A dependent care flexible spending account (FSA) lets participants set aside pre-tax dollars to help pay for dependent care. Contributing to this benefit reduces taxable income and spreads the benefits of pre-tax dollars throughout the year, helping individuals save 30 percent or more (based on their tax rate) on dependent care costs. Dependent Care...
The season for filing taxes is upon us once again. We’re getting closer to the deadline for filing for 2023. We wanted to share a few tips and reminders about health savings accounts (HSA) you’ll need for your tax return. HSA Tax Prep Checklist Check your W-2 for HSA payroll contributions Get your 1099-SA form...
Health savings accounts (HSAs) have become increasingly popular but they often come with misconceptions. To help employees make informed decisions, let’s debunk common HSA myths and shed light on the HSA facts that matter. HSA Fact #1: HSAs are Employee-Owned While employers may choose to contribute to an employees’ HSA, it’s important for employees...
Expanded public transit. The rise and rebound of ridesharing. Increased work-from-home arrangements. The work commute has changed a lot recently, as lawmakers and civic officials grapple with how to effectively support people traveling to and through ever-growing cities. New York City, Washington, D.C., Chicago, Philadelphia and Seattle are among cities that have enacted laws and...
What are pre-tax savings and post-tax savings? Understanding taxes relating to health savings accounts (HSAs), flexible spending accounts (FSAs) and other benefits plans can be time-consuming and difficult to explain. Pre-tax savings are tied directly to FICA taxes. You may be wondering what FICA is and how does pre-tax savings work for HSAs and FSAs?...
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Did you know that, when employees were asked on a scale of 1 to 10 how confident they are in their understanding of their benefits, 34% chose 7 or less. Only 25% responded with a 10. That was just one of the findings from a survey of benefits participants WEX launched in May 2023. Often,...
Health savings accounts (HSA) are a great way to set aside money for medical expenses. But did you know that it can also be used for investing purposes? Investing funds from an HSA is an excellent way to save for medical expenses post retirement. With the rising costs of healthcare every bit helps!
Investment Strategy
Continually contributing to an HSA will not only ensure funds are readily available when they are needed, but also present an opportunity for long term growth. First and foremost, it is important to have enough money set aside and available to cover your maximum out-of-pocket expenses as well as deductibles. Doing so ensures your costs are covered and there is money left over to invest.
Risk Assessment
It is important to weigh the pros and cons whenever money is being invested and be confident in your decision to do so. If you do decide to utilize funds for investing, create a strategy and look into a target date fund. Doing so will give direction and carve out a path to follow. At times, it may be enticing to spend the available funds, but it is important to think of an HSA like a 401k or investment account.
Along with investing comes risk. Understanding that nothing is certain and that markets fluctuate over time is important. Utilizing a target date fund (TDF) can help navigate risk long-term. A TDF bases risk off of when a person is hoping to retire. Thus, the farther away from retirement you are, the higher risk investments are made. As an individual gets closer to the retirement age, the money is moved to lower risk investments. Target date funds are also a wonderful way to diversify one’s portfolio.
Pay Yourself Back
If you plan on investing health savings account money, it is important to know that you can take money from another account to pay bills and pay yourself back with your health savings account later on. Just make sure to keep receipts for past transactions.
The information in this blog post is for educational purposes only. It is not investment, legal or tax advice. For legal or tax advice, you should consult your own counsel. To stay up to date on benefits trends and insights, subscribe to our blog.
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