A Black female financial advisor meets with a couple in a stylish office.

iStock-1185461743

Lauren Hargrave - Headshot

Adam Berry

Business man looks at phone number umbrella checking HSA balance on smart phone

HSA and recession

A grandfather and grandson plant a small tree and plan for a healthy future.

Making financial resolutions for the new year 

Two women meet with a smiling man who is a financial advisor in an corporate office

financial advisors and hsas

Smiling woman in business attire looks over a desk using a calculator to determine savings

using an hsa savings calculator

Two Asian women sit at breakfast table with laptop, notebook, and calculator reviewing finances.

Mid-year financial check-in and review

Lively can simplify your understanding of family healthcare. Here is what you need to know about family healthcare, benefits, retirement, and of course HSAs.

Family

Lauren Hargrave is a writer from San Francisco who focuses on technology, finance and wellness. She follows comedians like most people follow bands and believes an outdoor sweat session can cure almost any bad mood. She’s also been writing her first novel for so long, her mom doesn’t ask about it anymore.

Lauren Hargrave

Lively can simplify your understanding of taxes. Here is what you need to know about taxes, healthcare, benefits, retirement, and of course HSAs.

Taxes

What is a mid-year financial wellness check-up and why do you need one? We discuss how to review your finance goals and share ideas to stay on track.

How to Conduct a Mid-Year Personal Finance and Wellness Review

Employee Benefits

Lively can simplify your understanding of employee benefits. Here is what you need to know about employee benefits, healthcare, retirement, and of course HSAs.

Employee benefits

Adam Berry oversees Lively’s Financial Institution Partnerships channel and works with banks across the country to develop and implement HSA product solutions. Over the last 20 years, Adam has gained a significant amount of HSA experience working for national TPAs and creating HSA programs within brick-and-mortar regional banks. HSAs are a personal passion of Adam’s, and he specializes in bringing entities together to discuss transparent, unique, and innovative solutions that result in a better way to do business, increase revenue for Lively’s banking partners, and improve the lives of their mutual customers.

Personal Finance

Lively can simplify your understanding of personal finance. Here is what you need to know about personal finance, healthcare, benefits, retirement, and of course HSAs.

Calculator

Lively can simplify your understanding of HSA calculators. Here is what you need to know about HSA calculators, healthcare, benefits, and retirement.

Lively can simplify your understanding of retirement planning. Here is what you need to know about retirement planning, healthcare, benefits, and of course HSAs.

Retirement Planning

Lively can simplify your understanding of investing in these articles.

Investing Articles

Lively can simplify your understanding of benefits in these articles.

Benefits Articles

Lively can simplify your understanding of HSAs. Here is what you need to know about HSAs, healthcare, benefits, and retirement.

HSA Articles

The key information financial and investment advisors need to know about Health Savings Accounts (HSAs) and how they help their clients build their retirement savings.

What Financial and Investment Advisors Need to Know About HSAs

Setting a goal to improve your financial situation for New Years is a common and beneficial resolution. Learn the top 10 financial resolutions here.

10 New Year's Financial Resolutions

Financial Health

Lively can simplify your understanding of financial health. Here is what you need to know about financial health, healthcare, benefits, retirement, and of course HSAs.

Financial Health Articles

Health Savings Accounts

Lively can simplify your understanding of HSAs. Here is what you need to know about healthcare, benefits, retirement, and of course HSAs.

Lively can simplify your understanding of healthcare budgeting. Here is what you need to know about budgeting, healthcare, benefits, retirement, and of course HSAs.

Budgeting

An HSA has many benefits that can help shield both individuals and employees against economic troubles. Learn the many advantages here.

Are HSAs Recession-Proof?

If you're hoping to gain insight into having more financial security, look no further than this list of common practices by people who are financially stable.

10 Habits of Financially Secure People

Investing

Financial Institutions

Using an HSA calculator can help you plan for your tax savings. Learn everything you need to know here!

How To Use an HSA Calculator To Plan for Tax Savings

HSA (Health Savings Account)

Benefits

As a financial or investment advisor, your job is to help your clients create the best financial future for themselves and maximize their savings and investments. You can guide them towards lucrative investment vehicles, advise them on where to cut expenses, and help them achieve their long term financial goals. In all the mix of your clients’ assets, one account that shouldn’t be ignored is their Health Savings Account (HSA). 

The tax advantages of an HSA, especially in retirement, make it one of the most critical savings and investment accounts a person can maintain. It can also be an account likely to be forgotten if your client changes employers or ceases to be covered by a High Deductible Health Plan (HDHP). In this post we’ll walk you through the key information financial and investment advisors need to know about HSAs and how they can use these accounts to help their clients plan and build their savings for [comfortable retirement](https://livelyme.com/blog/hsa-bridge-the-retirement-savings-gap/).

## What is an HSA?

An [HSA](https://livelyme.com/guides/hsa-guide/) is an account into which participants contribute tax-free money to pay for qualified medical expenses. Not all providers offer the full range of HSA features or enable account holders to maximize their savings. Some function strictly as savings accounts and earn minimal interest on deposits, while others allow the investment of contributions. Here are the basic attributes of the HSA that make it a financially advantageous account for clients to maintain:

- The account has a triple tax advantage. The money clients contribute is tax-free up to the [annual contribution limit](https://livelyme.com/blog/hsa-contribution-limits/), which is set each year by the IRS. When account holders contribute to their HSA with pre-tax contributions, it also lowers their taxable income. HSA account balances grow tax-free, and the money that is used to pay for qualified medical expenses is distributed tax-free as well, regardless of your age at the time of distribution. That means your clients can save up to 37% on medical expenses, depending on their tax bracket. For example, would you rather your client paid $1,000 for an MRI, or $630?
- Account balances roll over from year to year, building a balance at an average net growth of 25%. This allows your clients to use their HSA to augment their other savings strategies with one that can be used to pay for a medical expense, even in retirement. 
- HSAs begin to function like a [retirement account](https://livelyme.com/blog/hsas-for-retirement/) once the account holder reaches age 65 with one exception: qualified medical expenses remain tax-free. This is especially helpful, because an individual can expect to pay [over $150,000 on health-related expenses in retirement](https://livelyme.com/blog/retiring-how-much-you-will-actually-need-healthcare/) after what’s covered by Medicare. All other distributions from an HSA are taxed at the appropriate income tax rate, which, depending on their retirement income, could come out at a lower tax bracket than when they made the contribution. 
- Your clients own these accounts and can never lose access to their savings, regardless of whether or not they are still working with the sponsoring employer or covered by an [HDHP](https://livelyme.com/guides/hdhp/). It’s true that in order to contribute to an HSA, the account holder must be actively enrolled in an HDHP and that can be their only health insurance coverage. But if they decide to buy different coverage later, they can still use their funds to pay for qualified medical expenses, or resume contributions if they ever elect an HDHP again in the future. As long as they have a balance, those funds can be invested and working for them generating supplemental income for retirement regardless of their health coverage status.
- They can [invest their contributions](https://livelyme.com/features/invest-your-lively-hsa/), ideally growing similar to investments in a 401(k) or IRA. Not all HSA administrators allow contribution investment, and some enforce high minimums that must be achieved before investment is allowed. But, if your client has an HSA like Lively’s, with low or no minimums required, they can invest as much of their money as possible so they can build their medical nest egg faster.
- Clients can use these accounts to pay for expenses for themselves, their spouses and their tax dependents, regardless of whether they are also covered under the same HDHP as your client.

## How HSAs are an essential part of a wealth building strategy

The way HSAs function allows clients to take advantage of favorable tax rules to augment their retirement savings with an account that helps them save money on medical expenses while they build their nest egg for the future. Here’s how HSAs help clients build true wealth:

1. HSAs help clients save money now and later. Since contributions are tax-free, they can help lower clients' income tax burden now while also saving them money on the medical expenses they pay for using their contributions. Clients also save money by buying HDHP insurance coverage since the premiums for these types of plans tend to be less expensive than traditional copay plans. In addition, clients can use their HSA money to pay for medical expenses in retirement tax-free. The average couple retiring today is expected to pay an average of $315,000 in [medical expenses in retirement](https://livelyme.com/blog/retiring-how-much-you-will-actually-need-healthcare/).  The ability  to pay those tax-free is significant
2. HSAs can augment other retirement accounts when contributions are maxed out. All tax-advantaged accounts have an [IRS-imposed annual contribution limit](https://livelyme.com/blog/401k-ira-irs-retirement-contribution-limits/), so if your clients are bumping up against those ceilings and are looking for another savings vehicle (that also has tax advantages), an HSA can be a valuable option.
3. The rollover and triple-tax advantages allow clients to reap greater returns due to compound interest, especially if they can invest their contributions.
4. HSAs allow for efficient use of retirement funds. By having an HSA on hand to pay for qualified medical expenses tax-free (but doesn’t have to be used for that purpose once they reach age 65), gives clients both stability and flexibility. In addition, if clients choose to maximize their HSA contributions and pay for medical expenses out of pocket while saving their receipts, they can reimburse themselves at any point in the future, including in retirement. This enables them to invest the maximum of their HSA funds. Lively offers account holders a digital receipt storage feature, so need to worry about losing receipts. 

## Not all HSA providers offer equal benefits

When advising clients as to the right HSA to participate in, here are some of the things you should look for:

1. Fees. Just like with other retirement accounts like 401(k)s, high fees can significantly cut into clients’ savings and minimize the effect of compounding.  This hamstrings your clients’ ability to build the medical safety net they want and need. The types of fees you should be wary of are administrative or maintenance fees, investment fees, research fees, debit card fees, statement fees, and transaction fees. Not every HSA administrator charges these fees, so look for one with low to no added fees to ensure your clients are reaping the rewards of saving. Lively has no fees for individual account holders. 
2. Ability to invest. The HSA administrator should make investing their contributions simple to find, easy to understand, facilitate API funds flows, inexpensive rates, and have multiple investment options so your clients have the flexibility to choose the right investments for their personal situation.
3. Native mobile apps and online dashboards for easy account management. In order for your clients to get the most out of their HSA, they must be engaged with the account. HSA advisors that make account management easy, and dare we say, fun with clear dashboards and a mobile app, tend to have higher engagement numbers than advisors who don’t.
4. The ability for your clients to electronically roll over or transfer their HSA from a previous employer or advisor. We don’t have to tell you the benefits of having your money in one place. But HSAs are often the “[forgotten account](https://www.thinkadvisor.com/2023/02/10/the-account-people-forget-to-rollover/)” that’s left with a previous employer’s administrator while a new one is opened via a new employer. By having multiple accounts open, clients will be paying more fees for the same services, which will eat into their savings. In addition, they might not have the same investment opportunities with their old HSA administrator, or their accounts could be invested in some of the same funds, which is an inefficient use of their money. Encourage your clients to consolidate their HSAs into one place to take maximum advantage of high quality investments, low fees and the compounding effect of time plus investment growth. 
5. The ability for advisors to manage the investment assets of the account holders. If you typically manage your clients’ other investments, it could be more efficient for you (and beneficial for your clients) if you also managed the investments in their HSA. 
6. Knowledgeable, responsive customer support and tailored, easy-to-access HSA education so that clients get the most out of their accounts. Lively offers dedicated, top-rated customer service via email, phone, and live chat, as well as extensive resources so our customers get the support they need. 

As a financial or investment advisor, you should consider the [HSA a valuable tool to helping your clients achieve real wealth](https://livelyme.com/partners/). It helps them to save money today and in retirement, it provides a tax-efficient investment vehicle and allows them to augment the retirement savings accounts they’re already maxing out. For questions about how Lively’s HSA can help your clients improve their financial picture, [reach out today](https://livelyme.com/contact-sales/).


Setting goals is an essential tool to living a purposeful life and achieving your dreams and aspirations. But merely setting goals isn’t enough, you have to conduct regular check-ins to assess your progress and recalibrate your “roadmaps to success” if necessary. The mid-year point is always a good time to check in on the goals you’ve set for the year to make sure you’re still on track. That way you have plenty of time to make adjustments before December.

If you set [financial and mental health goals](https://livelyme.com/blog/10-new-years-financial-resolutions/) for this year, this post will help you conduct a mid-year check-in and make any necessary changes. Employers will also find ways to help employees achieve their financial and mental wellness goals so that they’re less stressed and more productive at work.

## How to conduct a mid-year financial wellness check-in

When you’re assessing your [financial progress](https://livelyme.com/blog/habits-of-financially-secure-people/) (or lack thereof), you want to look at four major areas: 

- Savings
- Budget
- Debt 
- Tax withholdings

You’ll want to assess the current state of each, how it compares with the goals you had for this year, and your goals overall. Then, you can determine the changes you can make to get closer to those goals.

### Check your savings and tax-advantaged accounts 

There is an estimated [$3.68 trillion gap](https://www2.deloitte.com/xe/en/insights/industry/financial-services/closing-retirement-savings-gap.html) between what Americans will need saved for retirement and what is currently being saved. On top of that, [49% of U.S. adults](https://www.bankrate.com/banking/savings/emergency-savings-report/) have less savings than they had a year ago, or no savings at all. That means if an emergency arose, like an unexpected medical bill, or a car or home repair, these adults might have to use a credit card or might not have a way to pay for it at all. The simple fact is: most people aren’t saving enough.

So when you review your savings, look at your retirement account(s) as well as your [emergency savings account](https://livelyme.com/blog/money-resolutions-building-an-emergency-fund/), [your HSA](https://livelyme.com/guides/hsa-guide/), and any other savings vehicles you have. Are your balances what you thought they would be at this point in the year? Are you saving enough to reach your financial goals? Does your emergency savings account have at least 3 months’ expenses in it? Will you max out your [retirement account](https://livelyme.com/blog/401k-ira-irs-retirement-contribution-limits/) and [HSA contributions](https://livelyme.com/blog/hsa-contribution-limits/)? 

If you’re not sure how much you should be saving, use financial calculators to estimate the appropriate amount you should be socking away each month and year. You can use [Bankrate’s financial calculator](https://www.bankrate.com/retirement/retirement-plan-calculator/) for retirement savings, Lively’s [HSA calculator](https://livelyme.com/hsa-savings-calculator/) for your HSA (remember that your HSA can be used to augment your retirement savings), and economists’ general rule of thumb for household savings ([3-6 months of basic expenses](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3455696&amp;amp;dgcid=ejournal_htmlemail_behavioral:experimental:finance:ejournal_abstractlink)). 

The caveat to the 3-6 months’ expenses rule is if you are a low income earner (which is defined as making 200% of the poverty line or less). If you fall into this category, economists recommend saving 1 months’ expenses or approximately $2,500. Low income earners who save for retirement can also qualify for the [Saver’s Tax Credit](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit) which rewards said retirement savings with a lower tax bill.

If your savings levels aren’t where they should be, create a plan to save more. Set up automatic savings withdrawals to a separate savings account. Relook at your budget (see below) to see where you can cut spending to save more. If you’re currently prioritizing paying down debt, aim to save at least $1,000 this year so you have some financial cushion should an emergency arise.

When reviewing your retirement contributions and investment accounts you will want to make sure you are: contributing enough to max out your employer’s contribution match (if applicable) and that your investment accounts (including retirement) are automatically rebalanced to reflect your savings goals. If they aren’t you’ll want to rebalance them yourself.

### Check your budget

There are many factors that affect your budget on a monthly basis, so it’s prudent to take a look at your income and expenditures on a regular basis. Regularly checking in with your budget ensures that your budget is realistic and is adequate to meet your financial and life goals. 

Here are the steps to reviewing your budget:

1. Update your income so that it accurately reflects what you take in every month. If you’re self-employed and your income fluctuates, take the average of the last six months.
2. Review your spending. Go line item by line item and categorize it as either a want or a need. Where is your money going? Does it align with your financial goals? Where can you cut? Review your subscriptions and memberships and make sure they are all being used and necessary.
3. Establish a separate account for irregular expenditures like birthdays, holidays, vacations, and anniversaries. These expenses don’t occur every month but still need to be budgeted for. So set up regular deposits into this irregular expenditures account.
4. Plan for or adjust your budget for major life changes like the birth of a child or divorce from or death of a spouse.

### Check your debt

Nothing will hamstring your efforts to reach your financial goals like carrying high interest debt like credit card balances and personal loans. So try to pay down your debt as quickly and responsibly as possible. There are [two philosophies](https://ownyourfuture.vanguard.com/content/en/learn/financial-planning/how-should-i-prioritize-paying-off-my-debt.html#:~:text=Start%20chipping%20away%20at%20your%20highest%2Dinterest%20debt%20first.&text=Every%20dollar%20counts.,the%20next%2Dhighest%20interest%20rate) on how you can go about it: the Avalanche method and the Snowball method.

- Avalanche method. If you’re using this method, you would pay off your highest interest debt first while making minimum payments on your other debt. Once the highest interest rate debt is paid off, you move to the next highest interest debt. Repeat the cycle until you’re debt free.
- Snowball method. The Snowball method entails paying off the debt with the lowest balance first while making minimum payments on the other debt. When that balance is paid off, you move to the debt with the next lowest balance, repeating the process until you’re debt free.

Both of these methods have their benefits. If you use the Avalanche method, you will usually pay less interest overall and pay your debt down quicker (as long as you don’t incur more debt in the process). If you use the Snowball method, it could feel more manageable from a mental standpoint and you will get the emotional benefit of a quick win. Regardless of the method you choose, you will want to write out a list of your debts that include the total balance, the interest rates and the minimum monthly payments. Prioritize these debts according to your chosen method (if Avalanche, you’re prioritizing based on the interest rate, if Snowball, you’re prioritizing based on the balance). Then work these debt payments into your budget.

### Check your tax liabilities

If you’ve experienced any changes in income or expenses this year, you might need to adjust your tax withholding rate. The same is true if you were surprised by an unusually large tax bill or refund in April. To help determine what you may owe, you can use the [calculator on the IRS website](https://www.irs.gov/individuals/tax-withholding-estimator) and of course, consult with a financial professional.

### How employers can help employees maintain financial wellness

According to [recent surveys](https://www.hrmorning.com/articles/employee-financial-stress-high/), 72% of employees report feeling stressed about their finances and losing an average of 11.4 hours of productivity a week due to this stress. But there are many ways employers can help ease the financial stress their workforce feels without raising compensation across the board. Employers can:

- Offer financial literacy classes.
- Add health and wellness savings accounts like [HSAs](https://livelyme.com/guides/hsa-guide/), [FSAs](https://livelyme.com/guides/flexible-spending-account-fsa/), and [Medical Travel Accounts](https://livelyme.com/mta/) to their benefits package. Employers can encourage employees to save by contributing to their accounts. Make sure to include an investment option for their HSA like the Self-Directed or Guided Portfolio options that Lively offers. This will enable employees to grow their medical savings faster.
- Include a [Lifestyle Savings Account (LSA)](https://livelyme.com/lsa/) in benefits offerings and support expenditures on financial wellness expenses like financial counseling, budgeting help, financial advising, and budgeting software like Mint.

## Mental and emotional wellness check-in

Maintaining [good mental and emotional health](https://livelyme.com/blog/access-to-employee-mental-health-resources/) is essential to maintaining good physical and financial health. If you’re not at your optimal best emotionally and mentally, it’s hard to make good choices and be as productive as you want to be in both your personal and professional life. To conduct a mental and emotional wellness check-in, ask yourself these questions:

- How have I been feeling? If you’re not able to clearly articulate your feelings, using a [feelings wheel](https://feelingswheel.com/) can help. You start at the center of the wheel with your general feeling, then work your way outward, following the path that most resonates with your emotional state. There might be multiple feelings that resonate with you because our lives are complex and we might feel a wide range of emotions through any given day, week or month. Write down all that apply.
- Why am I feeling this way? Once you have pinpointed how you feel, it’s important to investigate the why. Write down the events that have occurred or factors that are presently occurring that could be contributing to your feeling this way. Determine what is a short-term or one-time event and what conditions are chronic.
- What do I need to do to take care of myself mentally and emotionally? Once you’ve determined the why of how you’re feeling, it’s time to figure out how to deal with it. If you’re feeling anxious or stressed, you might need to work on taking breaks and rest. If you’re feeling down, you might benefit from engaging in a favorite hobby or seeing or calling your favorite people. Everyone needs to engage in regular self-care, what that self-care looks like will be different depending on your needs. Take the time and mental space to investigate what would be most fulfilling to you now. 
- What can I do to reduce stress and promote peace? Chronic stress is one of the chief negative influences of our mental and physical health. If you’re experiencing work or school-related stress, creating a routine and taking regular breaks throughout the day can be beneficial in reducing that stress. If you’re experiencing stress outside of work and school, resulting from caretaking duties or other experiences, prioritizing self-care can help with this. Taking time to rest and meditate can benefit everyone and help promote a feeling of peace and calm.
- What coping mechanisms can I employ if I’m feeling overwhelmed or down? One of the best ways to ensure you maintain an optimal mental and emotional state is by creating a plan for what to do when the inevitable bouts of stress, overwhelm and depression hit. Write these coping mechanisms down and keep them in a place for easy access like your bedside table. Revisit them often, even if you’re currently feeling “good”.

If you have trouble determining the answers to any of these questions, reach out to a mental health professional. They can help you determine what you’re feeling, why you’re feeling it and how you can go about resolving these feelings.

### How employers can help employees maintain mental and emotional wellness 

Deloitte [recently surveyed](https://action.deloitte.com/insight/1568/burnout-is-a-current-problem-requiring-long-term-solutions) full time U.S. employees and found that more than 77% had experienced or were currently experiencing burnout at their current job. More than 50% of these respondents had experienced burnout before. This burnout is costly for employees in terms of their physical, mental and financial health, but it’s also costly for employers. Burnout slows productivity, lowers job satisfaction, can cause conflict between coworkers, and could lead to difficulty meeting deadlines and complete withdrawal from the company.

It’s a condition that cannot be ignored and there are many ways employers can combat it:

- Encourage employees to take time off. This can be communicated in many ways including employee check-ins to make sure people are taking vacation time.
- Monitor employee workloads so that employees are not overworked. Encourage employees to speak up if they are feeling overworked and normalize saying “no” to new projects if they can’t do so and maintain a healthy balance.
- Provide benefits that support a healthy lifestyle and balance. [LSAs that help employees](https://livelyme.com/lsa/) pay for hobbies, gym memberships or home gym equipment, meditation apps and more can signal to employees that their mental and emotional health are important and supported at the company.
- Provide mental health days that don’t count against employees’ PTO allotment. One thing many companies have started doing is offering global mental health days throughout the year. These are “extra” days off that aren’t related to a holiday and don’t require the employees to request PTO.

Checking in on your financial and mental wellness mid-year can go a long way toward helping you reach your goals. It can also help you find more ease and peace in your everyday life. For more targeted help and advice regarding your financial or mental health, always reach out to a professional. 


Why You Need a Mid-year Financial and Mental Wellness Check-Up

Whether you’ve decided to sign up for a High Deductible Health Plan (HDHP) and Health Savings Account (HSA) combination as an individual, or you’ve decided to offer the pairing as an employer, you probably know they can help you save on healthcare and insurance costs as well as reduce your tax liabilities. But in order to maximize the cost savings and tax benefits, you have to plan ahead.

The first step in planning is determining how much you will contribute to your HSA on a monthly or annual basis up to the annual contribution limit. There are many ways to do this. You can plan to max out your contributions, you can plan to save only what you’ll need to spend, you can base your contributions on the amount of taxes you want to save, or use another metric. Regardless of the amount you choose to contribute to your HSA, an HSA calculator can help make sure you reach your health and tax savings goals.

## How much should I contribute?

Individuals and employers will have different goals when it comes to contributing to the HSAs. Individuals should look at their personal savings goals, as well as their expected medical needs and budget to determine their contribution strategy for the year. Employers will want to look at their benefits strategy, their budget, and consider how much they’re looking to save on health insurance costs when deciding how much (if any) they’ll contribute to employees’ accounts.

### Individuals

When determining [how much you’ll contribute to your HSA](https://livelyme.com/hsa-contribution-calculator/) in a year, one goal to reach for is to “max out”. Maxing out means you contribute up to the [annual limit set by the IRS each year](https://livelyme.com/blog/hsa-contribution-limits/). The annual contribution limit includes all of the contributions made to your account including yours, those of your employer and any money anyone else has given.

There are several reasons to max out your annual contributions if that is available to you:
- Tax savings. All HSA contributions up to the [IRS annual limit](https://livelyme.com/blog/hsa-contribution-limits/) are deducted from your federal income tax. Some states also deduct contributions from their income tax assessment. Your contributions grow tax free in your account and distributions on qualified medical expenses are tax free as well. That means you could [save up to 37%](https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023) on your medical expenses, depending on your tax bracket.
- The more you contribute, the faster your savings grow. This is because your HSA balance rolls over from year-to-year so you can benefit from [compound interest](https://livelyme.com/blog/compounding-interest-and-retirement-how-starting-early-pays-off-later/). You also have the ability to invest your savings. If you invest your HSA contributions, you can grow your savings at the rate of the market and build quite a health savings nest egg for the future.
- At 65 your [HSA turns into a traditional retirement account](https://livelyme.com/blog/hsas-for-retirement/). That means you can spend your HSA savings on whatever you want. Distributions on qualified medical expenses remain tax-free (which is helpful since the average couple retiring today is expected to pay between $156,200 to $1 million on health care in retirement). Distributions on anything else are subject to the appropriate income tax rate.
- You can use your HSA to pay for [qualified medical expenses](https://livelyme.com/whats-eligible/) for you, your spouse and your dependents, even if they aren’t covered by an [High Deductible Health Plan (HDHP)](https://livelyme.com/guides/hdhp/). This greatly expands the instances when you can and will use your savings.
- The list of qualified medical expenses for which you can use your HSA is extensive and might include more than you think.
- You can save for your medical rainy day or future family. Even if you’re young and single, it’s not too early to save for your future medical costs. These include starting a family, medical travel, a serious illness or accident that requires surgery, specialist care, physical therapy or medication.

If maxing out your contributions isn’t within reach this year, here are other savings goals you can use:
- Enough to pay for your deductible. The IRS sets the minimum annual deductible for [individual and family HDHPs](https://livelyme.com/guides/hdhp/) each year, but your deductible could be higher. By saving enough to cover your deductible you won’t have to worry about how you’ll pay for a medical cost that comes up prior to said deductible being met. Once your deductible is met, your health insurance should cover all or most of your medical care. 
- Estimate the cost of your medical care needs for the coming year. This might be challenging since unexpected medical costs often arise, but a good place to start is looking at how much you’ve used the medical system in the previous three years and then adding in the cost of any procedures or prescriptions you know you’ll need this year. By budgeting to save for the medical care you think you’ll need will help ensure you have a tax-free way to pay for it.
- Estimate the tax savings you want or need. The tax breaks you get on your HSA contributions could be especially helpful if you have no or few other write offs.

One of the great things about HSAs is that you can always change the amount you contribute to your account mid-year. That means you can contribute a lump sum if you receive a bonus, sell an asset or receive a cash gift. Or, you can contribute incrementally throughout the year (or both). Also, if your financial circumstances change, you can change the amount you’re contributing to reflect that. 

Keep in mind that with an HSA, you can only spend the balance that remains in the account (which is different from an [FSA](https://livelyme.com/guides/flexible-spending-account-fsa/) which makes the entire annual contribution pledge available on the first day of the plan year). So if you know you have an expense coming up, you might want to adjust your contributions accordingly so you can take full advantage of the tax benefits of an HSA when paying for said cost.

### Employers 

The HDHP/HSA pairing helps employers [save on their FICA taxes](https://livelyme.com/payroll-tax-savings/), business taxes and the amount they spend on health insurance premiums. Employers should consider these savings when deciding whether or not they will contribute to employees’ accounts and how much they’ll offer.
- FICA taxes. Since HSA contributions are tax-free for the individual employees, they reduce the employees’ taxable income, which reduces the amount the employer owes in payroll tax. If employers want to encourage employee adoption of, and contribution to, their HSA, they might consider offering to contribute as well. Some employers offer a contribution match, some offer a flat amount, whichever you choose must be offered uniformly to all employees of the same employee class.
- Employer contributions are tax-free. Not just to the individuals but to the business as well. That enables companies to save on their business taxes.
- Health insurance premiums. HDHPs typically have the lowest health insurance premiums of the health plans and offering an HSA can help incentivize employees to choose this less expensive option.

## Plan ahead with a contribution calculator

Once you’ve determined your health savings goals, it’s helpful to use a health savings calculator so you see what those contributions look like. Here’s how to use Lively’s [contribution calculators](https://livelyme.com/resources#calculators) to ensure you meet your health savings and tax savings goals.

Lively offers several different calculators because there are multiple ways to strategize your health savings.

[Tax savings](https://livelyme.com/hsa-savings-calculator/). If your primary goal is to save on taxes, Lively’s tax savings calculator allows you to play around with contribution amounts until you arrive at your desired savings. The information you’ll need is:
- Your health insurance plan type
- Your tax filing status
- Your state
- Your age
- Your retirement age
- Your income
- Your current HSA balance
- Your annual HSA expenses

[Max HSA savings](https://livelyme.com/hsa-contribution-calculator/). If your primary concern is maximizing your health savings for the year, Lively offers a calculator to help ensure you reach this goal. The information you’ll need is:
- Your date of birth
- Your HDHP coverage type
- Your health plan start date

[Meet your specific goals](https://livelyme.com/guided-hsa-contribution-calculator/). If you have a more nuanced HSA contribution goal, Lively’s contribution goal calculator is a helpful tool. You can use it to determine the right amount to contribute on an annual basis for your specific health and  financial situation. The information you’ll need is:
- Who the coverage is for (you or you and family).
- Annual income.
- Filing status.
- State.
- Current age.
- How much your employer will contribute on an annual basis (if at all).
- Your current HSA balance.
- How much you’ll expect to pay in medical expenses for the year.
- Your savings goal for the year.
- 
You’ll have to answer a few questions about retirement goals and how you’ll intend to use your HSA in retirement, and then Lively’s calculator will not only tell you how much you should contribute on an annual and per paycheck basis, but your tax savings as well. If you have your account through Lively, the calculator will give you the option to change your contributions accordingly.

[Reduce payroll taxes](https://livelyme.com/payroll-tax-savings/). This calculator for employers will help you demonstrate how much your company can save with an HSA. To use this calculator you will need to know: 
- Average employer contribution
- Average employee contribution
- Number of employees

These calculators can help you get the most out of your HSAs and employers can use them to help their employees understand how much they can save with an HSA. 

## Get started with Lively

[Lively’s HSA](https://livelyme.com/) beats industry utilization averages and enjoys high customer satisfaction from both account holders and employers. Our easy-to-use platform makes it easy for account holders to save, invest, and manage their account. And if they have a question, our responsive, knowledgeable support team is there to help. If you’re ready to enable your employees to take advantage of all an HSA has to offer or open an account, [reach out to us](https://livelyme.com/contact-sales/) today. 


Ways You Can Take Advantage of an HSA Calculator to Plan for Tax Savings

With the inflation rate higher than it’s been in [40 years](https://data.bls.gov/pdq/SurveyOutputServlet), many people are feeling like their quality of life is declining, and [38%](https://www.personalcapital.com/blog/whitepapers/5-ways-the-current-financial-climate-is-cooling-consumers-spending-saving/) are feeling financially unhealthy. Many factors contribute to this feeling, including wage growth, gas and housing prices, news about the economy and more. And while the U.S. economy is [cyclical by nature](https://www.bea.gov/news/2022/gross-domestic-product-second-estimate-and-corporate-profits-preliminary-second-quarter) and heavily influenced by external factors like global conflicts and pandemics, it’s important to adopt habits that can help you build financial security. So you can weather the ups and downs that are bound to come while still meeting your financial goals.

## 1. Have a budget and stick to it

It’s hard to achieve a goal without a plan. A budget is a monthly and yearly “plan” for how you will spend and save your income. To [develop a budget](https://livelyme.com/blog/budgeting-plan-for-families/), you must take your total take-home (i.e. “after tax”) income for each month, and subtract from it your expenses. Some of these expenses, like rent or your mortgage will be “fixed”, which means they’re always the same and you can’t change them without making a big life change. These are the expenses you enter but leave alone (unless you have to).

Other expenses like food, entertainment, and even, perhaps childcare, are “adjustable”. These are expenses that tend to fluctuate and that you can affect by making relatively small changes to your habits. The first draft of your budget should just be entering what you spend on a monthly basis, making sure to label your expenses as either fixed or adjustable.

Once that draft is done, take a look. Are you in a good position to meet your financial goals? If not, play around with the numbers until you have a plan (i.e. budget) that’s doable for you but also puts you on the path to financial security.

## 2. Be mindful of future goals with major purchases

Major purchases should be planned for and fit into your [big picture goals](https://livelyme.com/blog/set-yearly-financial-goals/). An example of this is buying a car. Cars are expensive and usually require a downpayment that could take cash away from a longer-term financial goal like buying a house. Cars are also depreciating assets, which means that the longer you own them, the less they’re worth. 

So, if you want to make a major purchase of something like a car, run the numbers. Ask yourself, “How does the car payment fit into my monthly budget?” “If I give x as a downpayment, how far does it set me back in terms of reaching my longer term financial goal?” “Is this a smart purchase to make at this time or can it wait until I’ve reached that other financial goal?”

## 3. Surround themselves with financially secure people

Anyone who’s ever signed up for a group exercise class knows two things are true:
1. It’s easier to hold yourself accountable when you have others who are doing the same.
2. If you don’t hold yourself accountable, one of the group members is probably going to say something.

That’s because humans are [social creatures](https://www.waldenu.edu/online-masters-programs/ms-in-psychology/resource/why-do-people-act-differently-in-groups-than-they-do-alone) that want to belong, so we tend to take on the habits of those around us. Groups also tend to police the behavior of their members. So while we might make different decisions when we’re alone, if we surround ourselves with people whose habits we want to emulate, we’re more likely to be successful than if we’re surrounded by people whose habits are less desirable. 

## 4. Make savings a priority

When [developing your budget](https://livelyme.com/blog/budgeting-plan-for-families/), you should “pay yourself first”. That means, the first line item under your expenses should be how much you want to save. Then every paycheck, take your chosen amount out of your checking account and put it in either a savings, retirement or investment account. 

Many employers allow you to split up your direct deposit into at least two accounts. If your employer offers this service, you can choose how much you want to save from each paycheck, then every time you’re paid, your employer will automatically deposit your money into your preferred accounts. This can make it easier to save.

## 5. Eliminating debt is a focus

Since most debt carries interest, which makes whatever you purchased with your debt more expensive, it’s usually a good idea to focus on getting rid of as much of your debt as you can as quickly as possible. It’s also usually a good idea to avoid taking on new debt. However, not all debt is created equal. 

For instance, taking on debt like a mortgage that allows you to build equity, is generally considered a “good” kind of debt (provided the monthly payment works with your budget). But purchasing something on a credit card that carries 22% interest should be avoided unless you can pay off the expense before the interest gets assessed. 

## 6. Work with professional advisors

A financial planner can help you strategize and plan how to reach your financial goals. They can help guide you in how and when to invest your money, they can help you with your budget and can also serve as someone who holds you accountable for maintaining your healthy financial habits.

## 7. Learn from past financial mistakes

Everyone has made at least one poor financial choice at some point in their life. But you don’t have to keep making those poor decisions. If you make a mistake, take an honest look at your actions and their consequences and then build a system around you that can help prevent you from doing the same thing again. 

## 8. Avoid comparing themselves to others

Everyone’s goals are different. So before you get on social media and start envying the house, the vacation, the car, remember that everyone is starting at a different place, has different tools to work with and is headed on their own path. Maybe you’re still [paying off your college loans](https://livelyme.com/blog/pay-student-loans-build-savings/) and that person didn’t have to take on debt to get an education. Conversely, maybe they took on massive debt in order to pay for that thing you’re envying, and you know that taking on that debt would prevent you from meeting your goals.

This is where working with a professional comes in handy. They can help keep you focused on your path and reaching your goals, reminding you to stay the course so you can reach what financial security means to you.

## 9. Live modestly

Financially secure people live within their means. When considering different options, they usually veer away from the most expensive (even if they can afford it). They buy what they need and some of what they want, but it all fits within their budget and doesn’t prevent them from reaching their long term financial goals.

## 10. Invest in the future

Financial security means not being fearful of what the future holds. As we said above, the economy is cyclical, the market rises and dips and the U.S. sees periodic episodes of high inflation. In order to weather the ups and downs, financially secure people always keep an eye toward the future. 

They buy investments that will appreciate in value to help insulate them from inflation, they [contribute to an HSA](https://livelyme.com/guides/hsa-guide/) (and invest those savings) so they will have a tax-free way to pay for medical expenses, they [contribute to tax-advantaged accounts](https://livelyme.com/blog/maximize-tax-deferred-exempt-accounts/) like 401ks and IRAs and they plan for future financial events like the birth of a child, a child going off to college, retirement, etc. If you plan for what’s to come, you’ll be in a more financially secure position when it does.

## Getting started with Lively

Investing in an HSA gives you a tax-advantaged way to pay for medical expenses now and [in retirement](https://livelyme.com/blog/retiring-how-much-you-will-actually-need-healthcare/). You can invest your savings so that they grow at the rate of the market and once you turn 65, you can use your money any way you want to. An HSA is part of a well-balanced financial plan and [Lively can get you started](https://livelyme.com/) today!


What are 10 Things Financially Successful People Do?

As the calendar year winds down, people’s thoughts often turn to January and the habits and goals they want to achieve in the coming 12 months. If you’re thinking about New Year’s Resolutions you’d like to make for the next year, you might want to consider including one or two from our list. The positive effects from improving your financial health will extend well beyond the coming year and could even help you to achieve longer-term goals that may seem out of reach.

## 1. Look into investing

If you’ve heard the cliche, “You want your money to work for you,” the person who said it was probably talking about investing. An investment is something you buy that returns money to you in the form of interest, dividends, rent, or profit. For example, if you purchase a house that you rent to a family on a monthly basis, that’s a real estate investment. But if you purchase a home for you to live in, that would not be an investment unless you purchased it with the sole purpose of selling it for a profit.

There are many different ways to invest your money: 

- [ETFs](https://www.finra.org/investors/investing/investment-products/exchange-traded-funds-and-products). This stands for Exchange Traded Fund. ETFs are funds that allow investors to purchase an interest in a diverse portfolio of either stocks or bonds. For example, you could invest in an S&P 500 ETF that allows you to own an interest in the entire exchange. This can be lower risk than investing in individual stocks and can help ensure your money grows at the rate of the entire market. ETFS can also be a low-cost way to invest.
- Mutual Funds. Mutual funds are similar to ETFs in that they are diverse portfolios of pooled assets. When you invest in a mutual fund, you buy an interest in the performance of the pooled group of stocks, bonds and other investments. This is also considered a lower risk type of investing.
- Stocks. Investing in individual stocks is often considered an advanced type of investing. The reason for this is: in order to ensure the company and the industry it’s in are inline with your investing strategy and horizon (the timeline within which you plan to use or need the money you’ve invested), you will have to engage in a fair amount of research. You should also monitor news about the company, listen to investor calls and regularly assess whether or not owning stocks in these companies fits with your investment strategy.
- Bonds. Bonds are essentially a loan you’re making to a company or government. The company or government then pays you interest on the loan that corresponds with the likelihood you will get paid back (the lower the interest rate, the lower the risk and vice versa). 
- Real Estate. To invest in real estate you will likely need a large lump sum of money up front as a downpayment, then you can apply for a loan for the remainder of the purchase price. Whereas purchasing an asset like stocks or bonds requires very little of you on a daily basis, being a property owner will likely require time and additional capital to keep your investment in working order.
- Alternative investments like Cryptocurrency. Alternative investments like cryptocurrency are assets that usually come with higher risk and offer a higher potential reward. Most financial advisors would caution you not to put all of your savings into alternative investments and instead make them a small part of a well-diversified portfolio.

There are many vehicles you can use to invest your money:
- 401k
- IRA
- [HSA](https://livelyme.com/features/invest-your-lively-hsa/) 
- Brokerage account with a financial institution
- Robo-advisor 

If you have money left in your budget at the end of each month, investing it in the market will help your savings grow faster than if you leave it in a savings account. While the [average return](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html) of the market varies from year-to-year, investors can typically expect an annual return of 8% when accounting for inflation. Compare this to the current [average interest rate](https://www.cnet.com/personal-finance/banking/what-is-the-average-interest-rate-for-savings-accounts/#:~:text=National%20average%20savings%20account%20interest,pays%20the%20national%20average%20rate) for savings accounts (0.16%), and you can see invested money “works harder” than that in savings accounts.

## 2. Set aside money for emergencies
Even if you have a stable job and a partner that also contributes income to the family finances, financial experts suggest having an [emergency savings account](https://livelyme.com/blog/money-resolutions-building-an-emergency-fund/) with between 3 and 6 months worth of expenses in it. If you haven’t started your emergency fund, don’t panic. You don’t need to have the entire 3 to 6 months right now. You just need to start saving what you can.

First, determine what your monthly expenses are (you’ll use them to create your [personal budget](https://livelyme.com/blog/budgeting-plan-for-families/)). To do this, you audit your credit cards and checking account, grouping the withdrawals into like-kind categories like rent, utilities, food and entertainment. Take the total then multiple by 3 or 6, and you’ll get your goal. 

Next, determine how much you can afford to contribute to your emergency account every month. If you don’t have any extra wiggle room, you could consider redirecting some of the money you’re contributing to your investment accounts or 401k, or cutting back on spending, until you’ve reached your goal. Alternatively, if you receive a bonus or tax refund, you can put all or part of it into your emergency savings account.

## 3. Tackle your credit card debt

Credit card debt is among the most insidious forms of debt because of the high interest rates most cards carry. The current average [interest rate on a credit card](https://www.cnn.com/2022/11/09/economy/credit-card-rates-record-high/index.html) is 19.04%, which is higher than it’s been since Bankrate began collecting data on interest rates in 1985. 

If you don’t pay off your credit card purchases every month, you will pay interest on them. And then if you don’t pay it off the next month, you will pay interest not just on your purchases, but on the interest you were charged as well. Carrying credit card debt for months or even years in a row can get you into a spiral where your balance runs away from you as the interest compounds.

If you are someone who struggles with credit card debt, set a goal to pay more than just the minimum each month. If you have multiple credit cards with different interest rates, prioritize paying the most expensive cards off first. If you’re putting money into investment accounts but carrying expensive credit card debt from month-to-month, put a pause on investing until you can clear your balance. Your highest priority should be to clear your credit card debt so you can start earning interest instead of paying it.

## 4. Create a budget and stick to it

Saving money is the [second most popular](https://discoverhappyhabits.com/new-years-resolution-statistics/#:~:text=Of%20those%20who%20make%20a,still%20successful%20in%20keeping%20it) New Year’s resolution, but it’s impossible to be successful unless you know how much you’re bringing in and how much you’re spending. That’s where creating a budget comes in. It’s one of the key ways to improve your financial health and can make it easier to keep other financial resolutions.

To [create a budget](https://livelyme.com/blog/budgeting-plan-for-families/), audit your checking account and credit card statements. Open an excel sheet or Google sheet and put all of your income in one column (this is easy if you receive a paycheck, a little harder if you have contract or freelance income), and your expenses in another. Group your expenses into like-kind categories like rent or mortgage, utilities, food, childcare, entertainment, etc. Then total both columns. 

That’s the state of your finances as they currently stand. Are you happy with how things look? Do your current expenditures include deposits into a retirement account, an HSA or emergency savings account? If you want to make adjustments, prioritize the expenses that are inflexible like rent and utilities (for the most part) and start cutting from the other areas. Which brings us to our next resolution.

## 5. Evaluate where you can cut back spending

Most people have areas of the budget where they can cut back on expenses. Whether it’s buying less expensive brands of clothing, shopping at a less expensive grocery store, making their lunch or coffee instead of eating out or canceling subscriptions, there is probably at least one category in your expense column that could be adjusted downwards.

One area that might surprise you is subscriptions. The average person spends [$219 per month on subscriptions](https://www.cnbc.com/2022/06/02/consumers-spend-133-more-monthly-on-subscriptions-than-they-realize.html) which is $133 more than they think they spend. And 42% of people have forgotten that they’re still paying for a subscription they no longer use. So even if you think you’re spending is tight, do an audit of your subscriptions. You might be surprised.

## 6. Save for your retirement

The average 65-year old couple retiring this year will [spend about $400,000 on healthcare in retirement](https://livelyme.com/blog/retiring-how-much-you-will-actually-need-healthcare/) alone. This doesn’t include long-term care costs which are estimated to be $100,000 a year, nor does it include daily living expenses like food, mortgage, travel or entertainment. So if you haven’t started saving for retirement, now is the time to do it. If you’ve paused your 401k contributions to pay for other expenses, now is the time to restart.

The goal most financial advisors give is to save 10% of your income each year for retirement. If that’s not feasible given the budget you created and the spending cuts you made, save what you can. If your employer offers a contribution match to your retirement account, max it out if you can. And remember, your HSA functions like a normal retirement account once you turn 65, except that any distributions spent on qualified medical expenses remain tax-free. So if you can, [max out these contributions](https://livelyme.com/blog/401k-ira-irs-retirement-contribution-limits/) as well.

## 7. Look for ways to build your credit

Your credit score affects more than you might think. It affects your ability to get new credit (e.g. a new credit card or loan), it affects the price of that credit (people with higher credit scores pay lower interest rates than people with lower credit scores), it could even affect your ability to rent a house or apartment.

The five [tiers of credit](https://www.equifax.com/personal/education/credit/score/what-is-a-good-credit-score/#:~:text=Although%20ranges%20vary%20depending%20on,and%20up%20are%20considered%20excellent.) are:
Poor: 300-579
Fair: 580-669
Good: 670-739
Very Good: 740-799
Excellent: 800+

So how do you increase your credit score? Your credit score is determined by a formula that uses information from your payment history (on-time payments vs. late payments), the amount of debt you carry and the length of your credit history. If you’re a younger person or someone new to the United States that doesn’t have much of a credit history, consider putting a utility bill in your name and paying it on time, as opposed to opening a bunch of new credit cards.

## 8. Set short and long-term financial goals

A short-term financial goal might look something like, “This month, I want to reduce my grocery spend by $100, then invest what I’ve saved.” A longer term financial goal is something like, “In five years, I want to have saved enough for a downpayment on a home.” 

In order to achieve both [short-term and long-term goals](https://livelyme.com/blog/set-yearly-financial-goals/), you will have to determine what behaviors will help you get there. Reducing your grocery bill by $100 might require you to shop at a cheaper grocery store, buy in bulk or cheaper brands of food and/or make cheaper meals. To save enough for a downpayment, you will likely have to achieve many short term financial goals in a row.

Since changing behavior can be a difficult thing to stick with, pick one or two short-term financial goals to focus on and one long-term goal. Ideally, the one or two short-term financial goals will help you to achieve the long-term one. Once you’ve determined your goals, detail your plan to achieve them including the behavioral changes that need to be made. Make sure you also have a “due date” for goal achievement and put it in your calendar. Then check in on your progress regularly. 

## 9. Make additional principal mortgage payments

If you’re already saving for retirement, contributing to your HSA, you have your credit card debt under control, and you have your emergency savings all squared away, consider making additional principal mortgage payments. If you’re like most people the largest line item in your budget is probably the cost of your home. So the quicker you pay it off, the quicker you free up that monthly expense (and the less interest you pay over time).

If you own your home free-and-clear in retirement (i.e. you have no mortgage payment), you’ll have more stability as you age because your savings will go farther. You’ll also have more freedom to do the things you want to do.

## 10. Expand your financial knowledge

One of the best ways to improve your financial health is to make sound financial decisions. The best way to make sound financial decisions is to educate yourself. Research different investment options and how they typically perform. Educate yourself  on different retirement accounts and their benefits and drawbacks. If you have high credit card debt, look for services that help you consolidate your debt into one low monthly payment.

Once you’ve collected your information, seek professional advice from someone you trust. Ask all the questions. If the answers don’t make sense, ask them again.

## Get started with Lively today

Lively is your partner in saving for healthcare and beyond. Our goal is to make it easy and dare we say, “fun” to save and [invest your HSA contributions](https://livelyme.com/features/invest-your-lively-hsa/) for your immediate and future medical and retirement needs. If you have a question on how contributing to an HSA can help you improve your financial health, [reach out today](https://livelyme.com/)! 


10 New Year’s Resolutions to Improve Your Finances

Is the American economy currently in recession? Is it approaching one? How will we know? While recessions are a normal part of economic cycles, it can make us jittery to hear the economy is slowing down. The U.S. economy [grew 2.6%](https://apnews.com/article/inflation-europe-business-economy-gross-domestic-product-e1a95c0c9e7b046ed88ad2e9e3150dce) in the third quarter of 2022, and the federal government has yet to announce that it’s officially in recession. However, recession or not, people are still experiencing financial hardship or stress. In fact, a [recent Pew Research poll](https://www.pewresearch.org/politics/2022/07/13/views-of-the-economy-economic-concerns-and-inflation/) found that 49% of Amercans view the economy as “poor” and 47% believe it will be worse in a year. In addition, [80% of HR leaders reported](https://livelyme.com/blog/report-employee-benefits-pulse-check/) that offering employees competitive financial benefits was more important than a year ago in order to help ease economic stress. How Americans feel about the economy, regardless of its official designation, can have far-reaching effects. 

While a recession has not yet been officially announced, we will experience one at some point in the future. But it’s nothing to fear, it’s just something to plan for. And a [Health Savings Account](https://livelyme.com/guides/hsa-guide/) (HSA) can help both employees and employers do that. 

## A brief overview

The definition of “economic recession” can be hotly contested and political, but [*The Economist*](https://www.economist.com/the-economist-explains/2022/08/12/what-is-a-recession) defines it as, “a period of significant decline in economic activity.” In America, the responsibility for announcing economic changes, including recessions, falls on the [National Bureau of Economic Research](https://www.nber.org/) (NBER), a private, nonprofit research center on which the federal government depends. Typically, there is roughly a 6-month lag time (sometimes more) between when the recession starts and when it’s announced. For example, the [Great Recession](https://www.kiplinger.com/slideshow/investing/t038-s001-recessions-10-facts-you-must-know/index.html#:~:text=It%20takes%20the%20bureau%20at,it's%20close%20to%20the%20end.) was officially announced in December 2008, a full year after it had begun. It ended in June of 2009. 

So the time to plan for a recession is before the NBER officially announces it. One way to do that is to open and contribute to an HSA. Building up a medical safety net in the form of an HSA, and utilizing all of the tools that HSA provides, can help you recession-proof your financial health.

## What is an HSA?

An HSA is a savings account into which you deposit pre-tax money to pay for qualified medical expenses. In order to open and contribute to an HSA you must be currently enrolled in a [High Deductible Health Plan (HDHP)](https://livelyme.com/guides/hdhp/) and that must be your only health insurance coverage. Your HSA contributions roll over from year-to-year allowing you to build your savings to use in the future when you really need them, or even save for retirement.

## Should you invest or save?

One of the HSA features that is [under-utilized](https://www.devenir.com/wp-content/uploads/2022-Midyear-Devenir-HSA-Research-Report-Executive-Summary.pdf), but can help recession-proof your overall financial picture, is your ability to invest your HSA contributions. Not all HSA administrators allow you to invest your HSA money, but if you have an account with Lively you can take advantage of several [HSA investment options](https://livelyme.com/features/invest-your-lively-hsa/) and can use your contributions to buy stocks, bonds and other assets. By doing this, you can grow your savings at the rate of the market.

It might seem counterintuitive to invest money in the market to plan for a slowdown, but it’s important to remember the economy is cyclical. Recessions are normal occurrences and eventually end. Consequently, the market can experience [wide swings in growth](https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html) on a year-to-year basis, even when the economy is “good”, but over the long term it has an average annual growth of 8% (when you take inflation into account). So you want to approach investing with as long of a time horizon as possible.  

Recessions can also offer opportunities to buy assets at a greater value than you might be able to when the market is high. So you don’t want to stop contributing to your HSA or investing your savings unless you have immediate needs for that cash. By purchasing investments when the market experiences a dip, you can see a greater growth in your overall portfolio value (i.e. savings) once the market takes a turn for the better.

## Pay as you go funding

Since contributing to an HSA requires you to have an active HDHP, it shifts the way you spend your health care dollars to a more “pay as you go” model. Traditional health insurance plans tend to have higher premiums and cover a wider range of care upfront  in exchange for those higher monthly payments.

HDHPs tend to have the lowest monthly premiums and cover a wide range of [preventative care](https://www.healthcare.gov/coverage/preventive-care-benefits/) prior to the deductible being met. [Recent budget legislation](https://www.thinkadvisor.com/2022/08/10/budget-package-includes-insulin-help-for-hsa-users/) even allows for insulin shots to be considered preventative care and covered prior to meeting the deductible. But medical treatments that aren’t considered preventative care require out-of-pocket payment.

This structure allows plan participants to use the lower monthly premiums to save money in their HSAs for the medical care they want and need instead of paying higher monthly payments for care they don’t. As a bonus, they’ll [save up to 37%](https://www.kiplinger.com/taxes/tax-brackets/602222/income-tax-brackets) on that medical care, depending on their tax bracket, since contributions are made tax-free.

Another recession-friendly feature of HSAs is the ability of participants to change the amount they’re contributing as needed. That means you can lower contributions or pause them altogether if you have an immediate need for cash one month, then restart whenever you want. You can also make contributions up to the [annual limit](https://livelyme.com/blog/hsa-contribution-limits/) when you have an expense arise or when you receive a lump sum of money like a bonus, tax refund, or inheritance.

## Consumers look for lower costs

In an economic downturn, consumers naturally begin to look for lower prices. The [HDHP and HSA model](https://livelyme.com/blog/what-is-a-high-deductible-health-plan-hdhp/) pairs perfectly with this mentality. Not only are HDHPs usually the more affordable health insurance options, they allow participants greater choice in how their healthcare dollars are spent. 

Since they will be using their health savings account to pay for most of their medical expenses, they’ll be more incentivized to look for value in terms of providers. The same procedures will have different price tags at different hospitals and with different doctors, so the HDHP with an HSA model empowers consumers to shop around. HDHPs typically have PPO-style networks so plan participants have a wide range of options to choose from. 

## How does it affect employers?

As the economy slows down, so does revenue for many employers. This often requires them to cut costs. Unfortunately, the cost of health insurance premiums always seems to rise and is expected to do so again in 2023 to the tune of [7-8%](https://www.kiplinger.com/personal-finance/inflation/605084/what-will-happen-with-health-costs-in-2023#:~:text=Health%20insurance%20premiums%20and%20drug,over%20the%20past%20several%20years). One way to help insulate your budget from rising costs and falling revenue is to not only offer employees an HDHP, which comes with lower monthly premiums, but an HSA as well to encourage employees to choose this option.

HSAs can also help alleviate the [financial stress](https://www.bankrate.com/banking/money-and-financial-stress-statistics/#:~:text=Key%20statistics%3A&text=Women%20are%20more%20likely%20to,they%20worry%20about%20it%20daily.) many employees feel. A [recent study](https://gflec.org/wp-content/uploads/2021/04/Anxiety-and-Stress-Report-GFLEC-FINRA-FINAL.pdf?x85507) by FINRA showed that while COVID exacerbated feelings of financial stress many people were feeling, this phenomenon wasn’t new. In fact, in a 2018 study, they found that 53% of respondents were experiencing anxiety and stress around their finances. This affects employers because people who feel financial stress are less productive overall and spend 25% of their workday, on average, dealing with their issues. At a time when employers must do more with less (either smaller budgets, a reduced staff, or both), they need their employees firing on all cylinders. HSAs can help them do that.

HSAs help address financial stress by giving employees a way to save tax-free money to pay for medical care and even [retirement](https://livelyme.com/blog/how-to-use-your-hsa-as-a-retirement-account/). The flexible nature of HSA contributions give employees more control over how and when they contribute and the lower monthly premiums give employees more room in their monthly budgets.

## Get started with Lively today

Whether you’re an employee or an employer, HSAs can help recession-proof your financial picture and alleviate financial stress. We offer two different investment HSAs to help grow your contributions at the rate of the market as well as a full customer service suite for both account holders and [employers](https://livelyme.com/employers/). To learn more about one of the most popular HSAs in the market, [reach out today](https://livelyme.com/).


Are Health Savings Accounts Recession-Proof?

It’s that time of year again, when 80% of Americans spend less than an hour researching one of the most important decisions they’ll make this year: their health coverage.  Unfortunately, this often leaves many people under-insured or without the right coverage for their needs.  To prevent this from happening to you, we have a few tips that’ll help you make the right decisions for you and your family this [open enrollment season](https://livelyme.com/guides/open-enrollment/).

## What is open enrollment?

[Open enrollment](https://livelyme.com/guides/open-enrollment/), simply put, is [a period of time, usually two-to-six weeks](https://livelyme.com/blog/why-do-open-enrollment-periods-exist-for-health-insurance/), when people can enroll in health insurance and other benefits for the next year. It most often occurs in the fall, but some employers have specific open enrollment periods, so if you are not sure when your company's open enrollment takes place, it's always a good idea to ask. Outside of open enrollment, you often are not able to change your health insurance coverage without a "qualifying life event," such as having a baby, getting married, or losing other health coverage.

## Common mistakes

Because researching healthcare options can feel like a chore, during open enrollment, roughly 90% of Americans choose the health plan they had the previous year, despite any changes in health. This lack of research and [preparation for open enrollment](https://livelyme.com/blog/five-tips-to-prepare-for-open-enrollment/) can leave them under-insured. In addition, individuals often don't look into how their plans may have changed, even if it has the same name, and often neglect the full range of benefits their insurance plan and employer offers. 

## Six tips to help you determine your benefits package

These simple, actionable tips will help you select the best benefits for you and your family.

## Review your family’s recent health history

To make sure you’re buying the right coverage for your family’s needs, you need to know what those needs are. Take a look at what your family’s medical needs have been over the last two years. Assess:
- How did your current plan support you?  
- Where did it fall short?  
Then ask yourself if you or a family member has been recently diagnosed with a condition that will require ongoing treatment.  If so, you’ll want to take that treatment into account when choosing a plan.

## Assess recent or near-future life changes

Are you [getting married](https://livelyme.com/blog/tag/are-married-getting-married/)? [Pregnant, wanting to get pregnant, or adtopting a child](https://livelyme.com/blog/life-events-that-can-change-your-healthcare-costs/)? Are you planning to move away from your preferred doctor and want to make sure you have access to another health provider you like? To make the right decision for your health coverage, you’ll want to anticipate how these future changes will affect your healthcare needs.

## Check your current plan

Plan names can stay the same but the benefits included within them could change. So even if you keep the same plan as you had last year, it could end up costing you more or less depending on what changes your employer or the plan provider made. Possible changes to look for are:

- Coverage levels
- Pricing
- Types of products offered
- New providers for existing products
- New products from existing providers

## See if premiums and deductibles have changed

Sometimes companies change the amount to which they’ll contribute to their employees’ health plans. If your company has changed its contribution levels, this will likely affect the amount you pay in premiums and deductibles. It might also affect the attractiveness of HSAs and FSAs in order to help with those deductibles.

## Do your own research

Your company will likely put out official communication regarding your benefits options and reviewing its resources is a good place to start.  But it’s not a place to end.  Many companies provide resources to help consumers make the right choices when it comes to their benefits. By doing your own research, you’re more likely to get a neutral third party assessment of your plan options, and you might even find better benefits in the marketplace than your company is offering.

If you do find better plans that you think your company should consider, try sending them to your Human Resources (HR) Department. When HR knows what employees need, they can make better choices in terms of what benefits they offer in the future.

## Check your company’s wellness initiatives

Companies have realized that a healthier workforce is a more productive workforce. To incentivize healthy behavior, many have started programs that reward such behavior with increased benefits like a [greater HSA](https://livelyme.com/guides/hsa-guide/) or 401(k) contribution, lower premiums, or other perks like reimbursement for gym memberships. Check with your HR Department to see if you might qualify for any increased benefits.

Navigating the healthcare labyrinth can feel like a job in and of itself.  But if you follow our six tips, you’re more likely to make the right decisions for your family and could end up saving money over the course of the year.

## Learn more with Lively

Lively is a modern, health savings account (HSA) that helps you save for routine and unexpected healthcare expenses and plan for retirement. To learn more, check out our [resources on healthcare and financial wellness](https://livelyme.com/resources/), including our [open enrollment guide](https://livelyme.com/guides/open-enrollment/), or see if an HSA is a [fit for you](https://livelyme.com/features/).

Select the right healthcare insurance benefits for your family. Picture shows doctor doing a checkup on a child with his mother holding him.

child and mother at a family doctor visit 

80% of Americans spend less than an hour researching their health coverage. Follow these tips so you can make the right decisions for you and your family.

Open Enrollment Tips for Employees | Lively

Open Enrollment Tips for Employees

Familiar with the tax-saving benefits of a health savings account (HSA), and wondering how you can extend those benefits to your family? While an HSA is owned by one person, there is a way to tap into those HSA funds for the rest of your family. Discover how, and the differences between a family HSA and individual HSA.

## Your plan is dependent on your health care coverage

To be [eligible to contribute to an HSA](https://livelyme.com/hsa-guide#qualifying-for-an-hsa-account), you must enroll in an eligible [High-Deductible Health Plan](https://livelyme.com/blog/what-is-a-high-deductible-health-plan-hdhp/) (HDHP). The IRS sets annual minium deductibles for individual and family health care coverage, as well as annual out-of-pocket maximums, and usually update those annually based on inflation.

## What is a Family HSA?

![what-is-family-hsa](//images.ctfassets.net/6j8y907dne6i/2AyTsX5zWqJw75Sf8dPxjn/27b942e17c0757642c853d85db8abfe4/what-is-family-hsa.jpg)

While often referred to as a “Family HSA” account, there is actually no such thing. 

Each HSA is owned by one person. But family coverage under a qualifying HDHP allows you to use your HSA to pay for [qualifying medical expenses](https://livelyme.com/whats-eligible/) for yourself and your family. The type of health plan (individual or family) you’re enrolled in decides how much you can contribute to your HSA account in one calendar year. 

If you are enrolled in an individual qualifying high-deductible health plan, you will only be able to [contribute the individual maximum contribution](https://livelyme.com/blog/hsa-contribution-limits/) amount set annually by the IRS. If you and your family are covered by the same qualifying health plan, then your contribution limit is increased to the annual contribution limit set for families. One rule: To contribute the maximum family contribution limit, none of the family members can be claimed on another person’s [tax return](https://www.irs.gov/irb/2004-02_IRB). 

## Annual HSA Contribution Limits

![hsa annual contribution limit](//images.ctfassets.net/6j8y907dne6i/3mripn4V4Q51N7FfM26AEf/283c4bf5ded5d8aefbf448ea77e7b317/hsa_annual_contribution_limit.jpg)

If you are enrolled in an individual qualifying high-deductible health plan, you will only be able to [contribute the individual maximum contribution](https://livelyme.com/blog/hsa-contribution-limits/) amount set annually by the IRS. If you and your family are covered by the same qualifying health plan, then your contribution limit is increased to the [annual contribution limit set for families](https://livelyme.com/blog/hsa-contribution-limits/). 

One rule: To contribute the maximum family contribution limit, none of the family members can be claimed on another person’s [tax return](https://www.irs.gov/irb/2004-02_IRB). 

If enrolled in an HSA-eligible HDHP, and at least 55 years old—or will be 55 any time in the calendar year—you can make an extra $1,000 contribution. This is a [“Catch-Up” Contribution](https://livelyme.com/blog/what-is-an-hsa-catch-up-contribution/). 

## Real-life examples
### Individual health plan with HSA

During open enrollment, James chooses an HDHP because he wants to take advantage of his employer’s contributions to an HSA. James is not currently married and doesn’t have any dependents, so his health plan will cover only him.

As an individual, James can contribute up to the individual annual [HSA contribution limit](https://livelyme.com/blog/hsa-contribution-limits/) without a penalty.

### Family Health Plan with HSA
Fast forward a few years, and James is now married with two children. James is at a different company, but still has his HSA and an HDHP that covers him and his family.

James is now eligible to contribute the family limit to his HSA, and while the contribution limits often change annually, he knows he'll be able to contribute up the the annual family [HSA contribution limit](https://livelyme.com/blog/hsa-contribution-limits/) within one calendar year.

## Can I Have a Joint HSA With My Spouse?
![no-joint-hsa-with-spouse](//images.ctfassets.net/6j8y907dne6i/4JyBNCLJUiCy6ietwyTrGn/588c28e6b0352282f87b6d0c6643cfe9/no-joint-hsa-with-spouse.jpg)

*Short answer:* No. An HSA is owned by one person. 

Yet, there is a way for you and your spouse to have HSAs of your own. If you and your spouse are covered under the same HDHP, you can each open your own HSA and contribute separately. But, the amount you and your spouse contribute, combined, cannot exceed the contribution limit for a family plan. 

### Real-life examples:

#### Family HSA contribution limit with two accounts

Jack and Diane are married and covered under Jack’s high-deductible health plan. Diane wants to take advantage of her employer’s HSA contributions, so she decides to open up an HSA of her own. 

However, Jack and Diane’s total, combined contributions cannot exceed the family contribution limit set for the IRS that year. That means that whatever Jack contributes to his HSA and whatever Diane contributes to her HSA added together needs less or equal to the annual contribution limit. 

Jack and Diane can use these funds to pay for the [qualified medical expenses](https://livelyme.com/whats-eligible/) of those covered under their health plan, including each other.

#### Family HSA contribution limit with one account

The other option is to have the entire amount of the HSA in one account holder’s name. In this case, Jack opts not to contribute anything into his HSA for the year, and Diane and her employer will be able to contribute the entire amount into her account.

## The benefits of an HSA

![hsa-retirement-benefits](//images.ctfassets.net/6j8y907dne6i/1okT5ICuYiKx6c18Oof9dK/0e331b4135f6588ed8df49e0f2a24bdd/hsa-retirement-benefits.jpg)

There are four primary [benefits of having an HSA](https://livelyme.com/blog/what-are-the-benefits-of-an-health-savings-account/).

1. __Three levels of tax savings__. Pre-tax or tax-deductible contributions. Tax-free interest, and investment earnings. And tax-free withdrawals when used for qualifying medical expenses.
2. __Portability__. HSAs aren’t tied to your employer. If you decide to move to a different company or retire, your HSA stays yours. The funds added to your account stay there until you choose to withdraw or roll it over; like a 401(k).
3. __ A safety net in the event of a health-related emergency__. An HSA helps you save for the unknown. It can be used for unexpected health care expenses or health insurance if you’re between jobs. An HSA covers all qualified medical expenses, even after a change of plans or providers.
4. __ Flexibility in retirement__. When you turn 65, your HSA can be used for non-health-related expenses without penalties; like a 401(k), or IRA.

An HSA is a great safety net in the event of a health-related emergency. And with [options to invest](https://livelyme.com/blog/can-i-invest-my-hsa-money/), choosing to open an HSA is one of the best financial choices you can make for you and your family. 

To learn more, or to open an HSA, [get in touch](https://livelyme.com/features/) with us at Lively.


family hsa and individual hsa contributions are dependent on health care coverage

family-hsa-vs-individual-hsa

Learn the differences between a Family HSA vs Individual HSA. And how to extend HSA benefits to your entire family. 

Family HSA vs Individual: What’s the Difference?

What’s the Difference between a Family and an Individual Health Savings Account?

Dividing your assets, such as 401(k)s and Health Savings Accounts (HSAs) is a central piece of negotiating a divorce settlement. If you receive health insurance through your spouse’s employer, you want to carefully consider whether it makes sense to stay on your partner’s health insurance after you divorce.

## Tips for navigating health insurance when divorcing

### You can pay for health insurance through an ex’s health insurance.

If your health insurance was through your partner’s workplace plan, you may be able to stay on the plan for up to 36 months. The federal COBRA legislation requires any firm or organization with at least 20 employees to offer health insurance to the divorced partner. If your soon-to-be-ex works for a smaller employer, you may be eligible for extended COBRA coverage through a state-run plan.

But there’s a big expensive catch to COBRA health insurance coverage: Once you are divorced, the employer no longer will subsidize the premium cost for the non-employee. 

You will be required to pay the full cost. According to the Kaiser Family Foundation, the average monthly premium for single coverage through a group plan was nearly $7,200 in 2019.  And the employer is also allowed to tack on an additional 2% annual fee to cover administrative charges.

### Check out your employer’s health insurance. 

If you were on your partner’s plan because it was more robust or cost-effective than the plan offered by your employer, time to circle back to your workplace plan. It may now be more cost-effective than staying on your ex’s plan through COBRA. 

Getting divorced is considered a [qualifying life event](https://livelyme.com/life-events-that-can-change-your-healthcare-costs), so you’ll be able to enroll for health insurance outside of open enrollment. 

### Compare COBRA coverage to an ACA-marketplace plan.

Before you finalize your divorce, spend some time pricing out purchasing your own health insurance through the ACA marketplace. Depending on your income you may be eligible for subsidies. You can start your search at the [healthcare.gov](https://www.healthcare.gov/) website.

### Include the cost of paying for health insurance in your divorce negotiations. 

It’s likely that whatever health insurance solution you land on, the premium is going to be a sizable line-item cost in your monthly budget. You should factor that into negotiations for assets. And keep in mind that if there is a family HSA account that has a sizable balance, that is a valuable asset to also bring into your discussions. 

### Consider a legal separation as a temporary step. 

If you are legally separated, but not divorced, you may be able to stay on a spouse’s plan, but it varies by employer and insurer.

### Sort out who pays for insurance coverage of the kids.

This is obviously a key part of your divorce negotiation. If you opt for joint custody and you both assume responsibility for health insurance, the spouse whose birthday falls earlier in the calendar year will have the “primary” insurance for the children. If there isn’t joint custody, the custodial parent typically assumes responsibility for health insurance for children. If the custodial parent remarries, and doesn’t have health insurance, the responsibility can fall to the custodial parent’s new spouse. If that isn’t an option the non-custodial parent will be required to step in and provide health insurance coverage.

Given the complexity of divorce, including health insurance coverage. consulting with a lawyer experienced in divorce law is a smart move to ensure that everyone in the family is covered. 



stay-on-insurance-divorce

Divorce is a complicated process - and it doesn't help that your health insurance gets tied up into the process as well. We detail some information that you will need to know regarding your healthcare if you are getting divorced from your partner.

How Long Can I Stay on My Partner's Insurance After a Divorce? 

<p>Helping employees understand the benefits of an HSA (like any new HSA user), takes time and resources. In order to make the HSA education and engagement process easier for employers and employees, we have outlined our best practices.</p>
<p></p>
<p>Our employee HSA education guide will help you get HSA strategies&nbsp;in place from day 1 so employees can take advantage of the&nbsp;<a href="https://livelyme.com/what-are-the-benefits-of-an-health-savings-account/">triple-tax benefits</a>&nbsp;immediately.</p>
<h2>HSA Employee Education Tips</h2>
<p>Opening, establishing and contributing to an HSA should be easy.&nbsp;It shouldn&#8217;t be rocket science, that&#8217;s at least what we think at Lively! Here is what every employee needs to know to get started with their new HSA:</p>
<ol>
<li>Confirm&nbsp;<a href="https://livelyme.com/hsa-eligibility-details/">HSA-Eligibility</a></li>
<li>Understand&nbsp;<a href="https://livelyme.com/2018-hsa-contributions/">Contributions&nbsp;Limits</a></li>
<li><a href="https://livelyme.com/add-1-hsa-day-1/">Open and Establish their HSA</a></li>
<li>How to&nbsp;<a href="https://livelyme.com/hsa-rollovers-and-transfers/">Rollover or&nbsp;Transfer</a>&nbsp;an Existing HSA</li>
<li><a href="https://livelyme.com/set-forget-hsa/">Automating HSA Contributions</a></li>
<li>Use an HSA&nbsp;<a href="https://livelyme.com/hsa-debit-card/">Debit Card</a>&nbsp;for Eligible&nbsp;Purchases</li>
<li>Review&nbsp;<a href="https://livelyme.com/can-i-invest-my-hsa-money/">HSA Investment</a>&nbsp;Options</li>
</ol>
<p>No employer health or financial situation is the same. Once employees have opened&nbsp;an HSA, customizing&nbsp;HSA strategies can help each and every eligible employee take advantage of their HSA benefits. This will better ensure success (and renewal). Let&#8217;s look at two likely employee HSA scenarios:</p>
<ul>
<li><b>HSA Saver</b>&nbsp;&#8211; HSA savers are more focused on the long-term savings value of an HSA. They can invest their funds or simply take advantage of FDIC-Insured interest bearing&nbsp;HSA accounts. Thereby taking advantage of compound interest and save HSA funds for future health costs.</li>
<li><b>HSA Spender</b>&nbsp;&#8211; These employees are using pre-tax HSA funds to pay for expected and unexpected health costs. They can use their dedicated HSA funds to reduce their out-of-pocket health expense liability.</li>
</ul>
<p>Many HSA account holders are a mix of both. Helping employees save for health costs today and plan for anticipated health costs well into retirement will only increase HSA adoption.</p>
<h4>Employee Engagement and Support</h4>
<p>Things come up. Employees get stuck. We get it. We have&nbsp;been through it ourselves. Making sure on-demand support options are available for employees is crucial in this process. It saves everyone time. Employee HSA education is an ongoing process. So we created an on-demand resource center to help &#8211; from an&nbsp;<a href="http://support.livelyme.com/">HSA FAQs</a>&nbsp;to&nbsp;<a href="https://livelyme.com/calculator/">HSA saving calculators</a>. We backed it all up with a dedicated&nbsp;customer&nbsp;service team to answer employee&nbsp;questions via&nbsp;<a href="mailto:support@livelyme.com">email,</a>&nbsp;<a href="tel:1-888-576-4837">phone</a>&nbsp;or chat (via our website).</p>
<h4>Don&#8217;t&nbsp;Forget! Talk About Retirement &amp; Health Costs</h4>
<p>Many employees are stuck on a year-to-year&nbsp;ferris&nbsp;wheel when it comes to health insurance and cost planning. Employees are forced into rising yearly health insurance premiums and out-of-pocket costs. Not planning for health costs in retirement &#8211; which are&nbsp;<a href="https://www.cnbc.com/2017/11/24/health-care-costs-in-retirement-can-top-275000.html">expected to exceed&nbsp;$275,000 per couple</a>&nbsp;&#8211; can be a financial mistake. Employees can use their HSA to plan and save for retirement. In fact, an HSA might be the&nbsp;<a href="https://livelyme.com/stealth-ira/">new stealth IRA</a>.</p>
<p>Opening an HSA is easy (at least at Lively). Helping employees understand the value of an HSA should be too. Use this employee HSA guide&nbsp;to fast-track benefits education to save employees time.</p>

Employee-HSA-Guide.jpg

Helping employees understand the benefits of an HSA (like any new HSA users), takes time and resources. In order to make the HSA education and engagement process easier for employers and employees, we have outlined our best practices.

Employee HSA Guide

Lively Blog

What is an HSA?

How Do I Qualify for an HSA?

How Does a Health Savings Account Work?

How Much Can I Contribute to My HSA?

What Can I Use a Health Savings Account For?

It’s a fact. The cost to be - and stay - healthy rises each year. And even the comprehensive  (expensive) health insurance plans are covering less for the cost of care. So what’s a person to do? Open an HSA.

A Health Savings Account (HSA) allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. You, your employer, and even friends and family can contribute money to your HSA. The contributions are tax-deductible and never expire. So you can save them for a rainy day, retirement, or to help pay for an expensive procedure you have coming up.

## How do I qualify for an HSA?

To qualify for opening and contributing to an HSA, you must meet these criteria:

1. You must enroll in a [High-Deductible Health Plan](https://livelyme.com/guides/hdhp/) (HDHP). 
2. You have no other health coverage except what is permitted under what the IRS defines as "[other health coverage](https://www.irs.gov/publications/p969#en_US_2022_publink1000204039)."
3. You must not be enrolled in Medicare.
4. You can’t contribute to a [Health Flexible Spending Account](https://livelyme.com/blog/what-is-a-healthcare-fsa/) (HFSA). But you can contribute to a [Dependent Care](https://livelyme.com/blog/dependent-care-fsa-dcfsa-work/) (DCFSA) or [Limited-Purpose FSA](https://livelyme.com/blog/what-is-a-limited-purpose-fsa/) (LPFSA) and contribute to a health savings account in the same year.
5. You can't be claimed as a dependent on someone else's tax return.

## How to enroll and use an HSA

![how-does-health-savings-account-work](//images.ctfassets.net/6j8y907dne6i/3zynuAFE9SoOfJRy8MT7lO/d0078bf16189f8141aeeaa5b7ae1da54/how-does-health-savings-account-work.jpg)

### Step 1: Elect a high-deductible health plan during open enrollment.

![Infographic High Deductible Health Plan plus HSA how you save](//images.contentful.com/6j8y907dne6i/5lcCeg9CA7pfdV9jfLrUVG/86661d1a0187b5c1f8408c52a5247e9f/Infographic_HealthPlan_plus_HSA_HORIZ.png)

### Step 2: Open a health savings account and decide how much you want to contribute. 

To enroll in an employer-sponsored health savings account, you'll likely open your HSA during open enrollment. Let your employer know how much you want to contribute for the year up to the [IRS contribution limit](https://livelyme.com/blog/hsa-contribution-limits/), which are different whether you are an individual, family, and/or over 55. Your employer may begin making payroll deductions each month.

Your employer may choose to contribute to your HSA. But they’re not required to. If they do, those contributions will count toward your annual limit. But will remain tax-free to you.

![Infographic how money goes into your HSA](//images.contentful.com/6j8y907dne6i/5qd6V0TtmmbBHgwTvMuTHh/f26f8ca95dd89fa960804adbe80616d6/Infographic_Money_In_HORIZ.png)

Maybe your employer doesn’t offer a health savings account. Or it’s outside of open enrollment and you want to get started on saving for your health care costs today. You can open an HSA with a financial institution in the private market.

With this route, you will make arrangements to fund your HSA with the account administrator. And your contributions will be deducted from your gross taxable income when you pay taxes for that year.

### Step 3: Use your funds for qualified medical expenses.

To use your funds, your account administrator may provide a debit card so you can pay for your health care costs at the point of sale. Or you will pay for costs upfront and submit documentation for [reimbursement](https://livelyme.com/blog/hsa-reimbursement-rules/). Your withdrawals are tax-free as long as you use the money to pay for qualified medical expenses. If you use your money for something else, the money you withdrew will be subject to income tax plus a 20% penalty.

![HSA infographic how money comes out of HSA](//images.ctfassets.net/6j8y907dne6i/4ASMR4GJB8EGJoXPtGWqLj/d6a2d0cf2f363b57abaa037e62026a55/Infographic_Money_Out_HORIZ.png)

__Additional health savings account details:__

- You own your account so you can take it with you from employer-to-employer (or employer to unemployed). 
- Even if you choose a health insurance plan that isn’t an HDHP, you can still use past contributions for out-of-pocket, qualified medical expenses. But you won’t be able to contribute to your account.
- Employer contributions are tax-free.
- If you’re under the age of 65, you must use your contributions for qualified medical expenses.
- Once you reach 65, you can no longer contribute to your account. But you can use your savings to pay for whatever you’d like.  
- An HSA offers triple tax savings: pre-tax or tax-deductible contributions, tax-free interest and investment earnings, and tax-free distributions when used for qualified medical expenses.

## What can I use my funds for?

![hsa-eligible-expenses](//images.ctfassets.net/6j8y907dne6i/42Oe00AuAcE2fs9KFkcmHS/b30013424117eb2a8c42b7c42b094e5c/hsa-eligible-expenses.jpg)

HSA-eligible expenses include (but are not limited to):

- Deductibles
- Copays
- Coinsurance
- Out-of-pocket costs related to diagnostic services like x-rays and blood tests
- Prescriptions
- Quality of life enhancers like air purifiers (with a letter of medical need)
- Medical supplies like band-aids and crutches
- Alternative medicine treatments like acupuncture

This list is not exhaustive. For a comprehensive list of IRS-qualified medical expenses check [“What’s Eligible."](https://livelyme.com/whats-eligible/)

## What happens if I switch employers?

You get to keep your account and every dollar you’ve saved. Although you may not be able to continue contributing to that same account. 

If your new employer uses a different health savings account administrator, you will have two options. [Roll the HSA](https://livelyme.com/blog/rolling-over-your-hsa/) from your previous employer into the new account or maintain two different HSAs. One account from your previous employer - from which you can withdraw but not contribute. And one from your current employer into which you can start contributing.

For more details about your specific situation, contact your HR department.

## Where can I sign up for a Health Savings Account?

![sign-up-lively-hsa](//images.ctfassets.net/6j8y907dne6i/4sUTWDriKFMgGBrIHxeyH9/a36ee79d497005f21445666727ab98e6/sign-up-lively-hsa.jpg)

You can [sign up for an HSA](https://secure.livelyme.com/signup/start) in two places. Through your employer, if it offers this benefit. Or through a financial institution in the private market.

Here, at [Lively](https://livelyme.com/), we offer a private-market HSA that allows you to put your contributions into mutual funds or other investments. That way you can access an even greater benefit: growing your money with the market.

As you can see, there are many ways an HSA can help you save money for health care expenses and retirement. A health savings account can also offer security should you lose your health insurance coverage for a period of time. For more information about HSAs, check out our [HSA Guide](https://livelyme.com/guides/hsa-guide/).


what-is-hsa

Learn the basics of an HSA, including the qualifications for opening and contributing to an account, how much you can contribute, how to use your account, and more!

HSA Basics: Qualifications, Contributions, and More | Lively

The Basics of HSAs: Qualifications, Uses, and More

On May 16, 2023 the [Internal Revenue Service announced the HSA contribution limits for 2024](https://www.irs.gov/pub/irs-drop/rp-23-23.pdf). These are set each year and adjusted for inflation, and 2023 limits are significantly higher than those set for 2023.

For 2024 HSA-eligible account holders are allowed to contribute: 

- $4,150 for individual coverage
- $8,300 for family coverage

This is a $300 increase for individuals and a $550 increase for families from the [2023 HSA contribution limits](https://www.irs.gov/pub/irs-drop/rp-22-24.pdf).

The 2023 HSA contribution limits are: 
- $3,850 for individual coverage
- $7,750 for family coverage

If you are 55 years or older, you’re still eligible to contribute an extra [$1,000 catch-up contribution](https://livelyme.com/blog/what-is-an-hsa-catch-up-contribution/).

To be eligible for an HSA, your health plan has to meet the following IRS criteria for a [high-deductible health plan (HDHP)](https://livelyme.com/blog/what-is-a-high-deductible-health-plan-hdhp/):

__For 2024:__
- Must have a minimum deductible of $1,600 for individual coverage, and $3,200 for family coverage
- Out-of-pocket maximums cannot exceed $8,050 for individual coverage and $16,100 for family coverage

__For 2023: __
- Must have a minimum deductible of $1,500 for individual coverage, and $3,000 for family coverage
- Out-of-pocket maximums cannot exceed $7,500 for individual coverage and $15,000 for family coverage

Annual minimum deductibles have increased $100 for individuals and $200 for families from 2023, and out-of-pocket limits have increased by $550 for individuals and $1,100 for families. 

You can [use our HSA contribution calculator](https://livelyme.com/hsa-contribution-calculator/) to help figure out your optmial monthly contribution.

## How HSAs work

A [Health Savings Account (HSA)](https://livelyme.com/guides/hsa-guide/) is a tax-advantaged savings account. Think of it as a 401(k) for healthcare. In order to [contribute to an HSA](https://livelyme.com/partners/how-to-open-an-hsa/), you must have a high-deductible health plan. 

HSAs allow for tax-deductible contributions, tax-free interest and tax-free withdrawals for qualified medical expenses. This means the money you contribute to an HSA can be used tax-free on health expenses such as prescriptions, copays, and more. This can help you minimize your health care costs throughout the year while saving for the future.

If you choose a high-deductible health insurance plan through an employer, you are likely eligible to contribute to an HSA. If this is the case, your employer can also help to contribute to your HSA before taxes, so you can receive extra savings until you reach the annual contribution limit. 

The main benefit of an HSA? It’s 100% yours. If you leave your job, you can take your HSA (and the funds that you contributed to it) with you. This is different from a [Flexible Spending Account (FSA)](https://livelyme.com/guides/flexible-spending-account-fsa/) in which the funds will get returned back to your employer. 

There are three different tax advantages you can get from your HSA:

- Tax-free contributions
- Tax-free spending for all [qualified medical expenses](https://livelyme.com/whats-eligible/)
- Tax-free growth

The result is the most tax-advantaged account on the market. 

To get started, see if you are [eligible for an HSA](https://livelyme.com/blog/hsa-eligibility-requirements/) or [sign-up](https://secure.livelyme.com/signup/start) for a free account. 


piggy bank on pink background

The IRS announced the 2024 HSA maximum contribution limits. $4,150 for individuals and $8,300 for families. Sign up for your health savings account with Lively today!

2023 and 2024 HSA Contribution Limits

2023 and 2024 HSA Maximum Contribution Limits

The ground shifted under employers as the pandemic caused many workers to reevaluate their values, their jobs, the companies they worked for and even their careers. We likely won’t know the full impact of the pandemic and The Great Resignation for years to come but even with continued economic uncertainty and a potential recession, one thing is clear: employees are demanding more from their employers. In fact, a study from Lively found that in the past year [84% of HR leaders increased benefits](https://livelyme.com/blog/report-employee-benefits-pulse-check/) to attract and retain employees facing a high employee turnover rate.

At the same time, employers have fewer resources and need to keep their budgets in-check while retaining and recruiting talent. They need benefits solutions that offer a bigger bang for the buck, and [80% of HR leaders](https://livelyme.com/blog/report-employee-benefits-pulse-check/) say that competitive financial benefits are more important than they were a year ago. That’s where Health Savings Accounts (HSAs) come in.

## A brief overview

[HSAs are personal savings accounts](https://livelyme.com/guides/hsa-guide/) participants can use to save pre-tax money to pay for [qualified medical expenses](https://livelyme.com/whats-eligible/). Money is contributed to the account tax-free, any interest earned on the money is tax-free and distributions made on eligible expenses are tax-free as well (that’s why HSAs are called triple tax-advantaged accounts). Account owners can choose to [invest their savings](https://livelyme.com/features/invest-your-lively-hsa/) so that they grow at the rate of the market or to keep it in a savings account earning interest. The money never expires and rolls over from year-to-year.

Another beneficial feature is that anyone can contribute to an employee’s HSA. That includes the employee themselves, their employer, their friends and their family. The only caveat is that the total of all contributions must not exceed the [IRS’s annual contribution limit](https://livelyme.com/blog/hsa-contribution-limits/) for that year.

These features make HSAs a good tool to help employees save for future medical expenses and [even retirement](https://livelyme.com/blog/hsas-for-retirement/) as the account functions as a traditional retirement account once the participant turns 65. The only exception is when the account holder uses their HSA to pay for qualified medical expenses as these distributions stay tax-free, even in retirement.

There are a few eligibility requirements for employees to contribute to an HSA:
1. They must be actively enrolled in a [High Deductible Health Plan (HDHP)](https://livelyme.com/guides/hdhp/) and that must be their only health insurance coverage.
2. They must be under the age of 65.
3. They must not qualify for Medicare.
4. They can’t be counted as a dependent on someone else’s taxes.

For these reasons, HSAs are popular among employees. And what’s even better is the same features that are popular, are also beneficial to employers. This makes HSAs a valuable benefit to offer. Let’s take a deeper look.

## Financial benefits

One of the qualities that makes HSAs so valuable to employers is the ability of this account type to lower their cost per employee. HSAs can lower companies' costs directly by encouraging employees to choose more affordable health insurance plans as well as indirectly by lowering the companies’ FICA obligation.

### Reduce the cost of health premiums

The financial benefits HSAs offer employers include the ability to reign in the cost of health insurance. In a recent survey, employers said they expected their spending on medical care to [rise 6% in 2023](https://www.fiercehealthcare.com/payers/employers-expect-healthcare-costs-rise-next-3-years#:~:text=U.S.%20employers%20expect%20healthcare%20costs,be%20over%20budget%20this%20year.), after increasing 5% in 2022. If you’re looking to contain the costs of your benefits package while still offering quality health insurance, consider an HDHP/HSA combination.

According to the [Kaiser Family Foundation (KFF)](https://www.kff.org/report-section/ehbs-2022-section-8-high-deductible-health-plans-with-savings-option/#:~:text=Five%20percent%20of%20covered%20workers,HSA%2Dqualified%20HDHPs%20in%202022), the average annual premium in 2022 for a family HDHP was $21,079, of which employers paid $15,891. Compare this to the average annual premium of $23,003 for a non-HDHP health plan, of which employers paid $16,893 and you can see that offering this type of plan can help you save $1,000 per employee that enrolls. 

A great way to incentivize employees to [enroll in the HDHP](https://livelyme.com/guides/hdhp/) is to pair it with an HSA and, if your budget allows, to offer an employer contribution. You can structure this contribution as a match or a flat amount for all employees who are actively contributing to their HSAs.

### Lower your company’s tax obligation

Since employee contributions to their HSAs are taken pre-tax, their gross taxable income is reduced. The less gross taxable income they have in their paycheck, the less FICA taxes you, as the employer, pays. This is why it’s important to not only offer an HSA, but strategize about how much, if any, you will contribute to employees’ accounts. It might be beneficial to contribute a small amount to encourage employees to enroll in the HDHP/HSA benefits combo, but not too much so that it disincentivizes them to contribute themselves. 

Just like with employees’ contributions, HSA contributions from employers are also tax-free.

To find out how much you can save on FICA taxes by offering an HSA, use our [FICA tax savings calculator](https://livelyme.com/payroll-tax-savings/). 

## Improved recruiting and employee retention

The estimated cost of annual turnover at a mid-sized company costs as much as [$7.5 million](https://www.finra.org/media-center/newsreleases/2021/large-number-americans-reported-financial-anxiety-and-stress-even) and depending on the employee, costs as much as 213% of their salary. Average turnover at all companies is currently about 18% per year. Many employers are left scrambling to adjust their retention and recruitment efforts. If you’re one of these employers, here’s what the experts say you can do to keep more top talent in the building:

1. Make sure your benefits are in line with the [labor market as a whole](https://www.shrm.org/hr-today/news/all-things-work/pages/what-employees-want.aspx), not just your industry. Workers, especially those at entry level will happily jump industries if it means earning a higher wage or receiving better benefits. Note: In 2020, 59% of employers offered an HDHP/HSA combo, compared to 50% of employers in 2016.
2. 88% of job seekers will weigh the chance of getting better health insurance benefits for a lower-paying job against lower-quality benefits at a higher paying job. 
3. Not all employees have the same needs so employers should offer a benefits package that allows for flexibility and personalization.
4. HSAs are popular. KFF found that 24% of all covered workers are enrolled in an HDHP/HSA combination.

To keep employees, you have to keep them happy and a good benefits package with popular, usable options that allow flexibility and personalization is one way to do that. HSAs help employers achieve this by:

1. Giving employees the flexibility to pay for the medical care they want with pre-tax money instead of paying a higher monthly premium for care they might not need.
2. Giving employees a tax-free opportunity to save for future medical costs.
3. Giving employees a tax-free way to augment their current retirement savings plan with an additional savings vehicle.
4. Giving employers an opportunity to show employees they’re invested in their employees’ financial and physical health and well-being. 
5. Giving employees a convenient way to use their savings with debit cards that can be used to pay for medical care at the point of purchase.

## More productive employees

Did you know that a [2013 Gallup study](https://www.stress.org/the-stress-productivity-shortfall) found that employees’ lack of engagement at work costs the U.S. economy $450-550 billion a year? And over 275 million working days are lost a year due to stress? 

In a recent survey, [FINRA](https://www.finra.org/media-center/newsreleases/2021/large-number-americans-reported-financial-anxiety-and-stress-even) found that workers, especially younger employees, are feeling more financial stress than ever before. In fact, 60% of respondents reported feeling financial stress because they’re worried about their futures, mounting medical bills, their lack of savings and the state of their physical health and that of their families.

So what does that have to do with you, the employer? Everything. First, researchers have found a causal link between happiness and productivity. Happier employees are [13% more productive](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3470734) on average than unhappy employees. Second, stress accounts for 7.2-11.3% of employee turnover annually. Which means the cost of turnover is $251-$14,492 per employee. 

And the employees who stay? Twenty percent of workers report spending at least five on-the-clock hours per week thinking about their stressors. If the employee works 40 hours a week and has an annual salary of $60,000, that’s $1,500 per employee per year in lost productivity.

So what can you, as an employer do? You can give your employees increased opportunities to save and augment those savings with contributions from the company. An HSA is a great way to do that. 

HSAs help alleviate financial stress because they allow participants to set aside money pre-tax to pay for medical expenses. Participants can invest these savings, allowing them to grow their safety net at the rate of the market and to improve their financial well-being. HSAs also help employees answer the question, “How am I going to pay for that?” when an emergency arises. The fact that HSAs can double as a retirement account is another valuable feature for plan participants and can add to their overall feeling of financial stability. 

Employers that contribute to their employees’ HSAs show their workers that they’re invested in them. That investment goes a long way toward making employees feel valued. Which makes them feel happier at work. Which leads to higher productivity. Stress is an insidious cause of lost productivity in the current work environment, but it doesn’t have to be. [An HSA can help](https://livelyme.com/guides/hsa-guide/).

## How to get started

If you’ve decided that offering employees an HSA is the way to go, you’ll want to talk with your benefits professional about how an HDHP/HSA combination fits into your current compensation package. You’ll want to decide which [HSA administrator](https://livelyme.com/) you want to use, as HSAs are health-plan agnostic, meaning they can be used with any qualifying health plan. Then you need to figure out how much (if any) you’re going to contribute to your employees’ accounts.

One thing to consider is that many HSA administrators require [employers](https://livelyme.com/employers/) to do a lot of the heavy lifting when it comes to operating the plan. Lively doesn’t. Once you’ve set up your plan, you simply invite your employees to participate and we take care of their onboarding and education. You’ll be able to manage the plan seamlessly from our clear and informative dashboard and there will be no hidden fees to contend with. If you run into trouble, we’re here to help. We’re your partner in offering the best benefits package possible for your company.

## Find out more about Lively today

If you’re ready to offer an HSA to your company, you can [get started](https://livelyme.com/employers/) or [reach out to our team](https://livelyme.com/employers/) to walk you through the process. 

Group of happy, multiracial employees sit around a conference table discussing business

HSA add employee value

Employers can find lots of value in health savings accounts. Find out the details here.

What’s the value of an HSA?

The Value of Health Savings Accounts

In a world of text, chat and email it can feel like everything is (or has) an acronym. Health insurance plans are no exception. You may have come across the acronym HDHP and are wondering "What is a High Deductible Health Plan (HDHP)?" Continue reading to learn how choosing an HDHP could benefit you. Provided it gives you the coverage you need.

To start, an HDHP is a health insurance plan defined by lower premiums and a higher deductible. But don't let "higher deductible" scare you off. Here are two reasons why an HDHP could make sense for you:

1. All preventative care is covered before the deductible, and
2. HDHPs are an affordable way to get the coverage you need without paying more for extras you may not need.

HDHPs are also the only health insurance option that can be paired with a Health Savings Account (HSA). An HSA can help pay for the high-deductible or to save money for future medical costs.

<iframe src="https://player.vimeo.com/video/377355900" width="640" height="360" frameborder="0" allow="autoplay; fullscreen" allowfullscreen></iframe>

## What is considered eligible?

Annually, the IRS redefines what it considers an HDHP (adjusting for inflation). In 2022, their parameters were a [health plan](https://livelyme.com/guides/hsa-guide/) with a deductible of at least $1,400 for an individual and $2,800 for a family. As well as out-of-pocket expenses that didn’t exceed $7,050 for an individual and $14,100 for a family.

In 2023, the minimum deductibles and out-of-pocket maximums will rise. For individuals the minimum deductible will be $1,500 for individuals and $3,000 for families. The maximum out-of-pocket limits will rise to $7,500 for an individual and $15,000 for a family.

There's one other qualifying characteristic of HDHPs. The individual pays for the cost of healthcare, up to the deductible, before insurance pays for services. The one caveat here is preventative care. All preventative care is covered before the deductible.

## How do they work?

![preventative-care-included-hdhp](//images.ctfassets.net/6j8y907dne6i/5j1glZm5E5y47Fi5eW2T2K/1ebc0d46beb92be8021d514656948957/preventative-care-included-hdhp.jpg)

HDHPs charge participants lower monthly premiums. This is in exchange for requiring higher deductibles and out-of-pocket maximums.

Choosing an HDHP could make sense if you don't need many health care items or services. Or if you only visit the doctor for preventative care. This is because you'll be spending less on your monthly [health insurance plan](https://livelyme.com/compare-health-insurance-plans/) premium. An HDHP could also make sense if you need more care. Here's why.

Because HDHPs have a higher deductible, the IRS allows you to [deposit pre-tax money into a savings account](https://livelyme.com/blog/what-is-an-hsa/) called an HSA or Health Savings Account. HSAs are tax-advantaged accounts because contributions are pre-tax.

![Infographic High Deductible Health Plan plus HSA how you save](//images.ctfassets.net/6j8y907dne6i/5lcCeg9CA7pfdV9jfLrUVG/86661d1a0187b5c1f8408c52a5247e9f/Infographic_HealthPlan_plus_HSA_HORIZ.png)

The distributions and any gains those contributions make can also be tax-free. That's as long as the contributions are used to pay down your deductible or to pay for other qualified medical expenses. Depending on your tax bracket, this could help you save up to 30% on medical expenses.

Where an HDHP could get you into trouble is if you suffer a catastrophic event that requires an expensive procedure or treatment. And you can’t afford the out-of-pocket maximum. Or if you have or develop a chronic condition that needs management.

__Decide which plan is right for you with our [Health Plan Comparison Calculator](https://livelyme.com/compare-health-insurance-plans/).__

To choose an HDHP, you would make the election during the open enrollment period for either your place of employment or in the private market. The other time is after a [Qualifying Life Event](https://livelyme.com/blog/when-should-i-consider-changing-my-health-plan/). If you’ve experienced a life event like the loss of health insurance, marriage, the birth of a child, or death of a dependent, you can sign up for an HDHP at any time during the year with a special enrollment period.

## What are the benefits?

![high-deductible-health-plans-lower-premium](//images.ctfassets.net/6j8y907dne6i/45YNFcVTSqOIH1GiPuzUVQ/150ddbbe5981bcf60c7150e50f13f6d1/high-deductible-health-plans-lower-premium.jpg)

Whether you’re considering an HDHP or have been using one for years, there’s no question that higher deductibles are a tough pill to swallow. The good news is, this type of health plan does offer some unique flexibility and opportunities that other health insurance plans lack.

1. __Flexibility__ – HMO health insurance plans require referrals from a primary care physician. This can be extremely frustrating for individuals who need to have some kind of care outside of a general practitioner. While HDHPs still have in and out of network designations, the list of in-network providers is extensive. And you can see a dermatologist, cardiologist, or other specialists even if you haven’t yet designated a primary care physician.
2. __Lower cost__ – The problem with large, overarching health plans is they try to cover everyone. This might sound good on paper, but not in practice. This often leads to people with low health care needs paying more to cover people with high health care needs. HDHPs reward limited use of the medical system by charging participants low monthly premiums. While also covering preventative care before the deductible is met.
3. __Health savings for the long term__ – HDHPs are the only health insurance plan that you can pair with an HSA. You own the contributions both you and your employer make to your HSA. And they never expire. The funds can be saved or invested in stocks and mutual funds, making these accounts function as a medical safety net. This is beneficial if you lose your employment or your employer changes your health insurance options. Or if your health insurance company decides to discontinue the plan you’re on, or you experience a catastrophic event. Any of which could leave you scrambling to cover unexpected medical expenses. And in the event you don’t spend your contributions before the age of 65, you can use that money, tax-free, for any expenses. Just like another retirement account. 

## Is this plan right for me?

![is-hdhp-right-for-me](//images.ctfassets.net/6j8y907dne6i/1lGHA7VDq1QmkbEHtrozbq/8ce9096c3149cd21eca124e9fb2a5cf3/is-hdhp-right-for-me.jpg)

*The right health insurance plan for you lies at the nexus of affordability and appropriate coverage.* You must be able to afford the monthly premium but also the annual out-of-pocket maximum in case you experience a catastrophic event.

The plan must also provide adequate coverage for your current medical needs. As well as those in the foreseeable future (e.g. having a baby, knee surgery, etc.). Inadequate coverage could cause your out-of-pocket expenses to get out of hand quickly.

So take a look at the specifics for the HDHP you’re being offered. Can you afford that monthly premium? If yes, then take a look at what procedures, treatments, and prescriptions are covered and at what levels. When taking coverage levels into account, can you afford the copays, co-insurance, and other out-of-pocket costs?

Do you have the ability to contribute even a small amount to an HSA? Something to remember about HSAs is the money is contributed pre-tax. That means you could end up saving up to 30% on medical expenses depending on your income taxes bracket.

If, after answering these questions, an HDHP looks like it makes financial sense, then it could be the right plan for you. If you have questions about your specific situation, you should always reach out to your HR department.

HDHPs are often thought of as an [affordable health insurance option](https://livelyme.com/guides/hdhp/), especially for the healthy or if you know you’ll exceed your out-of-pocket maximum. Combine an HDHP's monthly affordability with the option to pair the plan with an HSA, and you have an attractive setup. Not only for those who have limited medical care needs but those who can afford to contribute a little extra each month toward future costs and savings. 

discover "what is a high deductible health plan?"

what-is-a-high-deductible-health-plan

Discover how an HDHP works, its benefits, and if one is right for you. Pair your Lively HSA with a qualified high deductible health plan to start saving today.

Your Crash Course in High-Deductible Health Plans

Understanding High Deductible Health Plans

You’ve heard about HSAs and FSAs. And you think they are a good way to save money for and on medical expenses. And your employer offers both as part of its benefits plan. 

You’re in luck. You get to choose the option best suited to your needs. And yes, you do have to choose. Because you can’t contribute to an HSA and a Healthcare FSA at the same time. Let’s discover which account type will win in HSA versus FSA.

So how do you choose? To make the best decision for you and your family, consider the details of each account. And compare those to the realities of your family’s medical and financial needs.

## HSA vs. FSA Basics

There are some basic facts you need to know to understand the differences between FSAs and HSAs. 

To start, let's look at what these accounts have in common.

Health Savings Accounts (HSA) and Healthcare Flexible Spending Accounts (FSA) are pre-tax accounts. And are both used to pay for qualified, out-of-pocket medical expenses. These include, but aren’t limited to, copays, deductibles, coinsurance, and prescriptions. Because contributions are pre-tax, you can save up to 30% on those out-of-pocket expenses. Depending on your tax bracket.

How are HSAs and FSAs different? The [major difference](https://livelyme.com/blog/differences-between-hsa-vs-healthcare-fsa-infographic/) they have is that an FSA is an employer owned account that pays for short-term expenses. You must use up the FSA funds you contributed by the end of the year.

HSAs are individually owned, and you can use them for short-term expenses, or long-term savings, like retirement. In addition, account functionality and account holder requirements are different for the two account types. 

Let’s learn a little more about each account type.

## What is a Health Savings Account?

![how-to-choose-between-hsa-fsa](//images.ctfassets.net/6j8y907dne6i/1JfvzE56bAaAExlGqDmfjd/eafd5bc19e833ef342e4349e4eb6f630/how-to-choose-between-hsa-fsa.jpg)

A Health Savings Account is a kind of savings account that allows you to [save for health care costs](https://livelyme.com/blog/what-is-an-hsa/). And reduce your taxable income. In other words, HSAs are individually owned, tax-advantaged medical savings accounts. You can open one as an individual or as part of a family plan. As long as you and your family are enrolled in an HSA-eligible [High Deductible Health Plan](https://livelyme.com/blog/what-is-a-high-deductible-health-plan-hdhp/) (HDHP).

### What’s considered an HSA-eligible health plan?

HDHPs are [health plans](https://livelyme.com/guides/hsa-guide#qualifying-for-an-hsa-account/) with a minimum deductible and maximum out-of-pocket expenses set by the IRS that differs for individuals and families.

The IRS adjusts its allowed annual [HSA contribution limits annually](https://livelyme.com/blog/hsa-contribution-limits/) for inflation, and has different limits for individual and family accounts. If you have a [mid-year change](https://livelyme.com/blog/hsa-contribution-limits-mid-year-changes/) – like moving from self-only coverage to family coverage, or vice versa, then your annual contribution limit becomes prorated.

### How does an HSA work?

When you open your HSA, you choose how much you’d like to contribute annually. Then, your employer will deduct the appropriate amount from each paycheck. Your employer may choose to also contribute to your account. But they’re not required to.

If they do contribute, those contributions will count toward your [maximum annual limit](https://livelyme.com/guides/hsa-guide#maximizing-your-savings). Choose your individual contribution amount carefully. And keep in mind that contributions are cumulative. Otherwise, you could end up going over the annual contribution limit.

If you’re under the age of 65, you must use your contributions to pay for qualified medical expenses. These include, but are not limited to:

- Copays
- Coinsurance
- Deductibles
- Acupuncture
- Mental health treatment
- Prescriptions
- Medical supplies like [bandages](https://hsastore.com/SearchProducts.aspx?q=band+aid&utm_source=Lively&utm_medium=TPA+Public+Proprietary+EL&utm_campaign=TPA+Partner), [crutches](https://hsastore.com/SearchProducts.aspx?q=crutches&utm_source=Lively&utm_medium=TPA+Public+Proprietary+EL&utm_campaign=TPA+Partner), [joint braces](https://hsastore.com/SearchProducts.aspx?q=braces&utm_source=Lively&utm_medium=TPA+Public+Proprietary+EL&utm_campaign=TPA+Partner), and more
- Hearing aids
- Dental health
- Vision tests

Want to see the full list of HSA-eligible expenses? Visit [What’s Eligible?](https://livelyme.com/whats-eligible/)

### How age affects HSA use and taxes

![age-affects-hsa-taxes](//images.ctfassets.net/6j8y907dne6i/1mxiaR9se6IhBYokKGgsdd/86de5569ecab00a84ae82f763e30789e/age-affects-hsa-taxes.jpg)

If you’re under the age of 65 and use your contributions for qualified medical expenses, those funds are not subject to federal income tax. But, your state tax liability for contributions depends on your state.

If you choose to use the money for something other than qualified medical expenses, you will incur a 20% tax penalty. And have to pay income taxes on the misused money. After age 65, you can use your health savings on anything you want provided income tax is paid on the amount of the non-qualified disbursement.

## What is a Flexible Spending Account (FSA)?

There is only one type of HSA, and its main use is to pay for qualified medical costs at any age. 

There are three types of FSAs: 

- [Healthcare FSA](https://livelyme.com/blog/what-is-a-healthcare-fsa/)
- [Dependent Care FSA](https://livelyme.com/blog/what-is-a-dependent-care-fsa/)
- [Limited Purpose FSA](https://livelyme.com/blog/what-is-a-limited-purpose-fsa/)

When people use the term “FSA,” they are most often talking about a [Healthcare FSA](https://livelyme.com/blog/what-is-a-healthcare-fsa/), which is a spending account your employer makes available to pay for qualified medical expenses with pre-tax dollars. HDependent Care FSAs are for qualified care expenses, like child or adult daycare. Limited Purpose FSAs are only used for qualified dental and vision expenses. 

The most important thing to remember is that you cannot contribute to a Healthcare FSA or Dependent Care FSA and an HSA at the same time. But you can have a Limited Purpose FSA and an HSA at the same time. 

### How does a Healthcare FSA work?

If you decide you would like to open an FSA, the good news is that you don’t have to purchase a specific health plan. In fact, you don’t have to purchase any health plan.

But you must elect to participate during your employer’s open enrollment period. Or within 30 days of starting employment if you begin your job mid-year. Then, you select the amount you would like to contribute to your account at that time. Your employer will then deduct the appropriate amount from each paycheck.

Your employer can choose to contribute to your FSA but is not required to do so. And their contributions don’t count toward your annual max. Unfortunately, you can’t change this election at any point outside of open enrollment. Unless you’ve experienced a [qualifying life event](https://www.healthcare.gov/glossary/qualifying-life-event/) like the birth of a child, death of a dependent, marriage, or divorce. 

![qualifying-life-event-fsa-contribution-amount](//images.ctfassets.net/6j8y907dne6i/td25GiIFP70vewqfrlrSD/751854829eee489fc8a0c81fddb11efb/qualifying-life-event-fsa-contribution-amount.jpg)

You also lose any unused money at the end of the year. Unless your employer offers either the option to [rollover a small amount of funds](https://livelyme.com/blog/fsa-contribution-limits/) to next year’s account or a 2.5 month grace period during which you can use leftover funds. So choose your contribution amount carefully.

Like with HSAs, the IRS imposes [an annual limit on FSA contributions](https://livelyme.com/blog/fsa-contribution-limits/) that adjusts annually for inflation. Unlike HSAs, FSAs are only opened on an individual basis, so there are no “family plan” increases for annual contribution limits. But if both you and your spouse are offered the opportunity to take part in an FSA at work, you can do so and each can contribute up to the maximum allowed amount.

FSA funds can be used to pay for out-of-pocket medical, vision, and dental expenses not covered by your health insurance plan. Including, but not limited to:

- Copays
- Coinsurance
- Deductibles
- Acupuncture
- Mental health treatment
- Prescriptions
- Medical supplies like [bandages](https://fsastore.com/SearchProducts.aspx?q=bandages&utm_source=Lively&utm_medium=TPA+Public+Proprietary+EL&utm_campaign=TPA+Partner), [crutches](https://fsastore.com/SearchProducts.aspx?q=crutches&utm_source=Lively&utm_medium=TPA+Public+Proprietary+EL&utm_campaign=TPA+Partner), [joint braces](https://fsastore.com/SearchProducts.aspx?q=joint%20braces&utm_source=Lively&utm_medium=TPA+Public+Proprietary+EL&utm_campaign=TPA+Partner), and more
- Hearing aids
- Dental health
- Vision tests

For a full list of medical expenses that you can use your FSA (or HSA funds) on, check out [Publication 502](https://www.irs.gov/forms-pubs/about-publication-502) from the IRS. You can also visit the [FSA Store](https://fsastore.com/?utm_source=Lively&utm_medium=TPA+Public+Proprietary+EL&utm_campaign=TPA+Partner).

## The differences between HSAs and FSAs

![choose-between-hsa-fsa](//images.ctfassets.net/6j8y907dne6i/EqKcpDQS9JGMip8psYcVj/994cea7acae40c6fc14eecff7688fdfc/choose-between-hsa-fsa.jpg)

### Eligibilty requirements

- __FSA:__ Only employers can establish an FSA plan for employees to contribute. Employees can open an FSA regardless of if they have a HDHP or not. Self-employed individuals cannot open an account.
- __HSA:__ Employees are eligible only if they have an [HSA-eligible HDHP](https://livelyme.com/guides/hsa-guide#qualifying-for-an-hsa-account). Individuals are not dependent upon their employer to offer an HSA. And an HSA can be opened from the private market. Self-employed individuals can open an account.

### Contribution sources and changes

- __FSA:__ The contribution amount is chosen during open enrollment or at the time of a qualifying life event. And the contribution amount can not be changed outside of these two time periods.
- __HSA:__ You can change your contribution amount at any time, no major life event required. This gives you the flexibility to increase or decrease your contribution at any time. *__Multiple contribution sources:__* You can grow your HSA in multiple ways. Not only can you add money to your HSA, but your employer, relatives, or anyone who would like to contribute can help your HSA grow.

### Rollover rules

- __FSA:__ Employers choose whether an employee can keep their unused funds or not. There are [three options](https://livelyme.com/blog/fsa-rollover-versus-grace-period/): *__Forfeit__*: Employee forfeits money, and employers get to keep it. *__Grace period__*: Employee has a 2.5 month grace period after the plan year ends to use on expenses. Any remaining money after the grace period is employer’s. *__Carryover__*: Employees can add a small amount of unsued funds, [set each year by the IRS](https://livelyme.com/blog/fsa-contribution-limits/) (in addition to contribution limit). Employers decide the carryover limit, and any funds over the limit are the employer’s.
- __HSA:__ Funds do not expire from year-to-year. Rollover money is in addition to the contribution limits. Money in your HSA can be carried with you and is available even if you change health insurance plans, get a new job, or retire. And funds left in your account grow tax-free through interest or any investment gains.

### Account ownership

- __FSA__: An FSA is owned by the employer. Unused funds belong to employers, not the employee.
- __HSA__: Funds stay with you. One of the best perks of an HSA is that the money you save always stays with you because you own the account. If money is left in your HSA at the end of the year, it stays put. No scrambling around trying to find ways to spend the money before the timer runs out.

### Access to money

![accessing-hsa-fsa-contributions](//images.ctfassets.net/6j8y907dne6i/4lJ6EN6128M5SHmAuh8hzk/60301225072d2cec1be8a6e2fda926ca/accessing-hsa-fsa-contributions.jpg)

- __FSA:__ Money available from day one. Every penny you contribute to your FSA is available at the beginning of the benefit year. Or shortly after the first contribution is made. Say you add $2,000 to your FSA for the year, you’ll likely contribute about $80 per paycheck. Yet, the entire $2,000 is available to use at any time even though you only make small contributions during the year. Another perk? If you leave a position before the year is over, the money spent from your FSA doesn’t have to be paid back.
- __HSA:__ As the employee contributes to their plan. An employee only has access to what has actually been deposited into their HSA account.

### HSA: A savings asset

- *__After the age of 65, your HSA functions like any other retirement account.__* And you can use your HSA money on anything you wish. How does it differ from other retirement accounts? You don’t pay income taxes on money used for medical expenses. You do, however pay income taxes on money used for anything else.
- *__HSAs are assets you can pass on to your kin:__* If your spouse inherits the HSA, it retains its status as a retirement-like account. With the same rules and allowances as it had when you were the account holder. If you pass it on to someone other than your spouse, it stops being an HSA, and inheritance laws apply.

## Understand the pros and cons to find what’s best for you

![is-hsa-fsa-better](//images.ctfassets.net/6j8y907dne6i/7dkm3u9Ez0B7z6r7ZndKdK/d746299a286d54387aae669880b9cbb2/is-hsa-fsa-better.jpg)

While it’s likely you’ll only be eligible for either a Healthcare FSA or an HSA, it is still a good idea to take a look at the pros and cons of both types of accounts. This can help you understand how they align with your greater financial goals and help you decide what healthplan to choose.

### HSA Advantages

- __Portable account__: means you own the account and don’t lose it if you change jobs
- __Triple-tax advantage__: Contribute funds pre-tax, funds grow pre-tax, withdraw funds pre-tax for qualified expenses
- __No use-it-or-lose-it rules__: Spend now or save for retirement.
- __Anybody can contribute to your HSA__: This includes your employer, spouse, family, or friends, as long as you don’t go over the annual contribution limit.

### HSA Disadvantages

- Must enroll in a HDHP and meet other qualifications to have one
- May be subject to fees from the provider
- If you use your HSA for non-qualified expenses over age 65 you'll owe an additional 20% tax penalty on top of any taxes due

### Healthcare FSA Advantages

- __Double tax savings__: Contribute funds pre-tax, withdraw funds pre-tax for qualified expenses
- __Health plan agnostic__: Can enroll in one if your employer offers it, do not need to have a specific type of health insurance plan

### Healthcare FSA Disadvantages

- Only available from an employer, can’t have one if you are self-employed
- Employer owned, means you lose the account if you change jobs
- Subject to use-it-or-lose-it rules, meaning you lose funds if you they are not used during the plan year

## Align Your Goals with Your Savings

Deciding between an HSA and FSA depends on your medical and financial needs. The principal requirement for an HSA is enrollment in an HDHP. And while preventative care is covered before the deductible under HDHPs, most other care is not. That means you will have to pay for your medical expenses for you and your family out-of-pocket until you reach your deductible.

An HSA-eligible HDHP makes the most sense in two cases. First, [if you or one of your family members](https://livelyme.com/features/) has a condition that needs managing by either a specialist or with speciality prescriptions or treatments. In this case, you’ll likely exceed the deductible and be able to use HSA funds to save up 30% on out-of-pocket medical costs.

Secondly, if you rarely use the medical system except for routine preventative care (that includes vaccines and well visits for children) and really want the ability to use your pre-tax account as an investment vehicle to save for retirement. Then, an HSA/HDHP arrangement may be the best choice for you.

To make the best decision for you and your family, start by assessing your past medical needs and those you can project. Then take a look at your finances. Choose the account and health insurance plan arrangement that sits at the nexus of best health coverage and account flexibility.

comparing hsa versus fsa

An HSA and FSA provide up to 30% savings on out-of-pocket healthcare expenses, but you can’t contribute to both. Let’s explore the pros and cons of each account.

HSA vs. FSA: How Do They Compare?

What is the Difference Between a Flexible Spending Account and a Health Savings Account?

Finding the right health insurance plan for you can feel daunting. One of the questions you may be considering is whether you should get an HSA or PPO. The good news is that you might not have to choose at all. Here’s what you need to know about both and how you can utilize them to maximize your health savings.

## HSA vs PPO: Why not both?

Before we get into the details of each option, let’s clear something up. A Health Savings Account (HSA) is a [tax-advantaged account](https://livelyme.com/guides/hsa-guide/) that allows you to save for qualified medical expenses — it’s not a health insurance plan. 

On the other hand, a preferred provider organization (PPO) is a type of health insurance plan that provides access to health care in a certain way. 

In fact, you [can have a PPO plan and an HSA](https://livelyme.com/blog/can-an-hdhp-be-a-ppo/) at the same time. Here’s how they both work.

### Preferred Provider Organizations

A PPO refers to the network coverage your health plan gives you access to. If you get your healthcare with providers who are in the network of your healthcare plan, you pay less for healthcare than with providers outside the network. However, you may still get some coverage with out-of-network providers. 

One major benefit of a PPO is that you don’t have to get a referral from your primary care physician to visit with a specialist. Simply check if they’re in your plan’s network and book an appointment with them directly. 

The biggest competitor to PPOs are [HMOs (health maintenance organizations)](https://livelyme.com/blog/hmo-vs-hdhp/), which allow you to coordinate your healthcare with your primary care physician, but at the cost of having access to a smaller network of providers.

### Health Savings Accounts

An HSA is a type of health savings plan that allows you to set aside money to pay for medical costs, up to a [maximum each year](https://livelyme.com/blog/hsa-contribution-limits/) which is set by the IRS.

Contributions to an HSA are tax-deductible, and your earnings in the account grow tax-free. As long as you use the funds for eligible medical expenses, those distributions are tax-free, too — that’s what the experts call a triple tax advantage.

To be eligible to contribute to an HSA, you have to have a [high-deductible health plan (HDHP)](https://livelyme.com/guides/hdhp/), which has a deductible and out-of-pocket maximum that are higher than traditional health plans. In exchange, they charge lower monthly premiums. 

### Can you get an HSA on a PPO plan?

In a lot of the information you may find online, it can sound like HDHPs, PPOs and HMOs are all separate types of health plans. But [HDHPs are defined only by their deductibles and out-of-pocket maximums](https://livelyme.com/guides/hdhp/) and have nothing to do with your network of providers.

In fact, the beauty of all of it is that it’s possible for an HDHP to be on a PPO network. That’s not to say the two are synonymous, though. Many PPO plans have low deductibles and out-of-pocket maximums, which are usually paired with higher premiums. 

Because this can get confusing, we’ll use the term “typical plan” or “traditional plan” to refer to the low- deductible, high-premium plans you can get on a PPO or HMO network, and we’ll use HDHPs for HSA-eligible plans that you can also get on both networks.

Now, with that out of the way, let’s get to the heart of the matter. The question isn’t whether an HSA is better than a PPO. The question is really whether you want an HDHP that qualifies for an HSA or a low-deductible plan?

## What is an HDHP?

As previously discussed, a high-deductible health plan is one where you have higher deductibles and out-of-pocket maximums than traditional plans, but also lower premiums. 

The limits are [determined each year by the IRS](https://livelyme.com/guides/hdhp/). These figures are sometimes much higher than what you’ll find with a traditional health plan. But the option to contribute to an HSA helps soften the blow a bit, especially if you have a high income and can benefit greatly from the tax breaks HSAs provide.

An HDHP can also be a good choice if you don’t have a history of needing medical care often. While there is a risk of ending up with a higher payment in some circumstances, you’ll have the certainty of lower monthly payments.

## What do traditional PPO and HMO plans offer?

These traditional plans charge higher premiums than HSA-eligible plans, but they also have lower deductibles and out-of-pocket maximums. In fact, some PPO and HMO plans have no deductible at all. They’re great if regular office visits are part of your health regimen.

The difference between a PPO and an HMO is how the provider network works. With an HMO, you’ll deal with your primary doctor most of the time and need to get a referral if you want to see a specialist. A PPO, on the other hand, gives you options to see other doctors and specialists without needing to go through your primary care physician.

## Why should you get an HDHP?

The biggest benefit of an HDHP is that it gives you the option to contribute to an HSA. To give you an idea of the potential savings, let’s say you have a family plan and can contribute $7,200 this year. 

If your effective tax rate for the year is 15%, that contribution cut $1,080 off your tax bill for the year — of course, as long as you don’t use your HSA funds for ineligible expenses.

In addition to saving for upcoming health care costs, you can also use an HSA to save for retirement. Health care is one of the [most expensive aspects of retirement](https://livelyme.com/blog/retiring-how-much-you-will-actually-need-healthcare/), and is estimated to cost an average couple $300,000 to $400,000 to pay for it.

Even if you don’t want to use your HSA for medical expenses in retirement, you can take withdrawals without the typical 20% tax penalty once you reach age 65. That said, the distributions will be subject to income taxes.

HDHPs can also be good if you’re young or generally healthy and don’t expect to spend a lot on medical care throughout the year. Of course, there’s no guarantee you won’t need an expensive procedure or visit to the emergency room. 

Even with most doctor visits, you have to pay the full bill before your insurance coverage kicks in. As a result, HDHP plans are best if your risk tolerance is high. 

## Why should you get a traditional PPO or HMO plan?

A traditional health plan won’t give you access to an HSA. But it can be great if you expect to make regular doctor visits or to get medication frequently throughout the year.

Their lower deductibles mean you’ll hit your limit sooner, and your insurance coverage will kick in earlier. For instance, they’re great if you’re pregnant as you’ll be doing regular check-ups with your doctor while you’re expecting.

Also, it’s possible to get access to a Flexible Spending Account (FSA) with a traditional health plan. FSAs are [another type of health savings plan](https://livelyme.com/blog/hsas-vs-fsas/), but you can only contribute to one if your employer offers it as a benefit. 

FSAs have some of the same benefits as HSAs, including pre-tax contributions (not the same as deductible contributions, but it’s the same concept). Also, when you designate how much you want to contribute over the next plan year, you’ll receive that amount at the beginning of the year instead of waiting to build up the balance through your payroll deductions. 

The biggest drawback of an FSA is its use-it-or-lose-it provision. This means that if you don’t use all of the money you contributed during the plan year, you could lose the remaining balance. 

Employers are allowed to make some exceptions, such as giving you more time to incur qualified expenses or allowing you to carry over some of the balance into the new year. But that’s not guaranteed.

Also, your FSA stays with your employer, so if you get laid off or move to another employer, you lose the money you’ve saved.

## Pros and cons of HDHP plans

Before you pull the trigger on a new health insurance plan, it’s important to understand both the benefits and drawbacks. Here’s a summary of what you need to know about HDHPs. 

### Pros of HDHP plans
- You’ll pay lower premiums than with traditional plans.
- You can contribute to an HSA and enjoy the tax benefits.
- HSAs don’t have a use-it-or-lose-it provision like FSAs.
- HDHPs can also be PPOs and HMOs, giving you more flexibility with your options.

### Cons of HDHP plans
- Deductibles can be high, which can be a colossal financial setback if you’re unprepared.
- Even simple doctor visits can be a major expense, especially if they include tests and screenings.
- You may find it difficult to contribute to an HSA if your out-of-pocket expenses are high every month.

## Frequently asked questions

### Can I have an HSA and a PPO?

Yes! In fact, many HSA-eligible health care plans are part of PPO networks. However, not all PPO plans are HSA eligible. Check if your plan allows you to have an HSA when shopping around.

### Is it better to have an HSA or a PPO?

If you’ve come across this question online, it’s important to note that it’s misleading. HSAs are a form of savings account that you can get with some healthcare plans. PPOs refer to the network your health insurance gives you access to.

But people tend to associate HSAs with HDHPs. And they associate PPOs with low deductible plans. The truth is that you can get a PPO plan that’s also an HDHP and, therefore, eligible for an HSA.

Hence the correct question is: Is it better to have a high-deductible or low-deductible health plan? The answer: it depends. It depends on your risk tolerance, how often you expect to visit the doctor, and how much you can afford to save up.

For instance, if you’re young and healthy and don’t expect a lot of doctor visits, an HDHP is an excellent way to save on monthly premiums. It’s also important to consider how much you can actually contribute to an HSA, which determines your tax benefits.

On the flip side, if you’re older, pregnant or have pre-existing medical conditions that require you to need regular check-ups, a traditional health plan may be a better fit, even with higher premiums. 

Finally, just because you’re young and healthy, it doesn’t mean you won’t max out your deductible or out-of-pocket maximum. You’re essentially betting that you won’t have to spend more on out-of-pocket costs than what you’re saving by not choosing a traditional plan. As such, HDHPs are better for folks with high risk tolerance. 

### What’s the difference between HRA and HSA health insurance?

An [HRA (Health Reimbursement Arrangement)](https://livelyme.com/blog/what-is-an-hra/) has a similar premise to an HSA. It’s a savings account that you can use to reimburse medical expenses. The big difference is that HRAs are only available through an employer, and only your employer can make contributions. 

In contrast, an HSA belongs to you, and you, your employer or anyone else can make a contribution. Also, HSAs are portable, so you don’t have to worry about losing anything if you leave your company.

With an HRA, if you leave your employer, you lose access to that money because it never really belonged to you.

### What’s better, an HSA or an HRA?

Like most things in life, it depends. It depends on you and your needs. HRAs and HSAs also have different benefits for employers and employees.

If you’re an employer, [advantages of an HRA](https://livelyme.com/blog/what-is-an-integrated-standard-hra/) include:
- Tax advantages.
- You can integrate them with FSAs.
- Better employee retention.

However, if you want to offer an HSA to your employees instead, your benefits include: 
- Tax advantages.
- Flexibility with how much you contribute.
- Less record keeping.
- Your workforce becomes more engaged with their health care and medical expenses.
- Lower expenses.

On the other side of the coin, if you’re an employee, the [benefits of an HRA](https://livelyme.com/guides/hra-guide/) include:
- No need for an HDHP.
- It’s completely funded by your employer. 
- You have access to the funds from the first day of coverage.

However, if you choose an HSA instead, here are the advantages:
- Portability.
- Can invest the funds for retirement in mutual funds.
- You get all the tax benefits.
- 
### Are all high-deductible plans HSA eligible?

Not necessarily. They need to meet the requirements set by the IRS to qualify as a true HDHP, which is HSA-eligible. Also, true HDHPs will cover preventive care without requiring you to hit your deductible but offers no other benefits until you reach that point.

Also, it’s important to note that in order for you to be able to contribute to an HSA, you must also meet other requirements, including;
- You have coverage under the IRS’s definition of an HDHP on the first day of the last month of the year.
- You have no other health coverage, and you’re not enrolled in Medicare.
- Someone else isn’t claiming you as a dependent on their tax return.

### Can I have an HSA if my employer offers an HRA?

Yes, but only under very limited circumstances. Most general HRAs will make you ineligible for an HSA. But if your company offers a “limited purpose” HRA or a “post-deductible” HRA, then you may still be eligible for an HSA. Also, if your employer contributes to an HRA that you can only use when you retire, you may be eligible for an HSA.

A “limited purpose” HRA is one where you can only use it for dental, vision or preventative care. A “post-deductible” HRA is one where you can use it to pay for medical expenses after the IRS deductible is met.

### Can I contribute to an HSA without an HDHP?

No. But you can still spend the funds in your HSA or reimburse your medical expenses until the account is empty. 

### Can I have an HSA if my spouse has an HSA?

If your spouse has an individual health policy and no other form of health insurance, then you can get an HSA for yourself, as long as you meet all the other requirements. 

However, if your spouse uses a [health care FSA](https://livelyme.com/blog/what-is-a-healthcare-fsa/), then you wouldn’t be eligible. This is because your partner can also use their FSA funds to pay for your medical expenses. The devil’s in the details, though. If your spouse’s FSA is a limited purpose FSA (one that covers vision and dental only), then you can get an HSA.

### Can an HSA plan have copays?

Yes. The IRS defines copays as an out-of-pocket expense in an HSA-eligible HDHP. HDHPs have to have a [max out-of-pocket limit](https://www.healthcare.gov/glossary/high-deductible-health-plan/).

### Can HRA be used for premiums?

For most employers, the simple answer is no. HRAs were often used by employers to reimburse workers insurance premiums. But, that changed with the Affordable Care Act (ACA). Under the ACA, an HRA can no longer pay for health premiums. There are some exceptions, though.

For example, ACA market reforms do not apply to retirement HRAs and stand-alone. The first option is offered only to retirees, while the second is an HRA with only one plan member. Under these two specific HRAs, you can use them to reimburse health care premiums.

### Can HRA funds be rolled over to an HSA?

As of 2012, you can’t roll funds over from an HRA into an HSA.

### Can you contribute to an HSA without health insurance?

No. To contribute to an HSA, you must be on a qualified HDHP and not otherwise insured. A family member can contribute on behalf of other family members as long as they are eligible. But to be able to contribute to an HSA, you need to have an HDHP.

## How to work out what plan is best for you

When deciding which health plan to choose, you’ll want to take a thorough look at the following factors:
- Do you expect to visit the doctor often? 
- What is your risk tolerance? 
- Will you be able to afford an expensive medical bill if an unexpected event happens?
- How big of a network do you need?
- Can you max out an HSA every year?

Take a clear look at the math of the plans you’re weighing up. Sometimes even though the deductible for a traditional plan is lower, it doesn’t make financial sense if the employer contribution to the HSA in the HDHP plan is high. 

At the end of the day, no-one can tell you what plan is best for you. Only you know your unique situation and your risk tolerance. Consider speaking with a tax advisor to get personalized advice to help you make the choice that’s best for you.

Choosing the right health care plan for you hsa vs ppo

HSA or PPO? The good news is that you don’t have to pick, as long as you have a high-deductible plan in a PPO network.

HDHP HSA vs PPO Plans: Which is better for health insurance? 

What’s the Difference Between an HDHP with an HSA and a PPO?

What if I qualify for Medicare?

If you qualify for Medicare and have HSA questions our articles can help.

What if I am married or planning on getting married?

Here you will find HSA related articles regarding marriage and tax savings.

What if I am unemployed?

Currently unemployed? Find out how you can save on your taxes with these USA articles.

What if I am self-employed?

If you are self-employed in a high deductible health care plan (HDHP) read our articles on how HSA's can help save money on taxes.

What if I have or was offered job-based insurance?

Offered job-based insurance? Read our articles.

What if I just had a baby or adopted?

Whether you had a baby or adopted one our articles on HSA tax savings can help.

What if I had a baby or just adopted?

What if I am under 30?

If you are under 30 and have a high deductible health care plan find out how an HSA can save you money.

What if I have children?

Are you looking for HSA related articles regarding children? Take a look at what we have.

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