How to use a HSA or FSA for your wealth
As a busy professional, healthcare planning might not top your to-do list, especially if you’re enjoying relatively good health. Still, factoring in your wellness needs is important at any age – and it goes beyond ensuring your rainy-day fund covers a potential medical emergency.
Integrate your health with your wealth
For instance, you might already know health savings accounts (HSAs) cover certain medical costs. But did you know you can contribute that money tax-free – and that withdrawals are tax-free too? Alternatively, while a flexible spending account (FSA) can’t be invested, it can lower your taxable income and ensure you have extra cash for healthcare costs.
Read on to learn more about the health planning landscape, including how FSAs and HSAs can offer benefits that go beyond medical needs.
Harness the power of HSAs – For those still working, HSAs offer a triple tax-advantaged way to save for escalating healthcare costs. You can contribute up to $4,150 for individual and $8,300 a year for family coverage (those over 55 can add $1,000). These contributions reduce taxable income – and some HSAs allow you to invest those funds, helping you grow those assets tax-free. But that’s not all. There’s a misconception that HSAs have a “use it or lose it” policy, which is not true. Tax-advantaged savings roll over year after year and can be used for a wide variety of qualified expenses. Check out this article to clear up other common HSA misconceptions.
Don’t overlook FSAs – An FSA is a type of employer-sponsored savings account that allows you to contribute a portion of your earnings – up to $3,200 for individual coverage and $6,400 for a household in 2024 – to pay for eligible health-related costs. Since the funds you contribute are not subject to income and payroll taxes, these accounts can help reduce your taxable income. (Keep in mind you can’t claim a deduction for any expense paid with an FSA). There are a few caveats, however. FSAs belong to your employer, which means you must usually leave those funds behind if you start a new job. And depending on your employer’s preference, you might lose any funds by the end of the plan year.
FSAs and HSAs are just two ways to prioritize your health as you grow your wealth, and you generally won’t have to choose between them. That decision is typically up to your work situation and insurance options. Regardless, it’s valuable to understand the pros and cons of each so that you can make them work for you.
Long-Term Care to fill the gap
Good health allows us to truly enjoy the fruits of our labor and make the most of our time with friends and family. But while healthcare is always a worthwhile investment, it can get pricey. For instance, you may be surprised to learn that a 65-year-old couple can expect to spend about $315,000 out of pocket on healthcare expenses in retirement, according to some estimates. Fortunately, there are ways to reduce your healthcare costs before and during retirement without compromising your well-being.
Prepare for tomorrow’s healthcare needs today
Many of those dreaming of retiring in the next few years are surprised to learn that long-term care isn’t covered by Medicare. Long-term care insurance can help you fill that gap and set your mind at ease about having the care you want should you ever need it. There are a variety of options with customizable riders to help you get the coverage that makes the most sense for you and your family.
For more insight on the types of coverage that can help you live with confidence now and during your golden years, Check out this video.
Medicare
You’ve heard it before: good health is our greatest wealth. It’s what allows us to truly enjoy the fruits of our labor and make the most of our time with friends and family. But while healthcare is always a worthwhile investment, it can get pricey. In fact, a 65-year-old couple can expect to spend about $315,000 out of pocket on healthcare expenses in retirement, according to some estimates. And that’s without factoring in potential inflation. Fortunately, services like Medicare can mitigate healthcare costs in retirement without compromising your financial or physical well-being.
Make the most of Medicare
As you approach Medicare decisions, consider all the options. A Medicare Advantage plan, also known as Part C, might be the answer for you as it covers more than traditional Medicare parts A and B. The open enrollment deadline is March 31, so let’s plan a conversation before then.
Of course, prevention is the best cure. Prioritizing your health also means learning to advocate for yourself in a medical situation. Attached is an in-depth Medicare overview.
As a reminder, we’re always here to help you discuss healthcare options and address any questions or concerns you might have.
