Maybe you’re fresh out of college and struggling to put pennies away for the future. Maybe your career is temporarily on hold so you can raise children, leaving no money left to save. Or on the flip side, maybe you’re a few years shy of turning 65 and you’re happily coasting to retirement. No matter where you are in life, you can expect a few twists and turns on your financial journey. The question is — are you prepared to encounter them?
In these uncertain times brought on by the COVID-19 pandemic, we are quickly learning to adapt to an every-changing way of life. With such intense focus on health, the interconnection of health and finances is more important than ever. Especially when it comes to saving for retirement and paying for unpredictable medical events today and in the future.
You have a powerful tool to help cope with financial unpredictability — a health savings account or HSA. It can help prepare you for the ups and downs for both your health and your finances. The money you put in your HSA can be used, saved or invested for retirement and long-term planning goals.
What’s an HSA?
An HSA is available with a qualifying high-deductible health plan (HDHP). The money goes in tax-free, grows income tax-free and comes out income tax-free when you use it for qualified medical expenses.
There’s no “use it or lose it” rule.You get to keep the money in your HSA, no matter what, even if you change jobs or move off a qualifying HDHP. When you, your employer or anyone else contributes to your HSA, it remains in that account until you spend it. Plus, any money you keep in your account may earn interest.
In addition, you can use your HSA to pay for the qualified medical, dental and vision expenses of anyone you claim on your taxes, even if you’re only enrolled with single coverage. This is a great way to plan for unexpected expenses — from your deductible to an ER visit — for the whole family.
How can an HSA help in retirement?
An HSA is a great tool to help prepare you for future health care costs and retirement. After turning 65, you can use your HSA funds for non-qualified expenses, like a boat or an exotic vacation. You’ll pay ordinary income tax on those funds, but the 20% tax penalty no longer applies. As you’re planning for the future, your HSA can ease your mind and prepare you for retirement by saving money income tax-free.
With an HSA, you can invest your savings. The best part is that the money you earn through investing generally is income tax-free. You can use that money for future medical, dental and vision expenses, or even for retirement. Once your HSA reaches a certain designated balance, typically $2,000, you may choose to invest a portion of your HSA dollars in mutual funds. Our asset allocation calculator can help you decide which funds are right for you. In addition, Optum Bank is also offering automated online advice and investing through Betterment, the largest independent online financial advisor.
How do I manage my account?
To help build your health and finance support systems, Optum Bank makes it easy to manage your account through our website and mobile app resources where you can deposit funds and calculate contributions. You can also engage with our Health Finance Journey™, a one-of-a-kind model that uses advanced data and analytics to help account holders move from deciding to open an HSA to using, managing and optimizing its tax-free advantages. Each stage is an important step toward health and financial well-being.
During these uncertain times, it’s vital to save for future health care expenses, both planned and unexpected. You may not know exactly how much you will need for health care and medical expenses in the near future. Saving in an HSA gives you a tax-advantaged account dedicated to future medical expenses — allowing you the opportunity to avoid dipping into other accounts intended for cost-of-living expenses. Taking these steps can help lower stress and anxiety, enabling you to make better health decisions now and in the future.
About the author
Vice President, Optum Financial Services
Barb Page is the vice president of marketing for Optum Financial Services (OFS). In this role, Barb is responsible for the marketing strategy and execution for OFS and Optum Bank. She brings over 30 years of financial services experience and health care expertise to the marketing arena for Optum. Barb has a master’s degree in business communications and a Master of Science in health care leadership.
About Optum Bank
Optum Bank is advancing the way we save and pay for qualified medical expenses, connecting the worlds of health and finances in ways that no one else can. Optum Bank is the No. 1 provider of health savings accounts (HSAs), managing 5 million HSA member accounts and over $11 billion in assets. By developing proprietary technology and applying advanced analytics in new ways, Optum Bank helps reduce costs while guiding people to the right care. Optum Bank, Member FDIC, is solely dedicated to health care banking with more than 10 years of experience managing health savings accounts. Health care and finance is in our DNA.
Investments are not FDIC insured, are not guaranteed by Optum Bank®, and may lose value.
Health savings accounts (HSAs) are individual accounts offered or administered by Optum Bank®, Member FDIC, and are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply. Fees may reduce earnings on account. Flexible spending accounts (FSAs) are administered by OptumHealth Financial Services and are subject to eligibility and restrictions. The content of this communication is not intended as legal, investment, or tax advice. Federal and state laws and regulations are subject to change.