Wealth Management

Using a Health Savings Account (HSA) is a prudent financial decision that many Americans overlook or simply do not understand. One of their primary benefits is that contributed funds do not run out each year like a medical savings account. Instead, unused funds roll over each year and can be used for future medical expenses. This feature creates a unique planning opportunity to help cover future medical expenses, which is important since it is well documented that medical expenses are the largest expense for many in retirement. Furthermore, a retiree can use a health savings account even when on Medicare to cover medical expenses.

Here are some important facts to keep in mind when it comes to an HSA:

• They must be under a high deductible health plan.
• Funds can be used for current or future medical expenses.
• Contribution limits are set by the IRS ($3,550 if single or $7,100 for family).
• You control the assets and they are portable if you retire or switch employers.
• Contributions are 100% tax-deductible and withdrawals are tax-free for qualified medical expenses.

Who qualifies for an HSA?

To qualify, you must be enrolled in a high deductible plan that is compatible with an HSA and you can’t be enrolled in another health plan or in Medicare (funds acquired through an HSA prior to using Medicare can be used, however).

If you have any questions, your best option is to simply inquire with your employer and see if you qualify for an HSA.

What are the tax implications of an HSA?

Contributions up to IRS limits of $3,550 single or $7,100 family are 100% tax-deductible. The money will grow tax-deferred and is tax-free if used to pay qualified medical expenses.

Other factors to consider

Assets in the health savings account can be invested in ETFs, mutual funds, or held in cash. A person can do a partial rollover from an IRA into an HSA (within IRS limits) as well to help fund the HSA. The amount you contribute is an important consideration and it is best to consult with a Financial Advisor to best understand how you can potentially benefit from an HSA and determine what amount is most beneficial for you to contribute.

These words have just been sitting heavy with me lately. As I think about them it has so many different meanings and is something, I just wanted to share.

1. Do Not Lose Sight of the Finish Line – The end of the year is in sight so make sure to complete any goal or projects you wanted to complete this year. Too many people run out of strength and do not complete things that they start. Take advantage of this time by staying focused and finish strong.

2. Do Not Lose Sight of Yourself -We have all been impacted by COVID but some worse than others. If your finances or health has been negatively impacted this year, do not isolate yourself but reach out and seek help. Contact us if you have nowhere else to turn.

3. Do Not Lose Sight of Loved Ones – During this pandemic too many people have been negatively impacted and we are seeing a larger number of people struggling with addiction or suicide. Reach out to loved ones just to check-in, especially if they live alone.

4. Do Not Lose Sight of What is Important – We are approaching elections and amid great turmoil in our wonderful country. Do not lose sight of what matters most, relationships. I have seen too many people burn bridges and lose a relationship with friends or family because of political beliefs.

If you missed our Money Mastery webinar series or just want to revisit any portion of the series given by our CERTIFIED FINANCIAL PLANNER^™ (CFP^®) professionals, the replays are now available OnDemand by clicking the links below.

Connecting the Dots to Your Financial Future (Part 1) – Learn the importance of creating a budget, strategies to pay down debt, and tips to build and maintain good credit.

Connecting the Dots to Your Financial Future (Part 2) – Create healthy financial habits and learn about the keys to investment success.

A Definitive Guide for Education Planning – Understand your options with student loans and learn about the best ways to save for college and maximize student aid.

This time of year, it is important for high school Seniors (and Juniors) to consider their plans after high school. The FAFSA process begins on October 1st and check out our recent blog post for more information. Below are some things to consider whether to go to college or not as well as what majors to consider.

• Below are jobs considered the best to have for the future:

• There are high paying careers that do not require a college degree. We have several clients that are small business owners in common industries (i.e. construction, chemicals, etc.) that do very well for themselves. If college is not your thing, the best option is to learn a specific skillset whether it be a lineman (median income about $65,000) or a healthcare specialty. Here is an article that shows the top 10 jobs that make over $79,000 a year without a college degree.

• If you are going to college an important aspect to consider is the Return on Investment (ROI) for the college you attend. This measure shows you how much you can expect to earn after college in relation to the cost for your education. Below is an interesting chart from payscale.com showing the Top 10 schools for ROI. Interesting to note some schools are specific technical schools like SUNY Maritime College and Colorado School of Mines.

There are many things to consider when deciding on what college to attend. If you would like to learn more please listen to our upcoming webinar on education planning.

If you or a child plans on attending college for the 2021-2022 school year (i.e. next fall) the most important step is to start the process early for financial aid. The first step is to complete the FAFSA, which is the government form used to determine how much financial aid the student may qualify for.

Who Should Complete The FAFSA?

High school seniors planning on attending college next fall or students who will return to school next year. The FAFSA must be completed annually so if you completed it before do not forget to complete the FAFSA this year.

When Should I Complete The FAFSA?

The FAFSA is available on October 1^st, so complete the application as close to this date as possible.

Just A Few Reasons To Complete The FAFSA ASAP:

• More Money – Studies have shown those who file early qualify for more federal and school aid than those who file late
• Simplify the Process – The financial aid process is tedious and takes effort. Get this out of the way to focus on college applications or scholarship searches and applications
• Better to Understand Your Options – Once the FAFSA is completed it is much easier to review and compare school acceptance offers
• Give yourself more time – The earlier you complete the process the more aid you potentially will qualify for. For example, many scholarships have early deadlines and will look at your FAFSA, so don’t miss out on opportunities for more college aid

How Do I Complete The FAFSA?

Go to FAFSA.GOV and click on the link to start if you are new or returning. See below for reference:

What Information Is Needed To Complete The FAFSA?

You will want to have tax returns handy to make the process simpler. Below is a summary of some basic info you will need:

Included Assets

• Checking and Savings
• Investments
  • Brokerage Accounts
  • Stocks, Bonds, & Mutual Funds
  • CDs
• Real Estate (Other Than Primary Residence)
• UTMA/UGMA Accounts
• College Savings Accounts (Reported As The Asset Owner)

Excluded Assets

• Home Equity
• Small Businesses (Owned and controlled by family)
• Qualified Retirement Plans
• Life Insurance
• Personal Possessions

Do Not Procrastinate! Completing the FAFSA can be overwhelming and causes many people to procrastinate. Complete the application on October 1st (or as close to it as possible) so that you do not have to worry about it and can focus on other areas to help you qualify for more financial aid! As always, do not hesitate to reach out to us with any questions and watch our upcoming webinar for more helpful tips for the FAFSA and qualifying for more financial aid!