You may be offered a high-deductible health plan by your employer during open enrollment. Beyond considering how it meets your health-care needs, you should think about how it could help your retirement savings.
Having a high-deductible health-care plan allows you to open a health savings account. An HSA provides tremendous tax advantages, especially if you are healthy enough not to use the account to pay for medical expenses.
"HSAs are the most tax-friendly investment vehicles on the planet," said certified financial planner Edward Vargo, founder of Burning River Advisory Group. You get a deduction when you make a contribution — as with a 401(k) plan — and, if it's used for qualified medical expenses, you get to make a tax-free distribution similar to a Roth IRA. It's the rare case where you get to have your cake and eat it, too, he said.
People had opened 18.2 million HSAs as of this past June 30, up 25 percent from a year earlier, according to HSA investment consulting firm Devenir. Assets had grown to an estimated $34.7 billion by June, up 22 percent year-over-year. (See chart below.)