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4 Simple Steps to Make Your HDHP + HSA Strategy a Success

Jan 13, 2021 8:00:00 AM

With the new year comes a new chance to take positive steps toward better financial health. No matter who you are or what your circumstance, making your money work smarter for you can only be a good thing. And luckily, if you’re enrolled in a health savings account (HSA) qualified high-deductible health plan (HDHP), four simple steps can get you well on your way to doing just that.

Whether you’ve had an HDHP and HSA for years, or whether this year is the first time you’ve enrolled in an HDHP, you’ve already taken an extremely important step to better control your healthcare costs and set yourself up for a brighter financial future.

Start the year strong and keep the momentum going by following these four simple steps to help make your HDHP and HSA strategy a success this year and for years to come. You’ll enjoy a host of immediate benefits, and your future self will thank you.

STEP 1: Complete the HDHP Puzzle by Opening an HSA

If you’ve already opened your health savings account, you can check this off your list. But if you’re new to having HSA-qualified high-deductible health plan coverage, or if you’ve had an HSA-eligible HDHP for a while but have never gotten around to actually opening an HSA, this is the first easy, yet critical step on your journey toward better financial health.

While you save money upfront through the lower premiums an HDHP offers, you need to open an HSA to truly unlock all the short and long-term financial benefits and other advantages an HDHP/HSA combination provides. Until you do that, your healthcare coverage puzzle is incomplete. Even if you have little to no knowledge of what an HSA is and how to use it, you still need to complete this first step and open an account.

So, if you don’t yet have an HSA, how do you choose where to open one?

One of the many great things about an HSA is that where you open your HSA is your choice. There’s no restriction on who you choose as your HSA provider. In fact, you can even choose to open more than one HSA if you so desire.

It’s always good to have options, and while it’s certainly a benefit to have the flexibility of choice when it comes to who you choose as your HSA provider, there’s also an element of responsibility to do your research and make the right choice, because not all HSA providers are created equal.

No HSA provider is quite the same. In fact, with the HSA industry still being in the growth phase, HSA offerings tend to vary quite substantially since they’re not yet as standardized as traditional health insurance plans and other types of investment accounts. From fees and deposit security, to opportunities for account growth and overall ease of use, it’s important you take the time upfront to find the best HSA fit for you, so you’re not stuck with a less-than-stellar account that’s cumbersome to manage and loaded with fees and other limitations.

If you want to learn more about what to look for when comparing HSA providers, we’ve got you covered. And if you want an industry-leading HSA that makes maximizing your HSA benefits quick and simple regardless of your level of HSA knowledge, look no further than Bend.

STEP 2: Learn ALL the Ways an HSA Can Benefit You

Once you’ve opened your HSA, the next step is to embark on a little HSA education. Because while having your HSA officially open and active is a great thing, knowing how and why to make the best use of it will help you level up and lock in a powerful HDHP/HSA strategy.

If you’re truly a beginner to the HSA world, a good place to start is to watch our “What is an HSA” video. With that overview in mind, we’ll briefly highlight some basic HSA benefits:

  • You get a triple tax advantage
    • Your HSA contributions aren’t taxed
    • Your HSA funds grow tax-free
    • Your HSA withdrawals for HSA-qualified expenses are tax-free
  • You get the flexibility and portability you need now more than ever
    • You own your HSA and it’s yours to keep no matter what—even with a job change, insurance plan change or retirement
    • Your HSA funds roll over indefinitely without penalty—you never run into a use-it-or-lose-it scenario with an HSA like you do with other tax-advantaged accounts like flexible spending accounts (FSAs)
    • Your HSA funds can be used for a wide variety of HSA-eligible expenses and healthcare costs—everything from over-the-counter drugs and feminine care products, to dental and vision care
    • You receive immediate benefits at no cost to you for anything on the IRS’s ever-expanding preventive care list—everything from routine physicals and vaccinations, to prescriptions and treatment for many chronic conditions like asthma, diabetes, heart disease and more
    • You’re able to allow multiple contributors to your HSA—from family members and friends, to your employer
  • With the right HSA, you can invest your HSA funds tax-free to boost your short and long-term financial wellness
    • When you open an HSA with a forward-thinking industry leader like Bend, you can take advantage of the unique ability to invest your HSA balance similar to a 401(k) or IRA
    • And with your investment earnings being tax-free and requiring no minimum distributions, they’re also able to be used for other purposes beyond HSA-qualified healthcare expenses after you turn 65

Hopefully you’re beginning to see that an HSA is so much more than just a 12-month spending account. With the right HSA strategy, you can leverage your HSA as a critical long-term investment vehicle, counteract the impact of perpetually rising healthcare costs and build real equity for future healthcare—and other—expenses.

STEP 3: Commit to Your Contributions

You’re more than halfway to setting yourself up for better financial health. You’ve opened your HSA to unlock the true potential of your HDHP plus HSA combination. And you’ve taken the time to learn all the ways an HSA can help you become a smarter and savvier healthcare consumer, saver and investor. Now, it’s time to make your money work smartest for you by committing to a contribution strategy that maximizes all the HSA advantages.

Simply put, you maximize both your short and long-term tax-saving and investment potential by maximizing your HSA contributions. This means, if possible, you’ll reap the most rewards by contributing the maximum annual limit to your HSA so you get the most significant tax savings upfront, while also having the most money possible available in your account to save and invest for the long term.

For 2021, that means you can contribute up to $3,600 if you have individual coverage, or up to $7,200 if you have family coverage. Not to mention the $1,000 HSA catch-up contribution you can add into either coverage option if you’re 55 or older. Just remember—the annual maximum HSA contribution limits include all your contribution sources.

If you want to take a deeper dive into actions you can take to become an HSA saver and investor, check out our blog post on spending or saving your HSA.

Just remember this if you’re tempted to pass on your opportunity to use your HSA as a long-term tool for your overall financial health—the latest research shows that a retirement-aged couple can expect to spend roughly $295,000 in healthcare expenses throughout retirement. Your HSA has the potential to play a critical role in helping you plan and pay for expenses for years to come, provided you commit to your HSA contributions sooner than later.

And also remember this—HSA contribution planning and your overall HSA strategy doesn’t have to be difficult. When you partner with a customer-focused HSA provider like Bend, you can take advantage of tools and resources like our HSA Contribution Planner to eliminate the guesswork and figure out the best saving strategy for your specific situation—for the year ahead and for years to come. Because at Bend, everything we do is driven to help you achieve better financial wellness.

STEP 4: Stay the Course, but Rest Easy Knowing You Can Adjust at Any Time

We’ve come to our final step, which is simple and straightforward. Stay the course.

You opened your HSA. You learned how to take full advantage of it and all it offers. You locked in a solid HSA contribution strategy. All that’s left is to maintain an active role in your ongoing HSA management, stay the course and watch your money work for you and grow for years to come.

At times, it may be tempting to dial back your contributions for an impulse buy or other nonessential purchase. But just remember, funding, saving and investing through your HSA means playing the long game. So, do your best to stick to the plan you committed to.

The good news is, with an HSA’s flexibility and portability, you’ll never be stuck if your circumstances change and you truly need to adjust your HSA strategy.

If you need to change your HSA contribution amount at any time, that’s an easy fix. You can add a one-time lift to boost your HSA funds, or adjust your recurring contribution whenever you need to, as many times as you need.

And with an HSA, there’s no time limit on reimbursement as long as the expense is HSA-eligible and was incurred while your HSA is open. So, there’s no need to panic even if you experience a healthcare expense that falls outside of what you’d initially planned for. You can always submit your HSA-qualified expenses at any point in the future if you want to be reimbursed through your HSA. Or you can pay with your HSA immediately if that makes the most sense. The choice is ultimately yours.

Partner with Bend to Make the Most of Your HSA in the New Year

Having an HDHP and an HSA is a smart choice. And partnering with the best HSA provider possible makes it an even smarter one.

Make the most of your HSA this year and for years to come by choosing a Bend HSA. You get the smartest, most advanced HSA on the market, with no gimmicks, hidden costs or strings attached.

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