What does retirement have to do with health care? A lot. And there’s an investment vehicle out there that can help with it.

Most people aren’t thinking about Health Savings Accounts (HSAs) as an investment option for retirement, but an HSA is one of the best options on the market. As the name implies, HSAs are designed to help individuals sock away cash for medical expenditures. HSAs offer several other benefits, such as:

100% of unused funds roll over year-after-year,
funds go with you even if you switch employers,
they can pay for the eligible expenses of your legal spouse and tax dependents regardless of their insurance, and
be used for Medicare premiums as well as qualified long-term care premiums.

Most employees use HSAs for short-term costs; however, building those funds long term is just as important. A recent study by the Employee Benefit Research Institute (EBRI) found that more Americans are turning to HSAs to cover medical expenses, but very few use them for retirement planning. The study also found that few people are investing their HSA funds for the long term, and even fewer are maxing out their HSA contributions. The research was based on nearly 6 million HSAs with $13 billion in combined assets. And regardless of any findings, most people will incur substantial health costs in retirement, for which HSAs can help.

It’s important for participants to understand the best way to use the HSA is by treating it as an investment tool, primarily because of the triple-tax advantage. As of just a few years ago, 4% of accounts had investments other than cash. Understanding the HSA’s investment potential won’t occur overnight for most people. It’s also unreasonable to expect everyone to have the wherewithal to use their account solely for investing.

However, by educating participants and employers on the long-term value of the HSA, it’s realistic to expect a behavioral shift and an uptick in participants using the HSA as an investment tool for retirement. A key point here is to start using and funding HSAs now, while contributing close to the annual limits if possible.

The IRS has announced the 2019 contribution maximums for Flexible Spending Account (FSA) plans in the newly released Revenue Procedure 2018-57. Contribution limits increased for the Health FSA, Commuter Benefits and Adoption Assistance program, while limits for the Dependent Care FSA remained unchanged.

Health Flexible Spending Account
The Health FSA, which provides employees the ability to set aside money on pre-tax basis to pay for eligible medical, dental, and vision expenses will have an increase to its contribution maximum from $2,650 to $2,700 for 2019. The new contribution limit will also apply to the Limited Purpose FSA which reimburses eligible dental and vision expenses.

Commuter Benefits
Commuter Benefits help employees pay for certain parking, mass transit and/or vanpooling expenses with pre-tax dollars. The contribution limits for this account will increase from $260 to $265 for 2019.

Adoption Assistance
The Adoption Assistance FSA helps employees pay eligible adoption expenses such as agency fees and court costs by contributing to the account with pre-tax money from their paycheck. The contribution limits for this account will increase from $13,840 to $14,080 for 2019.

2018 and 2019 Contribution Amounts

Benefit 2018 | 2019
Health FSA $2,650 | $2,700
Limited Purpose FSA $2,650 | $2,700
Dependent Care $5,000 | $5,000
Parking/Transportation $260 / $260 | $265 / $265
Adoption Assistance $13,840 | $14,080

Questions? Contact us at 855.890.7239 or send an email to customerservice@nuesynergy.com.

According to recent research, health savings account (HSA) participants are savvier health care consumers and more engaged in health care decision-making than their peers.

Relative to the general population, HSA holders are 80 percent more likely to save aggressively for future health care savings, 68 percent more likely to have a savings goal, 54 percent more confident in forecasting out-of-pocket health care costs and 46 percent more likely to research and compare costs, according to the 2018 Alegeus HSA Participant Profile Report.

Given these findings, along with the substantial benefits HSAs provide employers and employees, one might wonder what can be done to help sustain the predicted rise in HSA uptake. Whether you’re a broker or employer, there are plenty of options available to help facilitate and sustain HSA participation growth:

Educate employees

Education is essential if you’d like more employees to achieve the status of informed HSA participant. Many consumers still lack the knowledge of basic health care concepts. They need substantial training and support to understand how HSAs could benefit them. To give you an idea of the enormity of this problem, only 19 percent of the general populace can pass a basic true/false HSA proficiency quiz.

Fortunately, the benefits offered by HSAs are undeniable. Employers can expect to see a considerable increase in account adoption if they can effectively communicate the value of HSAs to their employees.

Incentivize employee participation

It’s crucial for employers to incentivize employee participation by contributing to their accounts. This is one of the most important things an employer can do if they want to see more employees opt-in for HSA and HSA-eligible plans.

Reinforce the value of HSAs throughout the year

One of the biggest mistakes employers make is only providing educational materials to employees during open enrollment. Organizations should communicate the benefits of HSAs throughout the year. It’s especially effective to focus on timely information that guides HSA holders to optimally fund, spend and invest their health care dollars.

It’s also effective to offer resources across a range of formats when discussing the benefits of HSAs. Webinars, on-demand videos, promotional displays, Intranet pages and account comparison tools are all effective options.

Most people have a hard time understanding health plans and benefits. So, while strong growth is projected for HSAs over the next few years, don’t fall into the trap of feeling a false sense of security. Consistent year-round communication, along with employer account contributions, is the best route forward for seeing increased HSA employee participation.

When you set up a Health Savings Account with NueSynergy, we ask you to select a beneficiary. You should choose carefully because this will determine what happens to your HSA when you pass away. The rules are explained in IRS publication 969 (page 9).

If your spouse is the designated beneficiary

If your spouse is the designated beneficiary of your HSA, the account will be treated as your spouse’s HSA after your death. This means that your spouse will be able to use the funds for eligible medical expenses even if he or she does not have an HSA-qualified health plan. Of course, only eligible individuals can contribute to an HSA, but anyone with an HSA, including your spouse after your death, can spend the funds whether they’re eligible or not.

If your spouse is not the designated beneficiary

The account stops being an HSA, and the fair market value of the HSA becomes taxable to the beneficiary in the year in which you die.
If your estate is the beneficiary, the value is included on your final income tax return.

The amount taxable to a beneficiary other than the estate is reduced by any qualified medical expenses for the decedent that are paid by the beneficiary within 1 year after the date of death.

It’s that time of year again. Open enrollment is around the corner. For many companies, this is the best time to review the health care needs of the organization. And with unemployment rates nearing historic lows, many businesses are enhancing their benefits package to recruit and retain top talent.

As some of you may be aware, enrollment in Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs) has been on the rise over the last several years. Participation in flex-benefit plans is part of a growing trend for employees looking for perks at work. This holds especially true for Millennials, the largest generation in today’s workforce.

This is where NueSynergy can help.

NueSynergy offers a fully integrated suite of administration services, managed by subject matter experts with an average of 10 years direct industry experience. Our administration services include:

Flexible Spending Arrangements
Health Savings Accounts
Health Reimbursement Arrangements
COBRA
Direct Bill
Consolidated Billing

Further, NueSynergy has the in-house expertise and integrated technology to help employers maximize operational efficiencies and control rising health care costs. Our commitment to outstanding client service ensures employees have the tools and resources to manage the financial aspect of their health care. By making innovations such as insurance carrier integration, single platform administration as well as single debit card and mobile app access to all plans part of our standard solution, we have quite simply raised the bar in benefit value and overall experience.

Open enrollment and beyond

In today’s modern workforce, it’s critical for employers to recognize the role that engaged employees play in driving sustainable company growth and success. By taking the time to educate and engage with employees about their benefits package, employers can better identify what programs and services employees and their families value the most. By taking this approach, employers better position themselves to create a healthier and more productive workforce.
So if you’re looking to add flex-benefits to your company’s health plan, or need help effectively communicating and educating your employees about their available benefits, please give us a call or send us an email! We’re here to help.

Please contact us today at sales@nuesynergy.com or 855.890.7239 to schedule your consultation today.