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Retirement Doctor: Got HSA?

Feb 11, 2019 12:08:45 PM / by Mike Rogers

 

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As you are planning your benefits strategy for the upcoming renewal season, do you have a high deductible health plan (HDHP) with a health savings account (HSA) option? 

 

There can be substantial tax benefits to the employer and the employee. These dollars are triple tax advantaged. You take a deduction for the contributions, you pay no tax on the earnings and the withdrawals are tax free.

 

This may also help you if your plan fails the annual ADP testing and your highly compensated employees are receiving refunds each year. The HSA would allow them to contribute dollars they might not otherwise be able to.

 

Congress just took action that could make these plans even more attractive.  The U.S. House of Representatives recently passed two bills (H.R. 6311 and H.R. 6199)  that would make some substantial changes to HSAs.

 

The biggest change is a proposed increase in the limits on annual contributions to the HSA. Under this legislation, there would be an increase in the contribution limits to match the limits on out-of-pocket expenses, which in 2019 will be $6,750 for an individual and $13,500 for a family plan. For those looking to use the “S” for the savings part of the plan, this is a substantial advantage.

 

In addition, they are expanding the definition of what a qualified medical expense is. Certain over-the-counter medical products to be treated as qualified medical expenses (meaning they can be paid for by the HSA) as well as certain fitness-related expenses, like gym memberships!

 

We need to see how the Senate votes or if they make any changes, but this is exciting news.

Topics: 401(k) plan, 401(k) plan sponsor, 401(k), best practices, ERISA, Audit, Retirement Doctor

Mike Rogers

Written by Mike Rogers

Mike is an industry veteran with 30 years of experience in every aspect of retirement planning, including registered investment advisory, third party administration, and record keeping. His list of credentials is as extensive as it is impressive: Qualified Pension Administrator (QPA), Qualified 401K Administrator (QKA), Certified Pension Consultant (CPC), Qualified Pension Financial Consultant (QPFC), Accredited Investment Fiduciary (AIF®), Tax Exempt and Governmental Plan Consultant (TGPC), Certified Behavioral Finance Analyst (CBFA), Professional Plan Consultant (PPC), Global Fiduciary Strategist (GFS). Mike is also a former member of the Schwab SRT Technologies Advisory Board, Schwab TPA Advisory Board, and Fidelity/IBG Advisory Board.

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