Optimize your HSA savings
March 4, 2019 •
If you’re enrolled in the UC Health Savings Plan (HSP), you know it includes a tax-advantaged Health Savings Account (HSA). The HSA allows you to contribute your own money that’s federal tax-free up to the limits set each year by the IRS — for 2019, $3,500 for individual coverage and $7,000 for family coverage. While UC isn’t required to fund your HSA, it contributes up to $1,000 for family coverage and $500 for individual coverage at the beginning of the year to help cover first-dollar medical expenses.
Your HSA can be used to cover deductibles; pay medical, dental and vision expenses or save for future health care expenses. You can adjust your contributions throughout the year, depending on your health care needs. All of the money deposited into your HSA is portable, which means any remaining balance at the end of the year, including UC’s contribution, rolls over into future years and follows you even if you leave UC.
To fully optimize your HSA account, consider growing your account beyond $1,000. Your HSA works like many other investment accounts – you can choose whether to save your money in a no-risk FDIC-insured cash account or to invest in a wide range of mutual funds. You even have a choice of actively managed funds or passive index funds. The one big difference between your HSA and other savings accounts? Your HSA grows federal tax-free, so you can lower your taxable income and increase savings over time.
Boost your retirement savings
Did you know the average American couple will need $265,000 in savings to cover out-of-pocket health care costs in retirement[1]? To better prepare for retirement, your HSA can help fill this gap. By saving now and letting your account grow, you can use your HSA to pay for medical expenses not covered by Medicare. Even in retirement, your withdrawals for qualified expenses are not subject to federal taxes.
If you’re 55 or over, you can make an additional “catch-up” contribution of $1,000 of each year.
Interested in learning more? Check out the HealthEquity video library.
[1] The average American couple will need $265,000 to have a 90 percent chance of having enough money to cover out-of-pocket health care costs in retirement. Based on median prescription drug expenses. Source: Employee Benefit Research Institute
Tags: benefits, health care, HSA
I agree that HSA accounts have many benefits. Although, I was surprised to see that our HSA account has fees. I also was charged a fee for a printed statement (which I quickly changed once I was informed of this fee). I’ve had HSA accounts with other companies and this is the first time I’ve been charged fees. These fees will amount to at least $50 / year.
Hi Marisa – We reached out to our HR team regarding your comment. As you mentioned, you can avoid the $1 statement fee by opting opt out of paper statements. The only other fee some members may encounter is a $3.95 administrative fee which is only charged to employees who are no longer part of the UC Health Savings Plan. (This administrative charge is covered for current UC HSP plan enrollees.) If you are being charged any other fees, please email link@ucop.edu and we will put you in touch with someone in HR who can look into this further. Thank you!