Full Width Image Background
Full Width Image Background
Text

HSA: A tool for retirement savings

Text

A health savings account (HSA) is a great tool to help you prepare for future health care costs, retirement, and help you to save on taxes.

Text

Boost your retirement income with HSA savings

If you’re like most people, you may think about your HSA solely as a way to pay for current-year qualified medical expenses, such as trips to the doctor or prescriptions. But did you know it can also be used as a long-term investment vehicle that can play an even greater role in your overall wealth and retirement strategy?

You can use your HSA with other retirement accounts to maximize your after-tax retirement income. Saving in an HSA for retirement gives you a tax-advantaged account dedicated to future medical expenses — allowing you the opportunity to avoid dipping into retirement accounts intended for cost-of-living expenses. Also, HSAs are a great way to pay for qualified medical expenses in retirement. 

Get ahead on taxes in more ways than one

HSAs are triple tax advantaged, making them an effective savings and investment account:

  • Withdrawals for qualified medical expenses are income tax-free.
  • All contributions to an HSA are income tax-free. 
  • Any interest earnings and investment growth from deposits are income tax-free.

Unlike other accounts, an HSA is one of the only savings vehicles that allows you to add money on a before-tax basis through payroll contribution, grow your savings tax-free (interest and investment earnings are not taxed), and take the money out income tax-free for qualified medical expenses.

With a 401k, you’ll always pay taxes when you withdraw funds, but if you use HSA funds for qualified medical expenses — it’s generally 100% income tax-free. Plus, after turning 65, you can use your HSA funds for non-qualified expenses. You’ll pay ordinary income tax on those funds, but the 20% tax penalty no longer applies.

Text

Flyer

Are you prepared for health care costs in retirement?

Learn how your HSA fits into retirement planning with the HSA Retirement Guide.

Download PDF

Text

Fill in the gaps of medical costs

HSAs and Medicare

It's important to max out your HSA now: once you enroll in Medicare, you can no longer contribute to your HSA — but you can still use your HSA funds income tax-free to pay for qualified medical expenses. You can also use your HSA to pay for Medicare premiums and qualified out-of-pocket expenses, including deductibles, copays and coinsurance for:

  • Part A (hospital and inpatient care) 
  • Part B (doctor and outpatient care) 
  • Part D (prescription drugs)

Catch-up contribution

Once you turn 55, you can contribute an additional $1,000 each year to your HSA, called a catch-up contribution. If you and your spouse are both over the age of 55, you can each contribute an additional $1,000. Your spouse will just need to open their own HSA for their additional portion.

Your HSA savings can really add up. If you can contribute $3,000 a year, you’d get over $1,000 in tax savings. Do that for five years, and you’d have $15,000 in your account plus over $5,000 in tax savings.*

Maximize your savings by investing

Investing HSA dollars has many potential tax benefits and can be an additional way to save for long-term health care expenses and financial goals. Once your HSA reaches a certain designated balance, typically $2,000, you may choose to invest a portion of your HSA dollars.

Learn more about investing

Text

* Results and amounts will vary depending on your particular circumstances. This example assumes individual is in 25% federal tax bracket and 5% state tax bracket.

Investments are not FDIC insured, are not guaranteed by Optum Financial or its subsidiaries, and may lose value.

Text

Self-directed mutual fund investment options are made available through the services of an independent investment advisor, or your plan sponsor. Discretionary advisory services are provided by Betterment LLC, an SEC-registered investment adviser, with associated brokerage transactions provided by Betterment Securities, Member FINRA/SIPC. For details and disclosures visit betterment.com. The Schwab Health Savings Brokerage Account is offered to certain account holders through Charles Schwab & Co., Inc., Member FINRA/SIPC. For details and disclosures, visit schwab.com. Brokerage services are offered to certain accountholders through TD Ameritrade, Inc., Member FDIC/SIPC and a subsidiary of The Charles Schwab Corporation. For details and disclosures, visit tdameritrade.com.

Orders are accepted to effect transactions in securities only as an accommodation to HSA owners. Optum Financial and its subsidiaries are not broker-dealer or registered investment advisors and do not provide investment advice or research concerning securities, make recommendations concerning securities, or otherwise solicit securities transactions.

Health savings accounts (HSAs) are individual accounts offered through Optum Bank®, Member FDIC, or ConnectYourCare, LLC, an IRS-Designated Non-Bank Custodian of HSAs, each a subsidiary of Optum Financial, Inc. Neither Optum Financial, Inc. nor ConnectYourCare, LLC is a bank or an FDIC insured institution. HSAs are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply. Fees may reduce earnings on account.

Flexible spending accounts (FSAs), dependent care assistance programs (DCAPs), health reimbursement arrangements (HRAs), Commuter and Parking Benefits, Tuition Assistance Plans, Adoption Assistance Plans, Surrogacy Assistance Plans, Wellness Benefits, and Lifestyle Accounts (collectively, “Employer-Sponsored Plans”) are administered on behalf of your plan sponsor by Optum Financial, Inc. or ConnectYourCare, LLC (collectively, "Optum Financial") and are subject to eligibility and restrictions. Employer-Sponsored Plans are not individually owned and amounts available under the Employer-Sponsored Plan are not FDIC insured. This communication is not intended as legal or tax advice. Federal and state laws and regulations are subject to change. Please contact a legal or tax professional for advice on eligibility, tax treatment, and restrictions. Please contact your plan administrator with questions about enrollment or plan restrictions.

Google Play and the Google Play logo are trademarks of Google LLC. Apple and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.

The promotional code OPTFSA7, OPTHSA5 and OPTHRA7 cannot be applied to previously placed orders, and cannot be combined with other promotional codes. Additionally, the code cannot be used for prescription drugs or virtual care visits. Promotional codes are not transferable or redeemable for cash or credit. To apply a promotional code you must enter it prior to completing the order.

Free and expedited shipping offers do not apply to shipping outside of the contiguous United States. Additional shipping restrictions may apply.

The Optum Store is an affiliate of the UnitedHealth Group family of companies.

Your employer sponsored plan may exclude reimbursement for certain categories of items. Check your plan document and summary plan description or contact your benefits department for specific coverage details. 

© 2022 Optum, Inc. All rights reserved