e, being a thoughtful spouse, paying real estate taxes, and
orrying about the overall health of your lawn. My wife may
t share that last sentiment...
INDUSTRY INSIGHT
YOUR FINANCES
SPONSORED CONTENT
has been the most exciting, joyous, and fulfilling time of
y life. That said, even as a financial planner, it hasn’t been
thout its nagging thoughts: Am I saving enough? Am I
king advantage of my benefits through work? Should I be
inking about saving for college already? Would my fam-
be okay (financially) if something terrible happened to
e? Should I have an estate hen
plan
in place?
What the heck
most
people think
a Bumbo?
of a Health Savings
W
REIMAGINING THE
HEALTH SAVINGS ACCOUNT
Account (“HSA”), they
though a lot of these issues see
are
uncomfortable
a tax-efficient
way to discuss
d an added to expense
during
an
already
expensive
time,
pay for medical expenses. During
ndling them their
now company’s
will not only
give
you peace of mind but
annual
enrollment
olid foundation
for securing
family’s financial future.
window,
they elect your
to contribute
enough into the plan to cover the
upcoming year’s out-of-pocket
ollege Planning
healthcare
expenses.
contributing
you know, college
is already
an By (almost
illogically) expen-
into
the
account,
they
reduce
their the majority of
ve journey. That, however, is not slowing
FICA, state and local taxes. This
ivate colleges federal,
from increasing
tuition year after year. If it’s
can easily add up to 30% savings on
ur family’s wish to help cover some or all of these costs,
every dollar contributed. Not a bad plan.
art saving when they’re in diapers. The earlier, the better.
This approach, however, can leave a
ok to establish a 529 plan and set up an automatic month-
massive investment opportunity on the
contribution table.
for an amount that fits into your cash flow.
u won’t even notice it after a few months. Also, let the
THE FACTS
andparents know.
They just may want to lend a hand.
you’ve reached retirement, you’re no longer relying on wages
to sustain your family’s lifestyle. From that mindset, term
life insurance is truly the most effective (and cheapest!) way
to go.
Before we go deeper, we first need to
take a step back and understand the ins
So how do you know how much to purchase? If you’re not
ork Benefits
and outs of HSAs (2019 figures):
running a thorough analysis on your existing portfolio,
though there are
many
and
they
will
differ
from
company
• To contribute, you need to be covered by a high deductible
anticipated IN growth,
and future cash flow, a good rule of
CONCLUSION
company, I wanted
to
highlight
one
in
particular—the
health plan (“HDHP”), which is an insurance plan that has a
thumb is 10x If salary.
Have
a qualified
adviser AND
go cash
out flow
to bid
you
have
a Health
Savings Account
permits,
ependent Care Flexible
Spending
Account.
This
account
minimum family deductible of $2,700 ($1,350 for individual
to find a reputable
insurance
company
that
will account
provide
that
consider
taking
advantage
of
this
unique
and
contribute
ows the parent to
set
aside
income
before
taxes
in
order
coverage)
coverage at the the
most cost-effective
If you’re
not in growth
maximum
each year. Invest rate.
the account
for long-term
help pay for the
of childcare.
Depending
on is your
• costs
The maximum
allowable
contribution
$7,000 tax
annually for
and,
while
working,
pay
medical
expenses
out
of
pocket
good
health,
if
you
smoke,
or
have
a
family
history
of
heart to allow
acket, this can easily
save
you
20
to
30%
on
what
you
elect
family coverage ($3,500 individual)
the
HSA
to
grow
unencumbered.
If
used
this
way,
it’s
potentially
for
instance,
the
low-cost
alternative
may
be
to
contribute. • Individuals age 55 or older may contribute an additional disease,
$1,000
the
most
powerful
retirement
vehicle
at
your
disposal.
obtain
that
level
of
coverage
through
your
employer.
They
per year
There
are several coverage
other factors
to weigh
when for
implementing
will likely offer
guaranteed
at group
rates
up to
fe Insurance • Limits are inclusive of any employer contributions
this
approach.
Reach
out
to
a
CERTIFIED
FINANCIAL
PLANNER™ to
some
multiple
of
salary.
•
Contributions
are
pre-tax
e focus of life insurance is to cover a period of time in
determine
whether
this
strategy
could
be
a
good
fit
for you and
• Distributions
for medical,
dental, and
vision
expenses are tax-
hich your family
is financially
vulnerable.
This
window
your
family.
Continued.
liability typically free
exists during your working years. Once
On the surface, HSAs can resemble the more popular Flexible
Spending Account (“FSA”). They differ in two significant ways.
First, it’s not a use-it-or-lose-it proposition. If you don’t spend the
funds during the year, they carry over into future years and are
fully portable when you leave the company. Second, monies in
the account don’t have to remain in cash. Each account will have
a list of available fund options you can choose to invest in.
A STRATEGY SHIFT
Knowing what we know now, this is the only account that
avoids taxes at every corner. You receive a tax deduction for
contributions, no taxes are levied on earnings, and distributions
are tax-free when used for qualified healthcare expenses. No
other account enjoys this triple tax advantage. So why would we
use it as an annual reimbursement account and not as a long-
term investment vehicle?
One could argue that the HSA’s major weakness is that it must
be used for healthcare expenses. Conversely, this is the HSA’s
most potent benefit, because healthcare expenses are never
more prevalent or greater than they are in retirement.
This Industry Insight was written by Matthew D.
Kelly, CFP®.
As an advisor with Allegheny Financial Group, Matt
helps guide individuals and families toward achieving
their distinctive financial goals. Matt and his wife,
Mia, live in Mt. Lebanon with their two kids and are
enjoying family life in such a friendly community.
For a better understanding of how Matt
could work with you and your family,
please call him at 412.536.8076 or email at
[email protected].
Allegheny Financial Group is a Registered Investment Advisor. Securities offered
through Allegheny Investments, LTD, a registered broker/dealer. Member FINRA/
SIPC.
MT. LEBANON
❘
SPRING 2019
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