Forest for the trees; blind but now can see—pick the cliché, but advisors are having trouble with certain areas of health saving accounts (HSA), and Jamie Greenleaf is determined to do something about it.
Greenleaf, Lead Advisor and Principal with Cafaro Greenleaf and Founder of TILT, a health benefits advisory firm, presented a session on Tuesday afternoon at the Broadridge Fi360 Solutions Annual Conference 2021. Titled “The HSA Blind Spot,” it began by addressing important misconceptions, starting with one commonly heard from employees that Medicare will cover all costs in retirement. There is also a major misconception about what the cost of health care in retirement will actually be.
“People also generally do not realize that HSAs allow the “shoe boxing” of receipts,” Greenleaf noted, “where you’re able to pay yourself back at a later date.”
She then moved to Medicare means-testing and how distributions from an HSA account are not applied to the accountholders modified adjusted gross income.
“It can make a big difference when you pay your Medicare premiums,” she added.
Despite the advantages they offer, adoption is still frustratingly low, and Greenleaf then explained why.
“It has to do with a high deductible health care plan, which is super scary,” she explained. “If we’re able to teach people that high deductible health care plans actually just means that you’re able to save premiums in an HSA and use those dollars for Medicare throughout your lifetime, we can have a huge impact on both employer as well as employee success.”
Significant regulation
She concluded with a brief discussion of recent regulatory changes that were significant, specifically greater transparency in healthcare pricing because of the Consolidated Appropriations Act of 2021. Many advisors are still unaware.
“We’re hoping that through health care transparency and some of the new fiduciary duties, that plan sponsors will be more receptive to letting professionals like ourselves go in and really educate on high deductible health care plans and the value of the HSA,” Greenleaf said.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.