Host Carla Wardin speaks with Jill Kelly, Vice President of HSA Solutions, about all the ins and outs of health savings accounts. Jill covers past misconceptions about HSAs, the top benefits for account holders, and how opening an account is a smart investment choice at any age. All you need to know about HSAs–right here!
Carla: Hello, my name is Carla Wardin, and I'm the host of the ConnectYourCare podcast. I'm talking today with Jill Kelly, Vice President of HSA Solutions. Hello, Jill.
Jill: Hello. Good morning.
Carla: Jill, can you tell me about yourself and your work?
Jill: Absolutely. I've been with ConnectYourCare over three years now, but prior to that I was the director of a health savings accounts division that I launched in 2004. And so, I had that product, grew that product until it was sold in 2017, so I breathe and live HSAs. I'm very passionate about the product and wish everyone could have one.
Carla: Oh, that is such a nice sentiment. Just last night, my husband asked me a question about HSAs and I was so excited that I was able to talk about it. And so, I understand you're living and breathing the product. So, obviously, lots of people have heard of them, but not everyone understands the ins and outs, especially not the way you do. What does it stand for, and what does HSA mean?
Jill: So, I think the first thing that the industry is learning is that when we say HSA, people don't get it. Visa did a study late last year, and when they said to someone, "Do you know what an HSA is?", too often people looked at them not understanding it, but when you said, "Health savings accounts," people understood it. And so, a lot of us are trying to push the industry to look at saying the whole "health savings account" so people really understand it. The only thing that we worry about is that word "savings" because we know you can spend it. And so, we, even from an industry perspective, have tried to get it changed to be "health spending accounts," but we didn't have any luck there. But, at the end of the day, if you have a qualified high-deductible health plan and you're eligible, you should really open up a health savings account, and whether you have to spend it or save it, that's up to you.
Carla: It's so funny. Once something is named something, it's so hard to get people to call it anything else. But what does the health saving account mean for people?
Jill: So, it allows you to put money aside for medical expenses, and you can put that money aside, you don't pay taxes on it, that money is yours to use how you see fit, and it's portable. It's similar to a bank account, but it's specific money that's set aside for medical expenses that you may incur.
Carla: You obviously know them very well, and obviously there are a lot of benefits. What would you say are the main benefits for owning one of these for a regular person?
Jill: A lot of us do say taxes, what you're going to save in taxes, but I think a lot of people who, you know, are in a lower tax bracket, it's more having money set aside for medical expenses. You never know when you're going to need to go to the ready-clinic, and so having these types of accounts puts the money aside. A lot of them are employer-sponsored. A lot of employers make contributions into the account on behalf of their employees. And so, it's really having money available to pay for medical expenses. It doesn't matter how great your health care plan is. If you have a qualified high-deductible health plan, you have a deductible, and so it's really being able to put money into an account to be ready to pay for that deductible if something was to come up.
Carla: And it seems like something always does come up. Just this last week, my friend's daughter broke her collarbone, and just this morning, part of my dad's hearing aid broke off in his ear. So, you don't get to plan for any of these things, obviously, but you're saying that, when you have the money there, you can use it for these types of events?
Jill: Exactly. And then, keep in mind, you know, how often do you get the 30%-off Kohl’s coupon? So, I look at the health savings account as my 30%-off Kohl’s coupon. I'm always going to take that coupon, especially when it's 30%, to make a purchase. Well, the same thing exists when you put money into a health savings account. You're not going to pay your federal tax on that, and in most cases, you're not paying state tax on it. And so, whatever your tax bracket is, that's your coupon, so why not run that money through a health savings account so that you get that coupon right off the top of that medical expense? So, like you said, the hearing aid, if you had that money run through the health savings account, whatever your dad's tax bracket is would be exactly what he was saving from a coupon perspective.
Carla: I like the idea of a coupon for taxes, I have to admit, anything to save money on taxes and then having that money available. Is this just an account people can get through their employers, or is this something that individuals can open?
Jill: No, it's definitely doable for an individual or a family if your employer does not offer one. And so, even on our site, we call it HSA Express, you can apply for an account, and then you manage it directly. You make electronic contributions right into the account. So, as long as you're qualified, you should definitely establish a health savings account and fund it with whatever you can fund it with. You know, for an example, I've had an individual account and I'm fortunate enough to have over $50,000. I'm what they refer to as a saver.
And too often, people don't realize what the cost of retirement health care is. I think a lot of people have this notion that, "Oh, my health care when I retire is going to be Medicare, and I'm good, you know, it's going to be covered." That's not the case. Prominent industry studies show that the average couple retiring at 65 will have medical expenses, not dental and not vision, exceeding $300,000. And so, for me as an individual, when I retire, I only have $50,000, but my medical expenses are going to be $150,000. So, for me, I look at this account as my health 401(k). I'm making sure that I put the money in there. But if you need to spend, spend it. You know, our tools allow you to spend it, whether it's, you know, processing a claim, paying a doctor, paying yourself back, or leveraging the debit card. So, it's a product that someone, whether you're a spender or a saver, can definitely use.
Carla: Yes, and congrats on being a saver, by the way. Do employers have to have any special qualifications to open HSAs for employees?
Jill: They don't. Normally, what the employer should make sure is that the individual's eligible. So, there's certain components. For example, if you're claimed as someone's dependent, you're not eligible to establish and contribute to an HSA, or if you're covered by your spouse's traditional flexible spending account, you're not eligible. So, employers will often ask their individual employees, "Are you eligible?", and then they give them a list of what may cause you to not be eligible. But, other than that, the employer is able to establish the accounts, and then able to fund those accounts through the pre-tax payroll contribution process.
Carla: What are some misconceptions surrounding HSAs? Are there things that you've heard or that people talk about that just aren't true?
Jill: We could be on the call all day long. The biggest one that I hear, that just, I can't comprehend it is, "I lose the money if I leave my employer," or, "I lose the money at the end of the year." I think what happened was, you had FSAs so many years before HSAs came into law that it's that whole "use it or lose it" syndrome. So, time and time again, it's reminding people that, "No, this is your money. Just like your checking account is your checking account, it goes with you wherever you go."
I think the other one that really pauses me is people don't know that they can invest, or they don't see the value in investing. In today's environment, you know, your cash position is not earning anything to write home about, but if you're able to invest, an even...an average, you know, 4% or at 5%, which is very low from a return perspective, that's 4%... Let me correct. That might be low as it relates. I think the stock market average is a 10% return over a 15-year period of time. So, 4%, I'm being very conservative there, but I'm able to earn 4% on my $50,000. So, people not knowing that they can invest it, I think, is a huge miss. Study upon study shows that, I think, 7% to 10% of people who are eligible to invest are actually investing, and so our big focus is that health to wealth, reminding people, when they receive their monthly statements, that they're able to invest and encouraging people to invest.
Carla: It is a great investment via a call, but what other retirement benefits do HSAs have? For instance, is there any point for someone to open one if they're approaching retirement age?
Jill: No matter how old you are, you should establish a health savings account if you're eligible. So, if you're 55 and you're in a qualified high-deductible health plan, you should give serious considerations to opening the account and making as much, from a financial perspective, contribution that you can because you have 10 years. And let's say you're able to save $5,000, that's $55,000 with no investment upside that you'll be able to take into your retirement. So, it's never too late.
I was on a call last week, and they're moving to a qualified high-deductible health plan, and they have a good number of employees that are in the 59 to 60 age range, and they are ramping up the education to get these people to establish these accounts and contribute the max. And then, when you're over 55, you actually get an extra $1,000 a year. So, people are starting to get the message out there that your health care's not covered in retirement and it's never too late to save.
Carla: It is never too late. And when we're talking about the different items and services that HSAs cover, do you want to talk about some of the ones that they cover that people might not know about?
Jill: Mm-hmm, absolutely. So, keep in mind, if you have a health savings account and you have to go get braces, or you have to go to the vision store to pick up your contacts, or you have to get some dental procedures done, you can use your health savings accounts for that. And so, it's not just items that are covered under your health care plan, it's other items. A lot of people don't realize that you can purchase sunscreen with your health savings accounts funds. So, there's an entire list of items that you're able to purchase. As a matter of fact, on ConnectYourCare’s app, we have the ability to scan the barcode on the back and it pops back the response of whether that item is eligible or not eligible.
Now, granted, you cannot go get an eyelift with the money in your health savings accounts unless you have a doctor's prescription that says it's causing a vision problem. A dear friend of mine was able to get his eyes done using his health savings account fund. So, there are different things in different areas that you're able to research what you're able to use it for, but at the end of the day, if you're able to save and use it in your retirement, it's able to pay for your health care premiums and such.
Carla: Where can people find out more about health savings accounts?
Jill: Definitely. On ConnectYourCare’s website, we have a ton of resources. One of the things that I have found people gravitate towards is our "HSA for Dummies," and it is able to be downloaded, and it's a quick reference guide giving you the ins and the outs of, "What is a health savings account and is it something I should consider?" And then, we also have a lot of tools and calculators on the website to look at, you know, "Where's my money going to be in 20 years?" Or, in my case, I'd like to think I'm going to be able to retire in under 10 years, you know, so it's forecasting those types of things and understanding how easy it is to open one of these accounts and the benefits of having one of these accounts.
Carla: Jill, thank you so much for your time. I'm glad that you live and breathe health savings accounts so that you can talk about it with me and tell everyone else about it too. And, everyone, if you would like more information, you can always go to connectyourcare.com. Thank you, Jill.
Jill: Thank you.
Carla Wardin is the host of the ConnectYourCare podcast, Exclamation of Benefits. Carla brings her broadcasting and technology experience to talk to experts about the latest innovations in the benefits industry. Carla is an author, speaker, and marketing communicator from Michigan, where she and her husband are raising three boys on a dairy farm.