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Spend or Save Your HSA – Part 2

Aug 19, 2020 8:00:00 AM

Even When Spending, You’re Saving

In our last blog post, we took on the topic of the ideal way to maximize a health savings account’s “savings” feature. We examined the benefits of saving your HSA funds for the future versus using them immediately for your qualified healthcare expenses.

There’s no one “right” answer when it comes to the “best” way to use your HSA. In reality, how you use your health savings account differs based on your specific financial situation and other circumstances. What isn’t up for debate is the benefits of an HSA. Regardless of where you’re currently at, if you have an HSA, you will benefit.

That’s what we’ll explore today—why it still makes sense to utilize your HSA even if you’re currently not in a position to save your HSA funds—or even if you’re not proactively contributing to your HSA right now.

Even When Spending, You’re Saving

With a health savings account, you stand to save substantially on taxes in multiple ways, commonly referred to as an HSA’s “triple tax savings.” Your HSA contributions aren’t taxed, are able to grow tax-free and also be used tax-free for any qualified medical expenses.

Your HSA provides the unique ability to help you save even when you need to spend—something no other account can do for you. But in order to take advantage of these tax savings, you need to contribute funds to your HSA. The good news is, HSAs are extremely flexible and allow you to contribute as you see fit and are able. So whether that’s a one-time contribution to cover a current cost, or whether you choose to begin a recurring HSA contribution to start routinely funding your account, you have options to best suit your situation and to help you snowball your savings whenever possible.

Let’s look at a basic example from a “non-funder” standpoint, meaning someone who doesn’t actively make any contributions to their HSA.

  • This individual incurs a $100 charge from a doctor’s visit. If they just paid this out-of-pocket, it costs them $100. But since the expense qualifies for HSA reimbursement, they can make a one-time contribution to their HSA for the $100, moving that amount into their account pretax. From there, they can immediately take the money out of their HSA to pay themselves back. By putting the $100 into their HSA, they’ll save approximately $25 on taxes. And since they were able to pay themselves back right away, there was essentially no impact to their day-to-day cash flow. With their HSA, they turned a $100 expense into a $75 expense—reducing their overall spend by 25%.

If you can stand to save around $25 on a $100 expense, just imagine how that savings amplifies with the more contributions you make. Because remember, the more pretax contributions you put into your HSA, the more you lower your pretax income and the less you pay in taxes—even if you end up needing to immediately spend all your HSA funds on your current healthcare needs.

And with a Bend HSA, saving is even easier with the help from the Bend Advisor, a unique tool that helps you track and manage your account in real time. The Bend Advisor does the work for you, pulling in data from your other accounts—like checking, credit cards, payroll and health plans—and identifies qualified expenses and guides you every step of the way so you can feel confident that you’re using your HSA funds wisely and making the most of your money.

With the Bend Advisor, no expenses are left behind and you don’t need to worry about remembering what you paid for, with what account and if those expenses were eligible or not. It’s just part of the Bend Difference and a great way for you to save, even if you have to spend.

HSAs Empower You to Take Control of Your Healthcare Costs

Tax savings and insurance premium savings aside, health savings accounts provide you with the opportunity to become a much more informed, active and savvy participant in your own healthcare. And HSAs also provide a wide variety of other unique benefits, including:

  • Portability and flexibility–Your HSA remains with you no matter what, regardless of job changes, health insurance plan changes or even retirement, and you can make (or adjust) your contributions at any time
  • Rollovers–You’ll never be faced with a “use it or lose it” scenario when it comes to your HSA contributions
  • Wide variety of eligible expenses–You might be surprised when you see all the qualified healthcare expenses you can pay for using your HSA funds—even over-the-counter medications
  • Ever-growing preventive care list–You can bypass your deductible and receive immediate benefits for any care that falls under the IRS preventive care list, equaling substantial annual savings year over year
  • Multiple contributors–You, your employer, your family and just about anyone else can contribute to your HSA
  • Long-term investment vehicle–As your HSA balance grows, you can easily invest your HSA funds just like a 401(k)

So, even if you’re not in a position to make regular HSA contributions, or if you’re able to contribute but have to turn around and immediately spend all your HSA funds, there are still many upsides when you use your HSA. And it’s also proof positive that moving toward an HSA saver strategy can help set you up for an even brighter financial future.

Work Toward Becoming an HSA Saver

We know it’s easier said than done, but shifting your HSA strategy and looking at your health savings account as much more than just a 12-month spending account will help you maximize the long-term financial benefits an HSA offers. It might be something you can think about doing sooner than later. Or it may be a ways off. Regardless, it’s good to be informed and know your options.

If you want to learn more about all the benefits of being an HSA saver, remember to check out our previous blog post on that topic. And in the meantime, you can consider taking small steps to adjust your HSA strategy for a more long-term approach. Here are just a few ways you can gain HSA saver ground:

  • Set up recurring HSA contributions, or bump up your HSA contributions slightly
  • Start to pay for smaller qualified expenses out of pocket so you can save your HSA funds and get reimbursed later
  • Set up a payment plan with your healthcare provider so you can continue to contribute funds to your HSA and get the tax savings while still managing your costs on a monthly basis for however long you need to

Saver, Spender or Somewhere In-Between, Bend has Your Back

With Bend HSA, we’re here to help you every step of the way to maximize your HSA, whether you’re a saver, spender or somewhere in-between. We teach you as you go and provide you with the helpful resources and tools you need, and before you know it, you’ll be an HSA expert and well on your way to better financial health.

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