With the ability to roll the balance over from one year to the next, an HSA can be a great replacement for a 401(k), especially if an employer does not offer a company match. When you consider that a family can contribute up to $6,250 in 2012 and contributions to health savings accounts go in on a tax-free basis, an HSA has the potential to serve as more than just a great way to pay for medical expenses. Since earnings on these accounts are not taxed and the money that comes out is not taxed, an HSA has the potential to serve as a rainy day fund, if not a retirement nest egg.
Enrollment in high deductible health plans paired with health savings accounts grew from 10 to 11.4 million between 2010 and 2011. According to a recent study by Cigna, financial benefits are only a part of the story. Results also showed that CDHP participants used emergency rooms 13% less than individuals in traditional HMO and PPO plans and were far more inclined to use generic medications, resulting in added savings.
While 401(k) plans will continue to help millions of Americans prepare for retirement, tax advantages and the ability to engage employees and dependents in their health care make health savings accounts a great way to build financial security.
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In cooperation with NAEBA