What comes to mind when I say “It’s that time of year again?” If you watch much television, you may already believe you’re late with Christmas shopping. If you are hosting Thanksgiving, you may think it is time to get that frozen bird in cold water.
Both good ideas, sure.
“That time of year” for us is the time to plan your strategy where next year’s benefits are concerned. Personal time, flex time, maternity/paternity leave and outfitting your 401k are parts of the whole that most people understand, but Health Savings accounts are a bit more obscure. Today, we untangle HSA’s myths and clear up the choices.
Myth #1: Health Savings Accounts are for People with Low to No Medical Expenses.
Some folks hesitate to select a high-deductible health policy and an HSA if they know they will incur medical expenses during the benefit year. Instead, they tend to choose low-deductible/higher cost coverage.
But, your employer’s seed money add/in (a flat contribution rather than a match) can more than make up the difference once cost per month plus deductible is factored in.
Myth #2: Your HSA disappears if you leave your job.
It does not. Most Health Savings Accounts can stay even if you leave the job. Or, like in the case of an IRA, it can be rolled into a new one.
Myth #3: Your Family Can Only Access Your HSA if They Are Covered Under Your Insurance.
It makes no difference if you have family or individual coverage. You can access HSA funds tax-free to defray medical expenses incurred by you or your family members. This is true even if separate insurance covers the family.
Myth #4: A Savings Account is Your Only HSA Investment Option.
This one is tricky, because “savings account” is, literally, in the name. Pay no attention. Your HSA Administrator will likely allow you to invest in mutual funds if you desire.
Myth #5: The Clock Starts Ticking on Your HSA Money as Soon as You Incur a Medical Expense.
Let’s say you had kidney stone surgery (Ouchy!), but paid the $3,000 deductible out of your own pocket. There is no set time afterward when you have to pull the money out of your HSA. Your HSA Administrator keeps score for you so the money in the Health Savings Account can stay there as a nest egg if you desire.
Myth #6: You Must Get Written Permission From the Administrator to Access HSA Funds.
Nonsense! Most HSA’s send a debit card to your house so you can pull the money as you see fit. Remember that there must be a qualified medical situation connected to your withdrawal, but you don’t need actual permission from anyone.
Myth #7: You Can Only Contribute to an HSA Until Your 65th Birthday.
Most people get this one stuck in their heads because of something that is true. Your eligibility to contribute to your HSA ends the day you sign up for Medicare. While it is true that most people sign up for Medicare on their 65th birthday, some folks are under their employer’s health plan until well after they turn sixty-five. Those people can still kick money into an HSA.
Those are our myths. Get them set in your mind so you can get after that Thanksgiving turkey.
Related: The Best Money Management Apps