Nobody likes surprise health care bills. By contributing to your HSA, you prepare for unexpected health care expenses—including those that come up if you’re disabled or unemployed—while saving for future expenses in retirement.
Unlike the money in a Flexible Spending Account, which you must spend before the annual deadline, your HSA balance rolls over each year. The unused balance can continue to grow through interest earnings and investments. And if you retire or leave UC, your entire HSA balance and any contributions—yours and UC’s—are yours to keep forever.
You can spend your HSA on current health expenses or let your balance grow and save the money for when you need it—even in retirement.
- You don’t pay federal taxes on the money you save*. Estimate how much money you could save by contributing to your HSA.
- Your balance earns interest—also tax-free*.
- You don’t pay taxes on the money you withdraw, as long as it’s used for qualified healthcare expenses.
Once your HSA balance reaches $1,000, you can invest your funds in a variety of mutual funds offered through HealthEquity, which can help your account balance grow faster. Online tools on the HealthEquity member portal will help you choose and manage your investments.
Log in to HealthEquity member portal for more information.
According to the Employee Benefits Research Institute, a retired couple could need as much as $350,000 in retirement just to cover the gap in health care expenses not covered by Medicare. Your HSA can help you close this gap and pay for health care costs in retirement not typically covered by Medicare, such as dental, vision and hearing expenses.
Many investment professionals now consider HSAs to be powerful companions to traditional retirement savings because they offer tax advantages that traditional retirement accounts don’t—specifically, the money is tax-free* both going into and coming out of your account, when used for eligible expenses.
Your unused HSA balance also earns tax-free* interest every month, plus any investment earnings are tax-free,* too.
If you’re age 55 or older, you can contribute more each year!
*Currently, for residents of California and New Jersey, HSA contributions and earnings are not excluded from state income tax. For more information, please consult your tax advisor.
Learn more about all the ways an HSA can benefit you from HealthEquity.