Research Shows How Your Healthcare Plan Should Account for HSAs
Employers have embraced high-deductible health plans (HDHPs) so enthusiastically that today half of workers with employer health coverage get it from these plans. HDHPs aim to make consumers more cost-conscious, but they potentially could encourage some workers to save money by skipping beneficial preventive health services.
The IRS tried to address that concern by making certain services exempt from deductibles in HDHPs paired with health savings accounts (HSAs). According to research from the Employee Benefit Research Institute (EBRI), this appears to have worked, since employees in HSAs were more likely to use the exempted health services. The findings may be worth keeping in mind for employees considering HDHP enrollment.
Do you have questions about saving for healthcare in retirement? Speak with a financial advisor today.
How HSAs Work
An HSA is a savings account that lets you save money to pay for healthcare costs with the help of special tax advantages. You can deduct money contributed to an HSA your current taxable income, and earnings from assets in the account are also tax-free. Finally, when you withdraw funds to pay eligible health expenses, the withdrawals are also not taxed.