4 Keys to Health Savings Accounts - Fidelity Investments · For all other visits, like the flu or a...
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58% have “no idea” how an HDHP pays for preventive care * Show your ID card when you see your doctor Your doctor submits a claim to your insurance You get a benefits statement with any amount you owe Pay the bill with your HSA ** You make regular pre-tax contributions from your paycheck. Your employer may make a contribution, either at the beginning or throughout the year. When you have a qualified medical expense, you can pay out-of-pocket and save your HSA for the future or use your HSA to pay for it. What you don’t use this year is yours to keep, even if you leave your current job. 1. What’s an HSA? An HSA is an individual account specifically for qualified medical expenses that is only available if you choose a high deductible health plan. It allows you to save as your budget allows so you’re prepared when those expenses come up. And your employer may contribute to it as well. How it works: YOUR SAVINGS HSA contribution Your potential tax savings (based on 25% federal income tax rate) $6,750 $1,688 WHEN YOU CONTRIBUTE You don’t pay tax on that money AS THE MONEY GROWS If you invest what you don’t use, you aren’t taxed on the earnings WHEN YOU PAY YOUR BILLS Withdrawals made to pay qualified medical expenses are never taxed 2. Tax benefits Why fund an HSA if you’re only going to spend the money this year anyway? Isn’t that a hassle? It does add a bit of paperwork, but without an HSA, you’re paying taxes on that money when you don’t have to. HSAs let you save money on taxes three ways ** : The money The medicine USING AN HDHP: You pay nothing for preventive care such as physicals, well-child visits and vaccinations. For all other visits, like the flu or a sprained ankle, you cover the cost until you’ve met your deductible. After that, you may still have a co-payment or co-insurance payment for such visits, but your total out-of-pocket spending for the year is capped. You will still want to see an in-network doctor, because they’re typically charging a lower negotiated rate. 3. Covering your costs A high deductible health plan might not cost as much as you think. Consider: LOWER PREMIUMS EMPLOYER CONTRIBUTION TAX SAVINGS Your premium may be lower for an HDHP than it was for your previous plan, saving you money over the course of each year. In most cases you’ll be paying your deductible with pre-tax money, and if you invest what you don’t spend, it can potentially grow tax-free into retirement. Your employer may put money in your HSA that you can use to pay for your out-of-pocket health care costs. 4. Getting started Once you’ve chosen an HSA-eligible health plan, here’s how to get started: OPEN YOUR HSA: Some employers will automatically open your account, but not all of them. If you don’t have an account, you could miss out on your company’s contribution. DECIDE HOW MUCH TO CONTRIBUTE: If you can fully fund your HSA, that’s great. If not you may want to: Start by contributing the amount you’re saving in premiums by choosing the HSA-eligible health plan. Save enough to at least cover your deductible. SAVE AND INVEST FOR THE FUTURE: If you don’t spend the money in your HSA this year, you may be able to invest so it can potentially grow for the future — even into retirement. Over time, what you don’t use could really add up. + + Minimum Maximum Maximum HSA 55+ catch-up deductible out-of-pocket contribution contribution Individual $1,300 $6,550 $3,350 $1,000 Family $2,600 $13,100 $6,750 $1,000 After you sign up for an HSA-eligible health plan: Your plan’s limits may vary 62% admit they don’t understand how HSAs work * 60% have no idea how costs compare with traditional plans * 86% are satisfied with the ease of use of their HDHP after 2+ years * 2016 federal limits 89% are satisfied with their coverage after being enrolled 2+ years * Open HSA account MIND THE CAP Every plan limits how much you have to pay out-of-pocket, but caps vary. So while you’re asking about the deductible, be sure to ask about the cap too. 4 Keys to Health Savings Accounts Confused about HSA-eligible health plans? You’re not alone. Every year, more workers choose a health insurance plan that may be paired with a Health Savings Account (HSA). These plans go by many names, but they all come with a higher deductible than other plans — and, typically, a lower premium. The HSA is there to help defray your out-of-pocket costs by giving you a way to save pre-tax money to pay for qualified medical expenses, either this year or in years to come. It also can be a long-term savings vehicle to help you save for health care expenses in retirement. Almost two-thirds of people don’t understand key features of these plans. * But over time, those who have chosen them express a great deal of satisfaction. If you’re confused about HSA-eligible health plans, this primer should help you understand some of their key features. * The Fidelity-sponsored 2014 HSA survey was conducted by GfK Public Affairs & Corporate Communications from April 30 to May 9, 2014, using GfK’s KnowledgePanel, a nationally-representative online panel comprised of 1,247 U.S. adults who are age 25-65, have household income of $25,000 or more, have primary or shared responsibility for household financial decisions, and receive health care benefits through their own or their spouse/partner’s employer. Of these respondents, 332 self-identified as being enrolled in an HSA-eligible health plan. ** With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. The triple tax advantages are only applicable if the money is used to pay for Qualified Medical Expenses as described in IRS Publication 969. Please see a tax advisor with respect to your specific situation. Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation. Keep in mind investing involves risk, including the risk of loss. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 © 2015 FMR LLC. All rights reserved. 700577.3.0
Transcript of 4 Keys to Health Savings Accounts - Fidelity Investments · For all other visits, like the flu or a...
58%have “no idea”
how an HDHP pays for preventive
care*
Show your ID card when you see your doctor
Your doctor submits a claim to your
insurance
You get a benefits statement with any amount you owe
Pay the bill with your HSA**
You make regular pre-tax contributions from your paycheck.
Your employer may make a contribution, either at the beginningor throughout the year.
When you have a qualified medical expense, you can pay out-of-pocket and save your HSA for the future or use your HSA to pay for it.
What you don’t use this year is yours to keep, even if you leave your current job.
1. What’s an HSA? An HSA is an individual account specifically for qualified medical expenses that is only available if you choose a high deductible health plan. It allows you to save as your budget allows so you’re prepared when those expenses come up. And your employer may contribute to it as well. How it works:
YOUR SAVINGS
HSA contribution
Your potential tax savings
(based on 25% federal income tax rate)
$6,750
$1,688
WHEN YOU CONTRIBUTEYou don’t pay tax on that money
AS THE MONEY GROWSIf you invest what you don’t use,you aren’t taxed on the earnings
WHEN YOU PAY YOUR BILLSWithdrawals made to pay qualified medical expenses are never taxed
2. Tax benefits Why fund an HSA if you’re only going to spend the money this year anyway? Isn’t that a hassle? It does add a bit of paperwork, but without an HSA, you’re paying taxes on that money when you don’t have to.
HSAs let you save money on taxes three ways**:
The money
The medicine USING AN HDHP:You pay nothing for preventive care such as physicals, well-child visits and vaccinations.
For all other visits, like the flu or a sprained ankle, you cover the cost until you’ve met your deductible.
After that, you may still have a co-payment or co-insurance payment for such visits, but your total out-of-pocket spending for the year is capped.
You will still want to see an in-network doctor, because they’re typically charging a lower negotiated rate.
3. Covering your costsA high deductible health plan might not cost as much as you think. Consider:
LOWER PREMIUMS
EMPLOYER CONTRIBUTION
TAX SAVINGS
Your premium may be lower for an HDHP than it was for your previous plan, saving you money over the course of each year.
In most cases you’ll be paying your deductible with pre-tax money, and if you invest what you don’t spend, it can potentially grow tax-free into retirement.
Your employer may put money in your HSA that you can use to pay for your out-of-pocket health care costs.
4. Getting startedOnce you’ve chosen an HSA-eligible health plan, here’s how to get started:
OPEN YOUR HSA: Some employers will automatically open youraccount, but not all of them. If you don’t have an account, you could miss out on your company’s contribution.
DECIDE HOW MUCH TO CONTRIBUTE: If you can fully fund your HSA, that’s great. If not you may want to:
Start by contributing the amount you’re saving in premiums by choosing the HSA-eligible health plan.
Save enough to at least cover your deductible.
SAVE AND INVEST FOR THE FUTURE: If you don’t spend the money in your HSA this year, you may be able to invest so it can potentially grow for the future — even into retirement. Over time, what you don’t use could really add up.
+
+
Minimum Maximum Maximum HSA 55+ catch-up deductible out-of-pocket contribution contribution
Individual $1,300 $6,550 $3,350 $1,000
Family $2,600 $13,100 $6,750 $1,000
After you sign up for an HSA-eligible health plan:
Your plan’s limits may vary
62%admit they don’t understand how
HSAs work*
60%have no idea how
costs compare withtraditional
plans*
86%are satisfied with the ease of use of their HDHP after
2+ years*
2016 federal limits
89%are satisfied with
their coverage after being enrolled
2+ years*
Open HSAaccount
MIND THE CAPEvery plan limits how much you
have to pay out-of-pocket,
but caps vary. So while you’re
asking about the deductible, be
sure to ask about the cap too.
4 Keys to Health Savings AccountsConfused about HSA-eligible health plans? You’re not alone.
Every year, more workers choose a health insurance plan that may be paired with a Health Savings Account (HSA). These plans go by many names, but they all come with a higher deductible than other plans — and, typically, a lower premium.
The HSA is there to help defray your out-of-pocket costs by giving you a way to save pre-tax money to pay for qualified medical expenses, either this year or in years to come. It also can be a long-term savings vehicle to help you save for health care expenses in retirement.
Almost two-thirds of people don’t understand key features of these plans.* But over time, those who have chosen them express a great deal of satisfaction.
If you’re confused about HSA-eligible health plans, this primer should help you understand some of their key features.
* The Fidelity-sponsored 2014 HSA survey was conducted by GfK Public Affairs & Corporate Communications from April 30 to May 9, 2014, using GfK’s KnowledgePanel, a nationally-representative online panel comprised of 1,247 U.S. adults who are age 25-65, have household income of $25,000 or more, have primary or shared responsibility for household financial decisions, and receive health care benefits through their own or their spouse/partner’s employer. Of these respondents, 332 self-identified as being enrolled in an HSA-eligible health plan.
** With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. The triple tax advantages are only applicable if the money is used to pay for Qualified Medical Expenses as described in IRS Publication 969. Please see a tax advisor with respect to your specific situation.
Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.
Keep in mind investing involves risk, including the risk of loss. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917
© 2015 FMR LLC. All rights reserved.
700577.3.0
