HSA News for April 5, 2021
HSA news is compiled weekly by Mr. HSA, Roy Ramthun.
News from Washington
Americans Have Until May 17 to Contribute to 2020 to Their IRAs or HSAs
The deadline to contribute to individual retirement accounts and health savings accounts is May 17, the same day that individual federal income tax returns are due, the IRS said March 29. Americans can contribute to 2020 IRAs and Roth IRAs and HSAs until May 17.
Democrats Gear Up for Major Push to Lower Drug Prices
Democrats are planning a major push to lower drug prices as part of a coming infrastructure package, seeing an avenue to move forward on a long-held goal for the party. House Democratic leaders are intent on including a measure that would allow the secretary of Health and Human Services to negotiate lower prices for prescription drugs, sources say.
Bernie Sanders Pushes Medicare Expansion in Democrats’ Next Big Bill
Sen. Bernie Sanders is urging Democrats to force Medicare to enter into negotiations with drug companies and use that revenue to pay for a huge expansion of the entitlement program. Sanders is aiming to lower Medicare's eligibility age from 65 to 55 or 60 years old and expand the program to cover dental work, glasses and eye surgeries as well as hearing aids.
HSA Studies & Analysis
New Voya Research Uncovers Bias Against HDHPs, Which Could Lead to Employees Overspending on Health Care
According to a new study by Voya Financial, employees often have a bias against HDHPs when compared to more traditional health plans despite the fact that the study was purposefully designed so the HDHP would always be the optimal financial choice. Voya uncovered three key reasons to help explain this decision-making mindset.
HSA Compliance Corner
PPE, Sanitizer as Qualified Expenses? No. Sorry. . . Wait. Yes, Now They Are!
The IRS guidance provides important symbolic validation of the use of masks, hand sanitizer, and sanitizing wipes to prevent the spread of COVID-19, the flu, and other airborne viruses. And we all can enjoy tax savings when we use an HSA or health FSA to pay for these items.
HSA Industry News
WEX Completes Acquisition of Certain HSA Assets of HealthcareBank
WEX announced on April 1 that it has completed the previously announced acquisition of certain HSA assets of HealthcareBank, the custodian bank for customers of WEX’s Health division. The acquisition is expected to be accretive to adjusted net income in fiscal year 2021.
The HSA Market
Large Employers Are Expanding Offerings, Including Voluntary Benefits
A new report by Benefitfocus suggests that HDHP and other consumer-directed models are growing in popularity (although PPOs are still the most popular plan with employees), with younger workers being more likely to choose HDHPs.
ICHRA Has Potential to Reshape the Way Employers Pay for Benefits
The introduction of Individual Retirement Accounts changed the paradigm for the way employees approach retirement savings. Individual Coverage Health Reimbursement Arrangements (ICHRAs) may have the potential to do the same for employee benefits.
HSAs & Retirement
HSAs and 401(k)s Vie for Contributions
When plan sponsors add an HSA option, 401(k) saving may suffer, highlighting the need for retirement plan participants to establish a savings hierarchy. Whether participants are building a health care nest egg for retirement or a temporary balance to finance medical costs in the current year, there are still best practices they should follow to ensure their retirement saving remains steady and strong.
Employee HSA Confusion Is an Opportunity for Advisors
The COVID pandemic has aggravated an existing lack of awareness of HSAs as well as a general misunderstanding of how they work. This presents an excellent opportunity for advisors to add value beyond retirement planning by offering holistic financial wellness education that boosts HSA enrollment and participation.
Employers and Employees Can Benefit from Understanding Medicare
Many people younger than 65 who are preparing for retirement think Medicare will cover their health care expenses once they retire. But that’s not always the case. While the program covers several types of medical costs, it doesn’t include everything. Additionally, retirees are responsible for paying premiums and deductibles.
How Overspending on Health Care Can Affect Retirement Readiness
A new white paper contends that biases toward certain health plans can lead to overspending, which can affect workers’ overall retirement readiness. The average employee would have spent between $500 and $2,500 more throughout the year—money a person could be saving for retirement, contributing to an HSA or putting aside for an emergency.
Maximizing Your HSA
Ditch Your Demanding Retirement Partner with an HSA
HSAs have no required minimum distributions, unlike retirement accounts which require you to take out a minimum amount every year starting when you turn age 72. So you can keep the funds in your HSA and spend them when you want or pass them on to an heir. That's a huge benefit in retirement, when you have fewer tax deductions and no opportunity to compensate for higher tax bills.
Young Professionals Should Consider HSAs
Indiana University accounting professor Greg Geisler ranks the most tax-efficient financial moves that young people should make when beginning a career. His first two steps are to put the maximum into an HSA and put enough into a 401(k) to obtain the greatest employer match. "Ideally, these first two moves should be made together,” he says.
Consumer-Driven Health Care
Debunk These 3 Myths With an HSA-Eligible Health Plan
HSA expert Bill Stuart joined WEX Health's recent episode of "Benefits Buzz" to break down some common myths about HSA-eligible health plans. Watch the episode on video or keep reading to learn three myths he outlined regarding these plans.