3 Ways to Reach Financial Goals with the HSA

Every year, very few HSA accountholders take advantage of the ability to invest their HSA funds - as high as 12%!  Even though every year, for the past five years, the share of accountholders investing has increased, many are still not utilizing this option to reach their financial goals.  Check out this week’s blog to learn about the other 2 ways to reaching financial goals with the HSA!

The Health Savings Account (HSA) is a personal savings account designed to help individuals save and pay for qualified health care expenses.   Employees use the HSA funds to pay for thousands of eligible items such as copays, over-the-counter medications, dental, vision, and more with tax-free dollars making it an excellent tax benefit to help make the most of every health care dollar. 

The BASE® HSA not only allows employees to pay for their health care expenses; but allows for the opportunity to save for the future, invest funds to build wealth, and create a powerful tool for a retirement portfolio. 

How are financial goals met with a Health Savings Account (HSA) in place?  Check out these 3 ways below:

1).  Max Out HSA Contributions.

With health care costs and costs of living on the rise, saving for retirement is more important than ever.  Each year, if individuals can max out HSA contributions within the IRS limits, it will easily allow funds to grow over time with triple tax advantages. Because funds carry over from year to year, there is no risk of losing those funds at the end of the plan year.  BASE offers clients the My HSA Planner tool to help participants determine the right amount to contribute funds based on income and goals.  This educational tool presents personalized calculations such as future savings balance, potential retirement balance, and projections based on participants contribution levels, just by entering in basic information. 

2).  Set and Monitor Savings Goals.

It is vital that goals set are achievable and realistic.  But also important is monitoring those goals.  HSA contribution amounts are flexible and can be changed at any time during the plan year while post-tax contributions can be made at any time.  It is best for individuals to check in on HSA status each quarter to see if you are working towards that goal. 

3).  Invest HSA Funds.

Investing HSA funds can make money grow faster, tax-free, and help supplement the long-term goals while saving for retirement.  Most people with active HSAs do not take advantage of this opportunity, stating that in 2020, only 6% were investing their HSA balances. 

This year marks the 20th anniversary of HSAs, with National HSA Awareness Day on October 15th, which is a significant milestone in the life of these accounts.  Tens of millions of Americans can save, through their employer, for current and future health care needs and be more educated on making health care decisions.  Each year, the HSA can be a powerful tool to help pay for eligible out-of-pocket health care expenses while also being a powerful tool to achieve financial success in the future. 

For more information on the BASE® Health Savings Account (HSA), contact BASE® at 888.386.9680 or visit www.BASEonline.com

Food for Thought…

The 125 Cafeteria Plans have nothing to do with food and everything to do with paying for qualified out-of-pocket health care expenses!  As we get closer to October, employers are looking into what health benefits they could be offering to their employees.  One of the most overlooked options for any business of any size is one of the four Section 125 Cafeteria Plans

The BASE® 125 Cafeteria Plan is like a menu of options that allows employers to customize the benefits they offer their employees.  They can offer their employees a way to help pay for their health care expenses, insurance premiums, or dependent care expenses on a pre-tax basis.  By utilizing BASE®, it will provide access to quality benefits, while providing a variety of affordable benefit options that stand alone or complement any health benefits package in place. 

There are four 125 Cafeteria Plans an employer can choose to offer:

  1. Flexible Spending Account (FSA)
  2. Limited Purpose Flexible Spending Account (LPFSA)
  3. Dependent Care Assistance Plan (DCAP)
  4. Premium Only Plan (POP)

All four options allow for the funds to be transferred on a pre-tax basis, allowing for both the employer and employee to see tax savings. 

With the BASE® FSA, the employees can use the funds they set aside to pay for their qualified, out-of-pocket health care expenses.  The employee has access to their full annual election on day one of the plan year for an FSA-eligible expenses.  

With the BASE® LPFSA, the employees can use the funds they set aside to pay for their qualified, out-of-pocket dental and vision expenses.  The employee, who has a Health Savings Account (HSA) in place, can use their LPFSA funds to pay for the dental and vision expenses while growing the funds in their HSA for other health care expenses now or in the future. 

With the BASE® DCAP, the employees can use the funds they set aside to pay for their qualified dependent care expenses.  The employee can still work and have peace of mind knowing they are establishing funds to help pay for a very significant cost to their family. 

With the BASE® POP, the employer does one simple payroll change that allows for the dollars from the employee’s salary to pay for the employee portion of the health insurance premiums.  The employee can save 25-50% on those premium costs by paying for their health insurance this way. 

Just food for thought… bottom line is this – adding in one, or all BASE® 125 Cafeteria Plans is money savings for both the employer and employee.  With BASE®, employees can see a 25-50% savings on every dollar they elect while employers can see savings on FICA withholding tax for every employee that participates.  The more your employees elect and save, the more tax-deferred dollars an employer can save in the long run. 

For more information on the BASE® 125 Cafeteria Plans, contact BASE® at 888.386.9680 or visit www.BASEonline.com.