Maximize HSA benefits through Schwab's HSBA
Health savings accounts (HSAs) continue to grow in popularity, along with increased employer adoption of high-deductible health care plans.
Schwab makes it possible to maximize their value as tax-advantaged savings accounts by offering the ability to invest those savings in brokerage accounts designed for HSAs. Schwab's Health Savings Brokerage Account (HSBA) is offered as part of some of the industry's leading HSA programs, allowing access to a broad range of investment choices and providing the ability to leverage the investment management services of an advisor. And opening an HSBA electronically is easy, through integrations Schwab has with HSA providers.
The HSBA works like other Schwab accounts. They are accessible to advisors through Schwab Advisor Center® (SAC), and to investors through Schwab Alliance or Schwab.com. Account data downloads are available through Schwab's Data Delivery (SDD) process, and they can be incorporated in Schwab OpenView Gateway®, as well as integrated with third-party software. Additionally, advisors can leverage the standard custodial billing process for management fees through SAC.
Like individual retirement accounts, HSAs are portable, so even if an investor is not currently with an HSA provider with access to Schwab's HSBA, they can open an HSA or roll over their existing HSA savings to a provider who does offer this access. And so long as they remain covered by a high-deductible health plan, investors may continue making contributions and growing their investment savings in an HSBA.
Financial advisors are in an ideal position to educate clients about the potential of HSAs to help manage rising health care costs in retirement.
Despite the rising popularity of employer-offered HSAs, few employees are using them to their full effect, said Peter Stahl, a longtime consultant to financial advisors who focuses on the health care challenges in retirement. Mr. Stahl recently spoke at a Schwab event titled Accumulating Wealth Through Health Savings Accounts. He said that by enjoying the HSA tax benefits today, account holders are leaving money on the table that they may want or need during retirement. This opportunity inside the story is getting out. According to a recent report from Devenir Research, while only a small share of HSA assets is currently being invested, this portion is growing faster than the overall total. As of June 2018, HSA investment assets jumped an estimated 45% compared with the year before, on target to reach an estimated $9.8 billion. That growth was more than twice the pace of the 20% rise in total HSA assets.
There's a reason why more and more financial advisors are focusing on helping clients save for health care costs. People are increasingly worried about how they're going to meet their health care needs in retirement and whether that obligation will eat away at their hard-earned savings.
HSAs offer advisors another opportunity to proactively address these common client anxieties and concerns. And in doing so, advisors can take another step to deepen client engagement, inspire referrals, and achieve a competitive advantage. In Mr. Stahl's opinion, this makes understanding HSAs a very promising addition to every financial advisor's playbook.
53% of advisors consider HSAs to be a growth opportunity for their firms.
Principals whose firms advise on HSAs appreciate the potential upside for what strategic growth opportunities HSA asset management can offer their firms in the future. Increased recognition of the benefits of including HSAs as part of long-term investment strategies is driving the need for a broader array of investment choices. With the introduction of Schwab HSBA, you can include management of HSA investments as part of your clients' overall investment portfolio.