HSA Basics and HSA Financial Strategies

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HSA BASICS AND FINANCIAL STRATEGIES Understanding Health Savings Accounts (HSAs) and Maximizing their Financial Potential

Transcript of HSA Basics and HSA Financial Strategies

Page 1: HSA Basics and HSA Financial Strategies

HSA BASICS AND FINANCIAL STRATEGIES

Understanding Health Savings Accounts (HSAs) and

Maximizing their Financial Potential

Page 2: HSA Basics and HSA Financial Strategies

Consumer Plan vs. PPO Plan

Consumer Plan

• Type: PPO network• Basic Concept: Lower

premiums with higher deductible

• Health Savings Account: Money not spent by the end of the calendar year rolls over to the next year and accumulates

• Limited Flex Spending Account

PPO Plan• Type: PPO network• Basic Concept: Higher

premiums with lower deductible

• Flex Spending Account: Money MUST be spent by end of calendar year or you lose it

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HSA vs. FSA

HSA – Health Savings Account

• All money contributed pre-tax• Available for use for IRS qualified

medical expenses• Contribution rate can be adjusted

during year• Can reimburse yourself later in

year• Savings Tool: If you don’t spend

the money during the calendar year, it rolls over to the next.

• Can be used for medical expenses in retirement, including long term care premiums.

FSA – Flex Spending Account

• All money contributed pre-tax• Available for use for IRS

qualified medical expenses• Contribution rate fixed and

non-adjustable• Fully funded day 1• Spending Account Only: No

savings function. Use it or lose it.

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How Much Can You Contribute?

Filing Status2013

IRS Max.Amway

BaseMax for

EmployeeWeekly

Bi-Weekly

Single $3250

$2000

$1250 $24 $48

Family $6450 $4450 $86 $171

> 50 Catch up $1000 $1000 N/A N/A

FSA $2500 N/A $2500 $48 $96

• Not required to contribute• Permitted to make HSA contribution rate changes

during year

Page 5: HSA Basics and HSA Financial Strategies

Notes: Combining HSA & Limited FSA in Consumer Plan

• FSA is limited until plan deductible is met

• Only need both if:• you know you will need

more than IRS HSA limit, or• you want to maximize your

HSA rollover/accumulation

• Use for specific, planned expenses

• Be conservative with funding your FSA

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IRS Qualified Medical Expenses

• Applies to both the HSA and FSA accounts

• From Acupuncture to Chiropractorto Dental Treatments to Eye Exams/Glasses to Home Care

• To Learn More, Google:• HSA Qualified Medical

Expenses • IRS Publication 502 (starting

on page 5) for a complete list from the IRS

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HSA Strategies

Health Savings Account• Save little

• Take advantage of $2000 Amway contribution• Not required to contribute at all • Consider the difference in premiums as a minimum

Save little

Page 8: HSA Basics and HSA Financial Strategies

HSA Strategies

Health Savings Account• Save little

• Take advantage of $2000 Amway contribution• Not required to contribute at all • Consider the difference in premiums as a minimum

• Save enough – enough to cover potential out-of-pocket costs

Save littleSave enough

Page 9: HSA Basics and HSA Financial Strategies

How Much to Cover the Out-of-Pocket Maximum?

Filing Status

OPMAmway

BaseEmployee

TotalWeekly

Bi-Weekly

Single $2500$2000

$500 $10 $19

Family $5000 $3000 $58 $115

PurposeTo have enough pre-tax money to cover expenses until Consumer Plan pays 100%.

Page 10: HSA Basics and HSA Financial Strategies

HSA Strategies

Health Savings Account• Save little

• Take advantage of $2000 Amway contribution• Not required to contribute at all • Consider the difference in premiums as a minimum

• Save enough – enough to cover potential out-of-pocket costs • Save as much as possible – roll over and accumulate

Save little

Save AMAP

Save enough

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Which Bucket is Most Efficient for Medical Expenses in Retirement?

401(k)

All distributions taxed

Roth IRA / 401(k)

Principal taxed at time of contribution; growth

is not taxed.

HSA

NEVER TAXED

when used for qualified medical expenses.

MOST EFFICIENT

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HSA Accumulation Strategy

• Goal – Accumulate maximum you can by rolling over as much as possible each year.

• Strategy• Fund HSA – Fully, if possible• Pay small expenses using taxed money, not the HSA.

• Establish the maximum amount you are comfortable paying out of pocket instead of with HSA. Any expenses over that amount, use HSA.

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HSA Accumulation StrategyFiling Status

IRS Max.

Amway Base

Max for Employee

WeeklyBi-

Weekly

Single $3250

$2000

$1250 $24 $48

Family $6450 $4450 $86 $171

> 50 Catch up $1000 $1000 N/A N/A

Filing Status

OPMAmway

BaseEmployee

TotalWeekly

Bi-Weekly

Single $2500$2000

$500 $10 $19

Family $5000 $3000 $58 $115

Out-of-Pocket Max Strategy

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HSA Accumulation Strategy

The HSA as longer-term investment vehicle• Multi-year strategy• Base

• $2500

Max OOP

Base $2500

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HSA Accumulation Strategy

The HSA as longer-term investment vehicle• Base

• Remains at $2500• Tier 1 - Cash

• Automatically refills Base• OPM account

• $2500 Single• $5000 Family

Max OOP

Base $2500

Tier 1OPM

Single $5000Family $7500

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HSA Accumulation Strategy

The HSA as longer-term investment vehicle• Base

• Remains at $2500• Tier 1

• Automatically refills Base• OPM account

• $2500 Single• $5000 Family

• Tier 2• Conservative Investments

• Tier 3 & Beyond• Riskier investments

Base $2500

Tier2

Single $5000Family $7500

Tier 1OPM

Single $5000Family $7500

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What We Have Learned

• If you/family are healthy, the Consumer plan is a clear choice.

• The Consumer Plan’s maximum out-of-pocket cap may save you money if you:• regularly take expensive non-

preventive prescription drugs• have an unusual & expensive medical

condition or need

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Your Life – Your Plan

• Transition to proactive consumer of medical services

• How you fund and spend your HSA is specific to you and your family’s situation.

• You can always adjust your contribution level during the year.

• Our take: Take advantage of free money. Amway is being extremely generous with the $2000.

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Unsure? BeManaged Can Help.

• Nov. 12th – Dec. 10th – Free onsite and online consultations.

• Online Tools Available: PlanAdviser helps determine which plan is most advantageous financially.

Amway.bemanaged.com Online Tools > Estimate Medical Expenses

• Prescriptions Questions? Connect with Express Scripts

• Claims or Expense Questions? Connect with Encompass.

Page 20: HSA Basics and HSA Financial Strategies

Schedule a Consultation

Visit us - Amway.BeManaged.com

Call us - (616) 871-0751 or

(888) 738-8780