The following is a post by Deborah Gill, CPA, FSDA, that was originally shared on SDA's private forum, Social Link.

Nine Facts about HSAs that might surprise you

I've always thought and tried to educate employees on the benefits for an HSA far beyond paying for current medical expenses tax free.  I finally found an article that enumerates the benefits very clearly.

"Health savings accounts (HSAs) are projected to surpass $100 billion in assets in 2023, showing that consumers are realizing the potential power of HSAs, including as a significant wealth-building tool (there were nearly 34 million accounts in June 2022, according to research by HSA investment company Devenir). The fact that the HSA individual contribution limit is lower than that for deductible contributions to an individual retirement account (IRA) has led to HSAs often being overlooked in financial planning.

However, when best practices are used over the decades of a typical working person's career, a sizable balance can be accumulated. Pair that with health care expenses as the biggest unknown in most retirees' financial plans, and having a pot of tax-free money set aside specifically to cover those expenses can make tax and withdrawal planning in retirement much simpler." 

Current law prohibits HSA contributions when any other coverage is in place, including Medicare, so individuals must take advantage while they are currently working. That is why firm controllers and HR managers should make a concerted effort to work with employees to educate them about the best uses of this tax-savings powerhouse.  

Here are nine facts about HSAs that many account holders don't know but are key to making the most of this important retirement planning tool. The full article can be found here. You will want to read the whole article.

https://www.journalofaccountancy.com/news/2023/jan/9-facts-hsa-that-might-surprise-your-clients.html?utm_source=mnl:fpd&utm_medium=email&utm_campaign=31Jan2023 

1. HSAs are fully portable at any time.

2. Trustee-to-trustee transfer and rollover rules are similar to those for IRAs.

3. Account holders can make a one-tim IRA-to-HSA rollover.

4. There is no time limit on HSA reimbursements

5. All future expenses are eligible, regardless of enrollment when incurred.

6.  Other coverage, including spousal FSA, negates the ability to contribute to an HSA

7. HSAs can be used to pay certain insurance premiums.

8. HSAs are not subject to probate.

9.  HSAs are taxable to anyone beside a spouse who inherits them.