Fu­ture of HSAS Is ‘Very Bright’

Health sav­ings ac­counts present ad­vi­sors with a great op­por­tu­nity to help clients deal with health care costs dur­ing re­tire­ment.

Financial Planning - - CONTENT - By Charles Paik­ert

Health sav­ings ac­counts present a great op­por­tu­nity to help clients deal with health care costs in re­tire­ment.

2018 MAY BE THE YEAR OF HEALTH SAV­INGS ac­counts for ad­vi­sors. Man­ag­ing HSA ac­counts is “the di­rec­tion the in­dus­try is mov­ing,” says Peter Stahl, prin­ci­pal of Bedrock Busi­ness Re­sults, speak­ing at a pre­sen­ta­tion at Sch­wab’s an­nual Im­pact con­fer­ence. Now that med­i­cal ex­penses are a top re­tire­ment con­cern, HSAS are thrust into the spot­light, he adds.

“Health care costs are now the big­gest is­sue for peo­ple,”

Stahl says. “The na­tional av­er­age for med­i­cal ex­penses once some­one reaches age 65 and is on Medi­care is $6,772. HSAS re­ally present ad­vi­sors with a great op­por­tu­nity to help clients deal with this prob­lem.”

A num­ber of plan­ners are eye­ing the op­por­tu­nity to man­age the in­vest­ments in a client’s

HSA ac­count, while re­search­ing which com­pa­nies to work with and how much to charge.

Ad­vi­sors should also con- sider work­ing with compa- nies that of­fer HSA ac­counts to em­ploy­ees, Stahl says. That op­por­tu­nity, he adds, “may be the rocket booster in 2018.”


The tax-ad­van­taged ac­counts al­low users to save for health care costs their in­surance doesn’t cover. Money is de­posited tax-free, grows tax-free and can be with­drawn with­out pay­ing taxes as long as the money is spent on health and med­i­cal ex­penses. How­ever, HSAS can be used only by peo­ple who have qual­i­fy­ing high-de­ductible health in­surance.

HSA ac­counts now have over $42 bil­lion in as­sets, Stahl says, a 23% in­crease from a year ago. Nearly $7 bil­lion in HSA ac­counts are in­vested, a 44% jump from a year ear­lier. The tra­jec­tory is likely to con­tinue on a fast-track growth path, ac­cord­ing to Stahl.

“The fu­ture is very bright for HSAS,” he says, not­ing that de­duc­tions and con­tri­bu­tions are ex­pected to in­crease and that the man­date for HSAS was set to be ex­panded in the Repub­li­can health care bill that nar­rowly failed to pass in the Se­nate ear­lier in 2017.


Ad­vi­sors should urge clients to con­trib­ute the max­i­mum amount to their HSAS and uti­lize the catch-up pro­vi­sion that al­lows in­di­vid­u­als over 55 to con­trib­ute an ex­tra $1,000 a year, Stahl rec­om­mends.

A tax-free 401(k) plan with an em­ployer match should be funded first, Stahl sug­gests, but as soon as the match is met, clients should be­gin to fund their HSA.

Ad­vi­sors may also want to sug­gest apps, such as HSA Coach, that can help clients track their med­i­cal ex­penses.

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