Peter Stahl, the president and founder of Bedrock Business Results, a Philadelphia-based health care consultancy working with advisors, compares health savings accounts, or HSAs, to underused Swiss Army knives: ubiquitous, and they can be used for more than one thing—not just for health expenses, but for retirement.
“I think these things will be ubiquitous, and everyone will be able to own them in the future,” said Stahl on Thursday at the 2017 Schwab IMPACT conference in Chicago. “HSAs are an essential part of health-care reform.”
Yet the advisors his firm serves tell him that most of their clients don’t use these accounts, or that the conventional wisdom, to save as much as possible in them, is sufficient for their clients’ needs. Others hold inaccurate assumptions about the utility of HSAs, Stahl said.
Unlike another type of health-related consumer account, the flexible-spending account (or FSA), the HSA does not have to be spent down from year to year.
“An HSA is a tax-advantaged savings and investing account used for health expenses,” said Stahl. “It’s not a ‘spending’ account; it’s a ‘saving’ account. But my passion is looking at these as investment accounts, not savings accounts.”
Account holders have the freedom to determine where their HSA assets are custodied, said Stahl, and about 20 different custodians currently handle HSAs offering a variety of investment menus.
“The day a dollar hits your HSA account, that’s your money; it doesn’t matter if you put it in or an employer puts it in, you can move it to a custodian because it’s yours,” said Stahl. As a real asset, HSAs can pass without issue to a spouse when the account holder dies.
Right now, HSAs are tied to high-deductible health-care plans, said Stahl. In 2017, they can be offered in tandem with plans that carry a deductible of at least $1,300 and a maximum out-of-pocket limit of $6,550. However, states place their own limitations on HSAs and the conditions necessary for offering them to policyholders.
Legislation is often proposed to allow everyone to use HSAs regardless of what kind of insurance policy they hold, said Stahl.
“In the last two revisions of the health-care bill that came close to passing the Senate, there were items that would have expanded the use of HSAs,” he said. “We do have bipartisan support for HSAs to encourage people to start putting their own money away from health care. Over time, hopefully, we’ll see the HSA market expand.”