While funds in an HSA can be used to cover present health-care costs, advisors should remind clients that because amounts saved in an HSA roll over each year and stay with the account holder regardless of employer or employment status, they are also an important investment vehicle.
By applying the HSA tax savings strategy for long-term investment instead of only for current spending, clients can more strategically utilize the tax benefits of their HSA. For example, if your client has health-care expenses in the current year, they do not need to pay for them at that time to benefit. Instead, clients can invest the money in their HSA, using their regular checking account to pay for out-of-pocket medical costs, and as long as they have saved the receipts, they can reimburse themselves for those expenses down the road. There is no time limit on reimbursement from an HSA so clients can maximize their contributions by allowing them to grow over time.
By encouraging clients to engage with their HSAs as long-term investment vehicles rather than only spending accounts, advisors can help their customers reap strong financial awards this tax season and into the future.
Kevin Robertson is CRO at HSA Bank.