Subscribe to Devenir’s monthly newsletter and stay up to date with the latest HSA news! Each month Devenir highlights a selection of articles to keep you in the know of the latest trends and developments in the HSA marketplace.
A summary of the articles included in the August 2024 edition:
- IRS Signs Off On Employer’s Matching Contribution Allocation Proposal, Outside The 401(k) Plan
- Bilt Expands Neighborhood Rewards into Healthcare: Collaborates with Walgreens to Launch Automatic FSA/HSA Program
- Do Medical-Monitoring Devices Qualify for Tax-free Reimbursement?
- Fidelity Investments® Releases 2024 Retiree Health Care Cost Estimate as Americans Seek Clarity Around Medicare Selection
- HSAs are Evolving: Here’s What to Know Beyond the Basics
IRS Signs Off On Employer’s Matching Contribution Allocation Proposal, Outside The 401(k) Plan
An Internal Revenue Service official has blessed an arrangement that will let workers allocate their employer’s annual retirement plan matching contribution to any one of four different accounts.
The workers will be able to send some or all of the employer’s contribution to a 401(k) account, a health savings account, an educational assistance program account or a retiree health reimbursement arrangement, according to a new IRS private letter ruling signed by Denise Trujillo, the Health & Welfare branch chief at the IRS Office of Associate Chief Counsel.
Bilt Expands Neighborhood Rewards into Healthcare: Collaborates with Walgreens to Launch Automatic FSA/HSA Program
Bilt Rewards, announced a significant expansion of its neighborhood rewards program through a strategic collaboration with Walgreens. This cooperative effort introduces an innovative “Automatic Healthcare Savings” program, marking the first time customers can effortlessly apply any network branded Flexible Spending Account (FSA) or Health Savings Account (HSA) benefits card to purchases at a major pharmacy chain.
The new program eliminates the need to carry separate FSA or HSA cards and removes the guesswork in identifying eligible items, addressing the approximately $4 billion in FSA dollars lost annually due to non-use.
Do Medical-Monitoring Devices Qualify for Tax-free Reimbursement?
Question: Wearable are becoming more popular. Are they reimbursable?
Answer: One of the marvels of modern technology is the wearable medical device, which helps patients and their medical professionals monitor a variety of conditions that were once monitored only infrequently through in-person visits. This technology saves money (fewer office visits), frees medical professionals to refocus their time, and allows for real-time warnings that may prevent sudden death, ambulance rides, or hospitalization.
Can Health Savings Account owners (and Health FSA participants) reimburse these expenses tax-free? The question doesn’t always lend itself to easy answers.
Fidelity Investments Releases 2024 Retiree Health Care Cost Estimate as Americans Seek Clarity Around Medicare Selection
Fidelity Investments shared its 23rd annual Retiree Health Care Cost Estimate, revealing that a 65-year-old retiring this year can expect to spend an average of $165,000 in health care and medical expenses throughout retirement. Fidelity’s 2024 estimate is up nearly 5% over 2023 and has more than doubled from its inaugural estimate in 2002.
Designed to inform Americans about the importance of incorporating health care costs into retirement planning, this year’s estimate continues the decades-long upward trend of health care costs. Despite this, there continues to be a disconnect for many Americans between the actual projected costs and how much they believe they will spend on health expenses in retirement. In fact, recent Fidelity research finds the average American estimates costs will be about $75,000— less than half of Fidelity’s calculation.
Fidelity’s estimate assumes an individual is enrolled in traditional Medicare—both Part A and Part B—which covers most hospital care and doctor visits. However, things like Medicare premiums, prescription drugs, dental and vision care, and all other health care costs that Medicare typically does not cover are left to retirees to manage on their own.
HSAs are Evolving: Here’s What to Know Beyond the Basics
Medical care is very personal, and so are the expenses that go along with it. Many eligible individuals choose to manage their medical care costs with a health savings account (HSA).
According to the Consumer Financial Protection Bureau, there were approximately 36 million HSAs active in 2023, and these accounts collectively held more than $116 billion in assets, an increase of more than 500% since 2013. This spike is no surprise as medical costs continue to rise and as the benefits of HSAs are becoming better understood.
In spite of this rapid growth, it may come as a surprise to many HSA accountholders that HSA funds can be used more broadly than immediate personal healthcare needs—allowing the HSA to play an expanded role in a person’s overall financial plan. As HSA use has increased in the more than 20 years since they were established, we see a need to manage these accounts similar to how we manage other long-term financial tools. For example, in some circumstances, an HSA can cover medical costs for a spouse, child, and dependents, and in other situations, such as death or divorce, accountholders need to evaluate how the funds may be transferred.
Beyond a fundamental understanding of what an HSA can do, it’s also critical to be informed of their full scope and how they need to be managed over time.