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A summary of the articles included in the January 2024 edition:
- The Latest HSA Trend: Automatic Enrollments
- Millennium Trust Acquires Maestro Health’s Consumer Directed Benefits Business
- Preserving HSA Eligibility And Maximizing Contributions After Age 65
- As HSAs Reach 20 Years, the Focus On Investing Ramps Up
- How Much Can Family Members Contribute to HSAs in 2024?
- HSA Improvements Could Cost $58 Billion: CBO
The Latest HSA Trend: Automatic Enrollments
Health savings accounts (HSAs) are a growing workplace trend, with more employees socking away money into the savings accounts and more employers promoting them to workers as a way to funnel away tax-free money for health care expenses.
Now the latest momentum for these savings vehicles comes in the form of employers automatically enrolling eligible employees into the account.
Nearly half (46.7%) of organizations report they automatically enroll eligible employees in an HSA, according to the PSCA’s 5th annual HSA survey of more than 500 employers. That’s up by more than 30% in just two years.
Meanwhile, the number of employers using a default or suggested savings rate to encourage greater account funding has also increased (11% of respondents, up from 9% last year and 8% the year before).
Millennium Trust Acquires Maestro Health’s Consumer Directed Benefits Business
PayFlex, a Millennium Trust solution has acquired the Maestro Health consumer directed benefits business from third-party administration (TPA) technology company Marpai. The deal represents one of Millennium Trust’s key capabilities in health and benefits, reflecting the company’s rapid expansion in consumer directed benefits following recent acquisitions of BRI and ProFlex earlier this year.
“As a leading consumer directed benefits provider, we feature user-friendly technology and offer clients a best-in-class experience with exceptional customer service,” CEO Dan Laszlo said. “This acquisition will provide that support to our new clients and reflects our strong HSA and FSA capabilities. This is a strong core competency for us, and our ongoing growth indicates the ability to take on future consumer-directed benefit administration opportunities.”
Preserving HSA Eligibility And Maximizing Contributions After Age 65
Although numerous tax-advantaged vehicles are available for retirement savings, HSAs have particular benefits for individuals saving for retirement. Specifically, HSAs offer a “Triple Tax Benefit” that includes tax-deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. This can allow individuals to save a significant amount that can be withdrawn tax-free for medical expenses later in retirement. Therefore, for workers looking to boost their savings towards the end of their working years, HSA contributions can be the most tax-efficient vehicle available.
The caveat, however, is that to be eligible to contribute to an HSA, an individual must be covered by a qualifying HDHP with no other non-HDHP coverage. And because government-funded health insurance options such as Medicare are not considered qualifying HDHP coverage, enrolling in Medicare – either directly through its website or by applying for Social Security benefits (which automatically enrolls someone in Medicare once they reach age 65) – means that an individual will no longer be eligible to contribute to an HSA.
For retirees, self-employed workers, and others who rely on Medicare as their sole option for health insurance after reaching age 65, this means there is effectively no way to contribute to an HSA after age 65. However, people who continue working beyond age 65 (or whose spouse does so) and have access to an employer-provided HDHP can continue making HSA contributions as long as they don’t enroll in Medicare or apply for Social Security benefits.
As HSAs Reach 20 Years, the Focus On Investing Ramps Up
The health savings account celebrates its 20th anniversary in 2024, and researchers and consultants say there is room for improvement amid the slow, steady growth of assets being invested in these accounts.
“HSAs may be like the 401(k) plans 40 years ago,” said Jake Spiegel, research associate, health and wealth, for the Employee Benefit Research Institute.
As participants have more exposure to HSAs and gain more familiarity, “it can lead to more comfort for investing,” he said.
Research by EBRI and others shows that familiarity breeds content for investing.
How Much Can Family Members Contribute to HSAs in 2024?
It’s time to plan your 2024 Health Savings Account contribution strategy if you haven’t done so already.
You’ve probably set your pre-tax payroll deductions to fund your Health Savings Account in 2024. If not, don’t worry – you can make prospective changes to your payroll deductions and personal contribution schedule at any time.
But don’t overlook certain situations in which some families can make multiple family contributions when covered by a single family medical plan. Read on to learn whether your family falls into one of those categories and thus more than one family member can reduce his taxable income and build a medical emergency fund through contributions to his own Health Savings Account.
HSA Improvements Could Cost $58 Billion: CBO
Analysts at the Congressional Budget Office estimate that a health savings account improvement bill could increase the federal budget deficit by about $58 billion over 10 years.
Letting people who are signed up for Medicare contribute to HSAs would account for $8.5 billion of the increase.
Boosting the HSA contribution limit to $7,500, from $3,850, for self-only coverage and to $15,000, from $7,750, for family coverage would add $44 billion to the deficit.
The CBO analysts put those predictions in an assessment of H.R. 5687, the HSA Modernization Act of 2023 bill, which was approved by the House Ways and Means Committee in September.