What is an HSA?
An HSA is a savings account that provides for tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
Who can fund an HSA?
You must be enrolled in a High-Deductible Health Care Plan (HDHP) to currently fund an HSA. Strict annual deductible floors dictate whether a plan meets the definition of a HDHP. For 2021, the minimum annual deductibles are $1,400 (self-only) and $2,800 (family).
How much can I contribute each year?
If your plan qualifies as an HDHP, you may contribute up to $3,600 (self-only) and $7,200 (family) to an HSA in 2021.
Individuals ages 55 and older are eligible for an additional “catch-up” contribution of $1,000 per year.
Who is involved?
AIS’ Health Savings Account Brokerage Program involves three primary players:
1. Custodian: As custodian, Charles Schwab holds financial assets for individuals to minimize the risk of theft or loss. Charles Schwab partners with investment advisors to ensure safekeeping of your money. Schwab also executes trades ordered by financial advisors across the U.S.
2. Administrator: Certain administrative obligations accompany HSAs, such as tracking cash flows and facilitating medical reimbursements. Schwab has partnered with two providers, Discovery Benefits or Optum, to meet this need.
3. Advisor: AIS will oversee, manage, and report on the account. You will be able to call the AIS financial planning team or your advisor with day-to-day questions or requests relating to your Health Savings Account.
What are the costs?
AIS’ new HSA program satisfies our firm’s commitment to cost-efficiency. Investors will benefit from zero-cost trading on stocks and ETFs through Charles Schwab. A small transaction fee will accompany certain mutual fund trades.
HSA administrators typically charge a “maintenance fee” and a “management fee” to cover routine reporting and clerical tasks. The fees for Optum and Discovery are listed below:
Finally, HSA assets will be combined with any other AIS accounts to calculate your quarterly management fee. Clients therefore benefit from AIS’ “tiered” fee structure, in which the percentage fee decreases as new accounts are added and/or the portfolio value appreciates.
Is an HSA right for me?
Many investors are utilizing HSAs to save for potential long-term care needs. These individuals cover current medical expenses out-of-pocket. Meanwhile, they make yearly HSA contributions and leave the assets to grow untouched. Others simply draw from the account as needed and invest any surplus funds for long-term growth.
Strict eligibility requirements apply. In addition, your age and financial circumstances may dictate whether an HSA is right for you. Please contact your advisor for a suitability assessment at any time.