Planning and saving for retirement is tough. Healthcare costs are up more than 80 percent in the last 15 years alone. And you are likely to consume more healthcare services in retirement, not less. That’s why you should definitely own one of the new “Medical 401(k)s.” That’s what many financial advisors call the new health savings accounts. They are a very good deal. Here’s why.
Participants Want Retirement Planning to Include Health Care Costs
Eighty-one percent of Americans believe it would be very or extremely valuable for their financial adviser to include health care costs in their retirement planning, according to new research. When asked what is the most essential for their financial future, 37 percent said their health, followed by happiness (19%), security (19%), peace of mind (16%) and independence (9%).
Wellness Culture Trumps Employer-Funded Dollars as HSA Participation Incentive
Financial incentives don’t govern employee plan participation as strongly as does finding the plans most tailored to their needs, according to a national benchmarking study from Wells Fargo Insurance. Consequently, employers could realize savings by cutting off contributions to those plans, and drive bigger behavior changes by building a holistic culture of wellness through C-suite-level behavior.
Remember when IRAs were a new idea? Then they became mainstream, and then we began to commonly see them as assets to be dealt with in death and divorce. And so it is with HSAs. HSAs are actually handled like IRAs in a divorce. And an HSA inherited from a spouse is also a straightforward situation.
Employers Shift Higher Health-Care Costs to Workers
Open enrollment season is under way, and when workers get their health-plan information, many of them can expect higher out-of-pocket costs. As employers cope with rising health costs, some are shifting more of the burden onto their workers, often in the form of health insurance plans that carry high deductibles. However, some workers’ deductibles will be offset by employers’ contributions to special tax-free funds called health-savings accounts that workers can use to pay for out-of-pocket health care costs.