High-deductible health plans have a well-deserved reputation as a way for employers to pass along some of the burden of spiraling health costs to you. They typically come with lower premiums than traditional insurance plans but require you to pay for more of your medical costs before your insurance kicks in.
Such plans have become more prevalent in recent years. Last year, 30% of people with employer-sponsored health insurance enrolled in high-deductible plans, compared with just 8% a decade earlier, according to the Kaiser Family Foundation. For some people, a high-deductible plan may be the only choice offered by their employer.
But high-deductible plans also give you access to a health savings account. And an HSA has secret powers that most people haven’t begun to tap. An HSA isn’t just a short-term, tax-friendly way to pay for current and future medical bills; it’s also a vehicle for supercharging your retirement savings.
For Marianela Collado, a certified financial planner in Weston, Fla., switching to a high-deductible plan and opening an HSA five years ago was an easy decision. Marianela, her husband, Edgar, and their three boys were healthy and rarely visited the doctor aside from annual checkups. The family began funneling cash into their HSA and covering current medical expenses out of pocket so the account could continue to grow.
Today, Marianela and Edgar, who are both in their early forties, contribute the maximum to their HSA each year, investing most of the money in a portfolio of growth-oriented stocks. “We hope to leave the account untapped for 20 to 30 years so it grows as much as possible,” Marianela says. Then, she says, they can use that money for medical expenses during retirement.
This story is from the April 2020 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the April 2020 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Your Vacation Home Could Provide Tax-free Income
If you plan to rent out your vacation home, it's important to understand how your proceeds will be taxed.
A SOLID YEAR FOR THE KIPLINGER 25
All but one of our favorite actively managed, no-load mutual funds gained ground as markets recovered.
IT'S NOT YOUR IMAGINATION: YOUR CEREAL BOX IS SHRINKING
To avoid raising prices, some manufacturers are reducing the size of common grocery items. Here’s how to fight back.
SHOULD YOU WORRY ABOUT BEING LAID OFF? IT DEPENDS ON YOUR INDUSTRY
Downsizing has hit certain sectors. But cutbacks may be slowing, and some companies are expanding.
How identity thieves are exploiting your trust
Con artists themselves are disguising as well-known brands to steal your money and personal information.
CUT THE COST OF YOUR WIRELESS BILL
AT&T, T-Mobile and Verizon dominate the market, but smaller outfits offer similar network coverage at lower prices.
MAKING HOME ENERGY MORE AFFORDABLE
Households in need can get energy-efficiency upgrades, help with utility bills and more from this nonprofit.
A HEAD START FOR SAVERS
The Saver's Credit is designed to help low- and middleincome taxpayers contribute to a retirement account.
Say I Love You With a Money Date
To nurture a lasting bond with your partner, meet regularly to talk about money.
Plan for Your Own Elder Care
AFTER I wrote a series of columns in 2022 about elder care planning for family members, I received a number of responses like this one: “What about married couples who have no children or whose family members don’t live nearby?” wrote one reader. “Or a single individual with no close relatives? How should these people plan for their own elder care?”