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Your Guide to HSAs

The savings account designed to help you manage rising healthcare costs

06/08/18
The economy is growing, and tax cuts have put more money in our paychecks. But healthcare costs have also increased. Even with insurance, an unexpected emergency or an illness can be enough to change your financial fortunes. That’s why the Health Savings Account (HSA) was created. It’s one of the best options available to help you save for and afford medical expenses. And it’s rapidly gaining popularity.
 
An HSA works similarly to a 401(k). Money is deducted from your paycheck pre-tax and deposited into your Health Savings Account. But unlike traditional 401(k)s, money can also be withdrawn tax free at any time to pay for qualified medical expenses. That’s a big benefit, especially if you have regular out-of-pocket healthcare costs like prescriptions or frequent doctor visits. Your HSA funds can even be used for your spouse's and dependents' medical costs. 
 
Another big benefit is that there’s no time limit on when you must use the funds. You can invest money in your HSA every month and the money will continue to grow tax free until you need it. That’s why many financial planners recommend them as part of their clients’ retirement savings strategies. After all, most of us will face increasing medical costs as we age.
 
Who qualifies for an HSA?
Your employer may offer an HSA as part of your employee benefits. Even if they don’t, you can still open an HSA on your own. To qualify, you need to be covered by a healthcare plan with a deductible of at least $1,300 and maximum annual out of pocket expenses of $6,500 for individuals, or a deductible of at least $2,600 and maximum out of pocket expenses of $13,100 for families as of 2018. 
 
There are a few other regulations, so it’s best to check with your insurance company to make sure your plan qualifies before opening your HSA. If you're covered by Medicare or Medicaid, you can’t contribute to an HSA, but you can still use HSA funds you previously saved for medical expenses.
 
Healthcare expenses that qualify for tax-free withdrawals from an HSA
  • Dental expenses
  • Health insurance deductibles
  • Hearing aids
  • Hospital and physical therapy bills
  • In-home nursing care, long-term care, & nursing home fees
  • Medicare premiums
  • Office-visit co-payments
  • Vision care
  • Prescription drugs and insulin
  • Wheelchairs and walkers
  • X-rays
And that’s just to name a few.
 
Bank of Colorado can help you open an HSA designed to offer an efficient, low-cost path to paying for healthcare expenses. We also offer an HSA investment platform that allows you to do even more with your HSA dollars. Using this platform, you’re able to invest a portion of your HSA balance in stocks, bonds and mutual funds.
 
Ready to take advantage of a valuable tool to help manage growing healthcare costs? Talk to Bank of Colorado today or visit www.bankofcolorado.com/personal-investing/hsa to learn more.