2. Future (during retirement) - The same as above
3. Future (during retirement) – Fund Medicare Part B and D and Medicare Advantage premiums, including Income Related Monthly Adjustment Amounts (IRMAA)
4. Future (retirement income) - HSA assets withdrawn after age 65 avoid penalty taxes and qualify for better tax preferences than those afforded to 401(k) contributions, and
5. Future (legacy) – There is no required minimum distribution. There are no forfeitures. A surviving spouse or non-spouse dependent designated beneficiary can continue to receive tax-preferred HSA benefits. Other beneficiaries will ultimately receive any residual assets as a taxable payout.
Solve for tomorrow, not for yesterday!
It’s too late to say you’re sorry!
In a 2004 strategy session, I was called upon to help evaluate the HSA’s potential as a business opportunity. I boldly predicted: “Twenty-five years ago, no one had ever heard of 401(k); 25 years from now, everyone will have an HSA.” Unfortunately, I failed to account for inertia.
Today, early adopters of HSA-capable health plans have significant account balances – including a handful whose account balance exceeds $200,000. Assuming no change in statutes or regulations, by 2030, we will have our first household with HSA accounts totaling over $1 Million!
While you can’t overcome missed opportunities of the past, don’t compound the mistake. It is time, right now, to investigate how Health Savings Account-capable coverage could offer superior value to your organization and your workers.
About the author: Jack M. Towarnicky is a member of aequum LLC. As an ERISA/Employee Benefits compliance and planning attorney, Jack has over forty years of experience in human resources and plan sponsor leadership roles. This includes twenty-five years as the leader of a Fortune 100 corporation’s benefits function. While serving in those roles, Jack and his team won a multitude of individual, team and corporate recognitions. In 2020 Jack joined aequum and provides plan drafting and compliance services to employers and plan sponsors.
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