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HSAs – Not Just a 12-Month Benefit

Sep 23, 2020 8:00:00 AM

Health savings accounts continue to skyrocket in popularity for many good reasons. They save you money on taxes in more ways than one. They’re incredibly flexible, portable and never expire. And the list goes on. It’s no wonder why HSA-eligible health plan enrollment is on pace to grow by more than 25% over the next year.

But even despite the continued rapid rise of HSAs, one of their best—and most unique—benefits is one that often goes unnoticed and unused.

Health savings accounts provide the unique ability to be leveraged as an additional investment vehicle to maximize your long-term account growth and overall financial well-being. Unfortunately, many people—even existing HSA accountholders—aren’t aware of (or don’t think about) an HSA’s potential to be used as a critical part of their long-term investment planning and strategy.

With an industry-leading health savings account like a Bend HSA, you can invest your HSA contributions in a variety of options just like a 401(k) for months and years to come, and even use your HSA funds for expenses beyond healthcare costs after you turn 65.

HSAs are so much more than just a 12-month spending account, and in order to maximize your health savings account both short and long-term, it’s important to understand why HSAs aren’t just a 12-month benefit.

Plan for Today, Save for Tomorrow (and Beyond!)

It’s not always easy to focus on future planning when you’re incurring healthcare expenses right now. When that’s the case, it’s easy to look at your HSA as a basic 12-month transactional account for paying for your immediate healthcare expenses in real time.

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With this approach, you can be tempted to make minimal contributions to cover your medical expenses for that year. But while there’s still merit to any HSA usage, the 12-month spenddown approach can end up being shortsighted in more ways than one.

The biggest problems with this style of HSA usage are that you don’t maximize your multiple tax advantages and you miss out on leveraging your HSA’s unique ability to build long-term, tax-free wealth through investing.

When you shift your mindset and view your HSA as the flexible, tax-advantaged, long-term tool that it is—one that can not only help you fund your current and future healthcare expenses, but also serve as a long-term investment vehicle, you’ll truly maximize your HSA’s potential.

Consider Shifting to the Long View

So you’re onboard and want to do everything you can to maximize your HSA’s long-term potential. How do you make it happen?

In order to maximize your HSA’s future benefits, you need to think beyond the 12-month cycle. We typically refer to this as an “HSA saver strategy.” If you want to become an HSA saver, here’s how you can make it happen in four simple steps:

1. Maximize your triple tax savings by maxing out your annual HSA contribution

  • Contributing the maximum annual limit to your HSA will give you the most significant tax savings upfront, while also adding the most money to your HSA to save and invest for the long term.
  • As we look into 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 catch-up contribution you can add into the mix for either coverage option if you’re 55 or older. Just remember, those annual maximum contribution limits include all contribution sources. So if you have an employer or anyone else who contributes to your HSA, you’ll need to adjust your own contributions accordingly so you don’t exceed the annual contribution limit.

2. Invest the entirety of your HSA funds and pay for your medical expenses out of pocket

  • It might feel a bit odd not tapping into your HSA immediately when you incur a qualified expense, but by paying for all your healthcare expenses upfront out of pocket and leaving your HSA funds untouched, you leave your investments to continue to grow uninterrupted and tax-free. The power of compound growth is a beautiful thing.
  • With this approach, you need to be sure you have a solid HSA provider, like Bend, that provides a variety of cost-effective investment opportunities and the ability to invest and change funds as often as you’d like.

3. Be sure to save your receipts and other documentation so you’ll be ready for future reimbursement

  • This might seem like a daunting task when you’re thinking about months and years of expense tracking—but it doesn’t have to be if you partner with the right HSA provider. With Bend HSA’s next generation platform, you can link your personal spending accounts to your Bend HSA and let our Bend Advisor track all your eligible expenses for you so they’re saved for future reimbursement. You can also easily add receipts to your online shoebox for safe recordkeeping, and view all your unreimbursed and reimbursed expenses anytime on demand with a simple widget available right on your account dashboard.
  • With Bend HSA, you never miss out on an eligible expense—no matter how long you choose to defer reimbursement.

4. Use your HSA just like an IRA or other retirement account, for both medical expenses and any other expenses you choose, once you turn 65

  • By staying savvy and implementing the HSA saver approach for the long term, you’ll have maximized your tax savings and investment growth and will enjoy a bright and stable financial future. And best of all, once you’re 65, you can use your HSA funds for anything you wish—not just healthcare expenses.

Even When Saving, Your HSA Funds are Always There When You Need Them

Looking past the 12-month cycle and implementing an HSA saver strategy can definitely take some getting used to. But it’s comforting to know, even when focused on using your HSA for long-term saving, you can always access your HSA funds when and if you need them.

If something unanticipated happens or your circumstances change, you can submit your qualified expenses at any point now and in the future if you want to be reimbursed through your HSA.

That flexibility is just another awesome element of having an HSA—because with a health savings account, there’s no time limit on reimbursement as long as the expense is HSA-eligible and was incurred while your HSA was open. That’s it. No red tape or hoops to jump through. Just your money there for you when you need it.

And remember, with all the resources and tools you get with Bend HSA, you never have to worry about missing out on an eligible expense, even if you don’t request reimbursement right away. Everything is available at your fingertips and will be in order at a moment’s notice when you need it, so you can be confident to move forward with a focus on saving for your future.

Choose Bend to Maximize Your HSA Now and into the Future

With Bend HSA, you don’t have to be a health savings account expert to make the most of your HSA. We’re here to teach you as you go and provide you with the helpful resources and tools you need—not to mention multiple investment options to help you create your own HSA saver strategy for long-term financial success.

No matter who you are or where you’re at with your HSA, we’re here to help you make the most of your health savings account.

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