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Retirement and Health Plans Can Intersect

Retirement plans and health benefits are different things and serve different purposes. Nonetheless, they can intersect functionally — and retirement accounts and health savings accounts (HSAs) are a prime example, as a BenefitsPro report observed recently.

Like retirement accounts, HSAs are tax-favored arrangements in which their owners can set money aside for future use. Unlike health flexible spending accounts (FSA), they are not subject to a use-it-or-lose-it rule —the funds in them carry over from year to year. Thus, an individual can maintain an HSA and tap into the funds to cover health care-related claims when they are retired. And that’s where retirement and health accounts intersect — as complementary means by which individuals can pay expenses after they retire.

Eric Remjeske, co-founder of the HSA adviser firm Devenir, thinks that advisors miss opportunities by looking at HSAs the wrong way. Remjeske told BenefitsPro that defined contribution plans’ adoption of HSAs would be greater if advisors better understood how HSAs could enhance what they offer plan participants.

According to Paul Oakford of Alliance Benefit Group, a TPA, advisors who downplay HSAs fail to recognize employers’ interest in helping to increase their employees’ retirement readiness. But he said that such a mentality is starting to shift, and that plan sponsors are beginning to view HSAs as ways to invest and not just ways to have cash on hand. Remjeske expressed a similar sentiment, noting that the funds in HSAs can be invested in a way that makes them a “really lucrative supplement” to retirement plans.

Do you utilize HSAs with your clients or with plan participants? Is that paying off for you? Start a discussion by clicking the comment link below!