HSA Enrollment and Options

[Jeff Nash]

This time of the year is when I start thinking about annual benefits enrollment and health insurance options. One of the more advantageous tax planning and personal finance strategies is to enroll in a high deductible health plan that is HSA eligible and contribute to it, preferably to the max. Not everyone will get this opportunity, as some employers do not make it available, or it simply might not be a good fit for you or your family for any number of reasons. The ideal scenario is that the contributions and growth in the account will be accessed tax-free, similar to a Roth IRA/401K.

If you adopt a long-term time horizon and allow an HSA to accumulate and grow, and have the discipline not to tap into it each year or spend it (like is required with an FSA), you might have the opportunity down the road to self-direct it into real estate or alternative assets.  The goal would be to enhance your returns and diversify while accumulating, but also to take a qualifying distribution in order to make a significant purchase or acquisition where you hopefully can benefit even more.  

One last point, if your employer's HSA is really just a savings account and has limited investing options that you are not keen on, you do have the option to create a new HSA outside of your employer and do a rollover or trustee-to-trustee transfer every 12 months.   

Take your benefits enrollment seriously - study the options available to you to ensure you are doing the best that you can.