Should I contribute to an HSA account?

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 Should I contribute to an HSA account?

Jason Conger Financial Advisor

Answered By

Alyssa Calhoun

Associate Wealth Advisor, Director of Client Communications at CAM Investor Solution

alyssa@caminvestor.com

 

Question

Should I contribute to an HSA account?

 

Answer

Recent years have seen health savings accounts (HSAs) grow in popularity across the United States. At the end of 2020, it was estimated that 63 million people made use of an HSA to pay for qualifying medical costs, and the total number of accounts rose 8% in 2021. These unique accounts enable you to save money on healthcare expenses and ultimately pay less in taxes. However, not everyone is eligible to enjoy the benefits of an HSA, and one may not make sense for you based on your individual circumstances.

To help you decide whether or not opening an HSA is the best course of action for you, we’ve broken down some of the most important factors for you to consider.

 

What is an HSA and how does it work?

Those enrolled in high-deductible health plans (HDHPs) can open an HSA, which is a tax-advantaged investment vehicle designed help people save money for medical expenses. Contributions are made on either a pre-tax or post-tax basis and the contents of the account can be invested, potentially growing over time, before being used to cover eligible healthcare costs. Among the things HSA funds can be used for are prescription medications and dental, vision, and medical care. You’re allowed to make contributions to your HSA up to the annual contribution limit, which is prescribed the IRS. The contribution limit for 2022 is $3,650 for individuals and $7,300 for families, while those over 55 years old have the option to commit another $1000 in “catch up” contributions. You can arrange to have contributions automatically deducted from your paycheck should your employer offer an HSA, and your employer may even offer to match a portion of your contribution.

If your employer does offer an HSA, you will receive a card or check linked to your HSA balance that can be used to cover any qualifying medical costs. If not, you can open one on your own, provided you fulfill the requirements and have a qualifying insurance plan.

 

What are the benefits of investing in an HSA?

The benefits of utilizing an HSA can be both vast and appealing to investors. From the tax advantages they unlock to the convenience they provide, here are some of the different reasons why you might want to consider investing in a health savings account

Tax Benefits

When it comes to using an HSA for your health savings vehicle, there are three important tax benefits to consider—often referred to as a “triple tax advantage.” When funding your HSA, you can deduct your post-tax contributions up to the IRS limit, thus lowering your taxable income. Contributions made with pre-tax dollars don’t entitle you to a deduction. Further, when you use your HSA to pay for qualified medical expenses, you’re not required to pay federal income taxes on the withdrawal. Lastly, any appreciation of the funds invested within your HSA is free from federal income tax.

Contributions Roll Over

The money you’ve committed to your HSA never expires. If you move to a new state, switch jobs, lose your job, or change healthcare plans, your HSA funds will move with you. Remember that if you switch to a healthcare plan that isn’t eligible for HSA contributions, such as Medicare or another non-HDHP, you will not be able to contribute to your account in the future without paying hefty tax penalties. However, you can always use the money in your HSA balance to cover eligible medical costs. Additionally, if you name a beneficiary, your HSA and its contents will be passed onto your heirs. 

HSA Investing

Your decision to invest in an HSA affords you federal tax-free earning potential. The option to invest your HSA balance across a variety of securities—such as stocks, bonds, ETFs, and mutual funds—can help you grow your investment significantly over time. You can start investing within your savings account at any time, and the sooner you get started, the more time you’ll have to potentially accumulate a comfortable retirement healthcare fund.

Family Benefits

An HSA can empower you to care not just for yourself, but for your loved ones, too. Even if your high-deductible healthcare plan does not cover your spouse and other dependents, their eligible medical expenses can be paid for using your HSA funds. Adult children can be HSA-eligible even if they are married or do not live with you anymore, as long as they remain under your insurance plan. In most states, they can do so until they turn 26.

Additional Retirement Savings

HSAs aren’t technically retirement accounts, but they can still prove invaluable in the pursuit of your retirement goals. If you are over 65 and healthy, you can deploy your HSA funds however you’d like—not just on medical expenses—without incurring a penalty or fee. Just pay standard income taxes on the withdrawal as you would with a traditional IRA. So, if you’re already maxing-out your contributions to your 401(k) and IRA accounts, an HSA can allow you to stash away another $3,650 per year for individuals, or $7,300 for families.

Are there any downsides to using an HSA?

Unfortunately, there can be certain disadvantages associated with using an HSA. To qualify for an HSA, one must have a high-deductible healthcare plan, and these aren’t always practical or available to all investors. Depending on the financial institution you choose to partner with, some HSAs come with frequent transaction or maintenance fees. Although they tend not to be excessively high, these fees can accumulate and have a significant impact on the value of your account over time, sometimes outpacing whatever interest the account might yield. That said, you may be able to avoid some of these charges by maintaining a minimum balance.

Some may be hesitant to seek medical attention when they need it because they don’t want to use the money in their HSA account. HSAs entail record-keeping obligations that may be challenging to manage, including procedures that must be followed for withdrawals and filing requirements for contributions.

 

The Bottom Line

Under current US tax conditions, HSAs are among the most advantageous savings and investment tools available to taxpayers. Medical costs often rise as one ages, especially once they’ve entered retirement. If you are eligible, beginning to contribute to an HSA early and letting it grow over the course of your lifetime can go a long way toward securing a healthy and comfortable future.

If you’re wondering whether or not an HSA makes sense for you, set up a free consultation and I’ll be happy to answer your questions and assist with planning for your future healthcare needs.

 

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How is child support and alimony treated for qualifying for a mortgage?

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How is child support and alimony treated when qualifying for a mortgage?

Jason Conger Financial Advisor

Answered By

Jamie Minster

Mortgage Loan Officer

jamie@jamieminster.com

 

Question

How is child support and alimony treated when qualifying for a mortgage?

 

Answer

 

In order for support to be utilized as qualifying income, the following criteria are required.

  • It has been received for:
    • 6 months, with a conventional loan
    • 3 months with a VA loan
    • 12 months with a USDA loan
    • 3 months with an FHA loan
  • It must continue for a minimum of the next 3 years after the closing date.
  • It is documented with a divorce decree, separation agreement, court-ordered or other legal written document is in place.
  • Voluntary payments are not typically acceptable.
  • Proof of receipt is required, by way of canceled checks or bank statements.
 

We will provide you useful and timely information you can use to be #financiallyfearless

How much life insurance do I need

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How much life insurance do I need?

Jason Conger Financial Advisor

Answered By

Katie Hetrick

Financial Consultant

khetrickfinancial@gmail.com

Question

How much life insurance do I need?

Answer

You know you need life insurance in order to protect your family when you are gone. They will have enough to deal with when you pass; they don’t need money added to that list.

But how much life insurance do you need? The simple answer is usually 10 to 12 times your annual income. But if that seems like too much, you can break it down using the DIME method.

D – Debt.

How much debt are you leaving behind? Make sure you have enough life insurance to pay it all off: credit cards, student loans, medical bills, whatever the debt may be.

I – Income.

You don’t want your spouse to be scrambling to replace the loss of your income while he or she is also mourning your loss. Make sure you have enough life insurance to cover your income for at least a few years while he or she adjusts to being gone. Stay-at-home parents, this would include the cost of paying someone to do all that you do for the household.

M – Mortgage.

You would hate for your family to have to move out of their home after you are gone because they can no longer afford the mortgage on it. If you have a mortgage on your home, make sure you have enough life insurance so that your family can pay it off with the proceeds.

E-Education.

If you have young children and you plan to help them afford college, make sure you have enough life insurance in order to do so.

If you take a look at your debt, income, mortgage, and education this will let you know how much life insurance you need in order to ensure that your family will be covered when you pass away. Let them be able to focus on mourning your passing and not be faced with a mountain of bills.

We will provide you useful and timely information you can use to be #financiallyfearless

How are employers enhancing benefits to attract and retain workers?

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How are Employers Enhancing Benefits to Attract and Retain Workers?

Jason Conger Financial Advisor

Answered By

Angela Sarver

Human Resouce Consultant

asarver@elliebluhr.com

Question

How are employers enhancing benefits to attract and retain workers?

Answer

As employers compete to attract qualified people for open positions benefits packages are being enhanced in interesting and meaningful ways.

Flexible work arrangements are an attractive benefit for job seekers and employees alike. This can include a fully remote option or a hybrid arrangement. When remote options aren’t possible, employers are considering flexible work hours including working non-traditional hours or working a compressed work week.

Paid time off is being increased to provide time beyond traditional vacation and sick leave to help employees achieve a better work/life balance. Some companies are providing an annual sabbatical in addition to the current vacation policy for employees to pursue personal interests, take a class, or relax and unwind. Other companies are establishing a minimum vacation policy that provides unlimited vacation days but requires all employees take a minimum number of days off to recharge.

Childcare has been a concern for many employees during Covid and some companies are providing a childcare stipend to help employees offset the cost of daycare. Some larger companies are providing back-up childcare or on-site childcare to support their employees.

Financial wellness is a new benefit assisting employees with financial literacy and offering financial planning services. This can help employees plan for their retirement, buy their first home, and more.

Education assistance is being expanded to include assistance paying off student loans. Typically, this is done through a monthly stipend that can be paid to the employee or directly to the loan provider. Tuition reimbursement programs are being expanded to include courses that may not be directly relevant to an employee’s position.

Mental health and wellness is a hot button issue and employers are finding creative ways to help their employees. In addition to services available through employer health plans, organizations are providing on-site yoga, meditation, and other mindfulness programs. Subscriptions to on-line meditation apps like Calm and Headspace are being provided at no cost to employees. Additional benefits include quiet rooms for meditation, gym memberships, and health and wellness coaching.

Other perks employers are providing include discounts toward phone plans or member clubs like BJs or Costco, discounts on company products or services, and free employer provided healthy snacks and/or meals.

If you are considering changes to your benefits package, contact us at asarver@elliebluhr.com or book a call at: https://calendly.com/asarver. We’re uniquely positioned to support small businesses with their HR needs. Let us help you create a sensible, robust, benefits package that will help you attract and retain employees.

We will provide you useful and timely information you can use to be #financiallyfearless

Top 3 Things One Can Do To Run Their Business More Efficiently

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Top 3 Things One Can Do To Run Their Business More Efficiently

Jason Conger Financial Advisor

Question

What are the top 3 things one can do to run their business more efficiently?

Answer

  1. Build out your CRM (Client Relationship Management) software and commit to using it.
  2. Block off time each week on your calendar to work ON your business.
  3. Organize your day to get the most out of your time and energy; give each day purpose and be intentional about doing what’s most important.

Wearing all the hats as a financial advisor and business owner can be overwhelming! At Atlas Park, we help you re-evaluate your business processes and help you gain clarity on how to make improvements. It starts with understanding your goals, pain-points and we then co-create streamlined solutions to help you avoid flying-by-the-seat-of-your-pants as you move your business forward.

We will provide you useful and timely information you can use to be #financiallyfearless