Are HSAs the New 401(k)?

With growing concern about health care costs on the part of both employers and workers, the popularity of health savings accounts should grow. Unlike Section 125 cafeteria plans where you lose what you don’t use at year end, HSAs offer many benefits, including rollover freedom, investment and some spending flexibility, as well as death benefits. The 2013 contribution limits on HSAs are $3,250 for individuals and $6,450 for couples, with $1,000 catch-up provisions for those 55 and older. While we spend a lot of time trying to figure out how much people need to save, we spend less on calculating expenses. EBRI estimates that a 65-year-old married couple who retired in 2011 with median prescription drug expenses would need $287,000 to have a 90% chance of covering all medical costs after retirement. Expenses can vary widely depending on health as well as the state retirees live in during retirement. There’s actually a service that helps advisors make that calculation – HealthView — which some providers make available.