Health savings accounts offer financial advantages during open enrollment that go beyond paying immediate medical bills.
HSAs require enrollment in a high-deductible health plan, but don't let the HSA itself drive your plan choice. Start by picking the health plan that fits your family's healthcare needs, premiums, deductibles, and out-of-pocket costs.
If you're married and both spouses have employer coverage, make elections together as one household. A spouse's flexible spending account (FSA) can block HSA eligibility. A general-purpose healthcare FSA that covers both spouses prevents either from contributing to an HSA, even if enrolled in an HSA-eligible plan. Limited-purpose FSAs and dependent care FSAs generally don't create this restriction.
HSA money doesn't expire at year-end like FSA funds do. If your cash flow allows, pay current medical expenses out of pocket and keep your HSA balance invested. One adviser suggests keeping enough cash for expected out-of-pocket healthcare costs, then investing amounts above that threshold based on your investment strategy and risk tolerance.
Save receipts for medical expenses paid out of pocket after opening an HSA. You can reimburse yourself from the HSA years later, provided you haven't already been reimbursed or claimed a tax deduction for that expense. This allows HSA assets to compound over years while you retain the option to withdraw funds later for those documented eligible expenses.
Once you enroll in Medicare, you can't contribute to an HSA anymore, but you can use accumulated balances for qualified expenses. HSA funds cover certain Medicare premiums, including Part B, Part D, and Medicare Advantage premiums, though Medicare supplemental policies generally aren't eligible.
Benefits make up more than 30% of U.S. employees' overall compensation, according to Bureau of Labor Statistics data. Reviewing your full benefits package during open enrollment can affect your broader financial life.