Financial advisors should note that some health savings accounts are better for covering current medical expenses while others are preferable for those clients hoping to invest current income for medical bills in retirement, according to recent Morningstar data cited by the New York Times.
Not All HSAs Created Equal: Mutual Fund Selection and Fees
Savers can use HSAs to invest, grow and use their funds tax-free, the publication writes. But they can only be used for medical expenses and are only currently open to those whose health insurance deductibles are at least $1,300 for individuals and $2,600 for a family, according to the Times. That’s still about a third of employees whose employers offer them health insurance, the publication writes.
People who wish to use HSAs for covering current medical bills should look for accounts with low or no account maintenance fees and easy access, Leo Acheson, a senior analyst at Morningstar, tells the paper. At the top of Morningstar’s list for spenders are Alliant Credit Union, the HSA Authority and Select Account, which don’t have a monthly maintenance charge, according to the Times.
Those wishing to use the funds for saving for retirement medical bills should look for variety of asset classes and quality of funds available through the accounts as well as total cost, the publication writes. Morningstar gave top marks in this category for Health Equity, Optum Bank, the HSA Authority and Bank of America, each of which has a combined expense ratio of under 1%, according to the Times.
Meanwhile, only Old National Bank’s HSA Authority ranked high both on maintenance fees for those using funds for current medical expenses and on its selection of mutual funds for those using HSAs for investing, the publication writes.
HSAs have grown in popularity since they were first introduced more than a decade ago as employers try to make workers pick up a bigger share of their healthcare costs, the publication writes. There were 20 million HSA accounts by the end of last year, or about 20% more than the year prior, and collectively they held almost $37 billion, according to Devenir data cited by the Times.
Commentary on the New York Times article by Ann Carrns
Posted by: The Wealth Advisor
