Anyone with ties to the mid-west region of America has more than likely heard of something called Euchre. No, it’s not a recently discovered planet or latest addition to urbandictionary.com. It’s a simple, yet tricky, card game whose reputation, interestingly enough, was once widely regarded as our nation’s official card game. The game presents unique challenges since players must strategize with a partner they cannot communicate with.
Euchre is a game which could easily be likened to a Health Savings Account (HSA), since rules and regulations are constantly changing and many find themselves struggling to keep up. A Fidelity Investments® survey revealed “65% of Americans primarily responsible for making household health benefit decisions simply do not understand how an HSA works.” You may be playing a bad hand with your HSA and not even know it.
Have a Game Plan:
- Avoid High Money-Management Fees
Tax advantages can quickly be negated by high money-management fees. It’s critical to shop around before opening an HSA. Like shopping for a new cell phone plan, comparing apples-to- apples may seem impossible. Research HSA offerings at local banks, credit unions or brokerage houses. Ask for a schedule of fees associated with the HSA and take time to compare your findings. Consider your future spending habits and potential account balances.
- Be Your Own Advocate
Since IRS rules and regulations change frequently, it’s imperative to stay abreast of the law. For instance, currently the IRS only recognizes an HSA as an individual account. Therefore, if you’ve recently opted for a family high deductible health plan, be sure you’ve correctly titled your HSA soas to comply with IRS code. Financial institutions may not question what type of health insurance plan you have when you open an HSA. Therefore, be your own advocate and never assume a financial institution has insight into your personal health insurance plan to keep you compliantwith IRS rules and regulations.
- Watch Out For Costly Distributions
Distributions from your HSA for anything other than a qualified medical expense will cost you attax time. Each year the IRS publishes revised guidelines listing which medical expenses qualify. Another great resource can be found here.
While keeping up with constantly changing IRS rules and regulations may seem overwhelming, keep in mind HSAs have the potential to be a powerful financial vehicle if suitable for your financial situation and maintained responsibly. I encourage anyone with questions or concerns to speak with a CPA or other qualified health care advocate. Check your facts and do your research so when it comes to your HSA you’ve got the upper hand.
Content prepared by Chelsea McLaughlin, Worley Erhart-Graves Financial Advisors