4 Points Every Financial Advisor Offering HSAs Should Know

Pat Jarrett, HealthSavings’ Co-founder and Executive Chairman, recently had the pleasure of co-hosting a webinar for financial advisors titled “How to Use Health Savings Accounts to Bring More Value to Your Clients (and Your Practice).” He co-hosted the webinar alongside Dimensional Fund Advisors and Aaron Pottichen, President of Retirement Services for CLS Partners.

Here are 4 key takeaways from the webinar:

  • 1. Two types of employees respond especially well to using HSAs as investment accounts.

Young employees with good health and close-to-retirement employees with the financial means to not touch their HSA contributions are generally strong candidates for investment HSAs, Pottichen said. Focusing on employers with those types of employees is a solid strategy for finding new clients.

Jarrett added that when HSA accountholders turn 65, they can pull money out of their HSAs for non-medical expenses and only pay regular taxes, which qualified medical expenses remain tax-free. For those people, an HSA works like a 401(k) on steroids.

  • 2. HSAs are for individual wealth managers too.

Pottichen noted that any advisor’s job is to make sure their clients’ money is spent as efficiently as possible. Since medical expenses affect everyone and HSAs are the most efficient way to pay for them, any advisor should feel comfortable introducing them.

Jarrett added that individual wealth managers who bring up HSAs show wonderful attention to detail and set themselves apart as total retirement managers, rather than someone who just thinks about pension plans.

  • 3. HSAs can help bridge the gap between benefits and retirement packages.

Jarrett said two concerns he often hears from employees are, ‘How do I pay for healthcare?’ and ‘How do I prepare for retirement?’ By enabling accountholders to pay for current medical expenses or invest funds towards retirement healthcare costs, HSAs answer both questions.

Pottichen added that in today’s growing economy, more and more employers are playing defense to keep their employees from finding other jobs. Helping your employees understand how your benefits and retirement packages work together can help keep them satisfied, and HSAs are a perfect example of this benefits integration.

Finally, Jarrett brought up a current piece of legislation proposing making HSAs a formal sidecar for 401(k) as an example of how HSAs aren’t going anywhere. Over time, he said he sees HSAs becoming the new 401(k) or IRA, and that many advisors will be kicking themselves wishing they’d gotten in on HSAs earlier.

  • 4. Advisors shouldn’t try to be HSA experts, but they should be experts on bringing up the concept of HSAs.

Pottichen recommended familiarizing yourself with a company’s current benefit environment and introducing the idea of an HSA, then passing the baton to a trusted HSA provider to cover logistical details.

However, he said he has often shown decision-makers a side-by-side comparison of medical expenses under their current health coverage versus a high deductible health plan (which you need in order to offer HSAs). Many times, people think high deductible health plans are always more expensive than other coverage, but a simple comparison can show a different story.

If you’re a financial advisor, we can provide the tools and expertise to help you confidently offer HSAs to your clients. Add HSAs to your toolbox and become the total retirement manager your clients need.