Adding one more tool to your financial tool box.
Taylor sat in her cozy kitchen, sipping her morning coffee as the first rays of sunshine filtered through the curtains. Her mind was buzzing with thoughts about her recent promotion and questions she should ask her financial advisor later that day during her financial visit. As she joined the virtual meeting, her advisor greeted her with her usual warm smile.
“Congratulations on the promotion, Taylor” Her advisor cheered. “That’s fantastic news, and I’m sure you might have questions regarding a possible pay increase too.”
Taylor smiled, feeling excitement. Yes, with this promotion and raise, I want to make sure I’m doing everything I can to secure my financial future. I’ve heard a bit about Health Savings Accounts from you over the years, but never thought I made enough to be able to save into one. I’m not sure if it’s something I should consider.
Her advisor leaned back in her chair, nodding thoughtfully. “HSA's can be a powerful tool in your financial toolbox. Let’s break it down and see if it’s right for you now.”
She began to explain the basics. “An HSA is a tax-advantaged account designed to help you save for medical expenses. You can contribute pre-tax money, which lowers your taxable income. The funds in the account may be used for a wide range of healthcare costs, and the best part is that the balance rolls over year to year.”
Taylor listened, intrigued by the potential of the money rolling over if not used in that year. “So, it’s like a savings account specifically for medical expenses?”
“Exactly,” her advisor added. “But it gets better. The money in your HSA grows tax-free, and withdrawals for qualified medical expenses are also tax-free.” Taylor was interested but was unsure of how much she should contribute.
Her advisor shared her screen and pulled up her Ecos Wealth Advisors client portal. She shared a few charts showing Taylor the different contribution limits for that year for a family. Since you and your family are relatively young and healthy, you might not need to use much of it now. That means you could build up a substantial balance over the years. Taylor thought about this and her family’s current health and potential future needs. What if we don’t have any major medical expenses for a while? Is it still worth it?
Her advisor nodded. “Absolutely. Think of it as a long-term bucket of money. The more you save now, the more you’ll have available for future healthcare costs. Medical expenses can be unpredictable, and having a dedicated fund can provide peace of mind in a stressful time. Also, many HSAs offer investment options, so your money can grow and earn a return over time.”
Taylor asked, Are there any downsides or things I should be aware of? Her Ecos Wealth Advisor stated, “The main requirement is that you need to be enrolled in a high-deductible health plan to contribute to an HSA. These plans typically have lower insurance premiums but higher deductibles. We’ll need to weigh if an HDHP is right for you and your family. But given your healthy lifestyle and financial goals, it could be a good move.”
Taylor left that financial visit with a clear plan. She reviewed her health insurance options and decided to switch to an HDHP. Her advisor then helped her open an HSA and set up systematic contributions. Feeling a sense of accomplishment both with her new career responsibilities and financial preparedness.
Over the years, her HSA balance grew steadily. She used it on occasion, but more importantly, Taylor saw it as a valuable part of her overall financial strategy. When unexpected medical costs arose, she felt secure financially, knowing she had a dedicated bucket of money to cover them. Her advisors’ guidance had empowered Taylor to make informed decisions, and her HSA had become a cornerstone of her financial security.