funds to pay for medical expenses. HSAs can also serve as an investment vehicle, additional retirement funds, and an emergency cash stash. They may be one of the most beneficial yet underutilized planning tools available to certain taxpayers.

To implement an HSA, a participant must have an eligible insurance policy with a high deductible of at least $1,400 for individual plans and $2,800 for family plans. Contributions to HSAs avoid both federal and most state income and payroll taxes (e.g., FICA, FUTA). Employers often offer these plans, and the fees and investment options vary with each financial institution.

Participants can withdraw money from their HSA for eligible medical expenses. The list of qualifying medical expenses is fairly liberal and includes over-the-counter drugs, acupuncture, and qualifying travel expenses. Taxpayers can use HSA funds to pay Medicare premiums after age 65.

Tax advisers working with employers and individuals participating in these plans need to understand the benefits and requirements for contributions and distributions and other unique opportunities these accounts provide so they can incorporate them into the financial advice they provide, especially when planning for retirement.

Listen as our panel of HSA experts explains who can and cannot use an HSA, how to maximize tax advantages, and how to incorporate an HSA into retirement planning.