“Rising healthcare expenses are forcing people to make educated decisions now more than ever, ranging from the services they utilize to the age at which they choose to retire,” said Brad Kimler, executive vice president of Fidelity’s Benefits Consulting business. “We understand some people don’t have a choice in when they retire. Sometimes health issues or someone’s occupation play a role. So it’s critical that people plan well in advance for the considerable cost of healthcare by adding it into their overall retirement planning discussions.”
In an effort to save for future medical costs, some households may want to consider health savings accounts (HSAs), which are tax-advantaged savings accounts specifically used to pay for qualified healthcare expenses. They are essentially available to everyone who has a qualified for a high-deductible health plan but no other main health plan, is not enrolled in Medicare, and cannot be claimed as a dependent on someone else’s tax return.
There are several notable benefits with HSAs. Individuals can claim a tax deduction on contributions made by him or her or someone other than employers, even if deductions are not itemized on Form 1040. Similar to some retirement accounts, interest or other earnings within HSAs grow tax-free. Your employer may contribute to the account, but HSAs belong to individuals, so they stay with you if you change employers or leave the workforce, and any remaining balance can be carried over to the following year. You can even invest your HSA funds in stocks and bonds if you wish to do so. If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse’s HSA after your death.