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Open enrollment and HSA’s: The hidden retirement vehicle

November 5, 2020

If you are like many in the workforce, the end of a year is the time for open enrollment. This is the time to sign up for, review or make changes to many benefits you receive from your employer. These benefits are typically around medical insurance, dental insurance, retirement planning and sometimes life insurance. As the options grow in numbers, the confusion can develop quickly. While it’s always best to check with your Human Resources department first, we are here to help shed light on the Health Savings Account (HSA) option.

An HSA allows the account holder(s) to set money aside from a paycheck before paying taxes. This money can then be used to cover a number of medical expenses. Any unused savings in an HSA can then be rolled into the next year and kept in the account until needed. A key to opening an HSA, these accounts are only available when the insured party has a high-deductible health insurance plan. See the chart below for deductible and contribution limits for 2021 according to the IRS:


Minimum Deductible

Out-of-Pocket Maximum

Maximum Contribution

Single Plan




Family Plan





While HSA’s are designed to save for medical expenses and give tax advantages to do so, these accounts can also be great retirement savings vehicles for certain people. HSA’s offer a triple tax advantage by being tax deductible in the contribution year, growing tax free and finally being used to pay for healthcare expenses tax free. HSA accounts can also be opened similar to a checking or savings account, but can also be set up like an investment account depending on how much money is in the HSA.

A recent study from Fidelity Investment© estimates a married couple who is age 65 may have healthcare costs around $295,000 through retirement. Savings in an HSA now will allow that couple to cover medical costs in the most tax-advantaged way possible. Beyond covering medical expenses, once the person reaches age 65, the money can also be withdrawn similar to a traditional IRA. This means the money will be taxed as ordinary income, but without any penalty.

HSA accounts aren’t for everyone, and it takes a few steps in order to qualify for this tax-advantaged account. However, if you are someone who rarely gets sick or won’t have many medical bills in the short-term, this is a great way to save for those bills or for medical bills in retirement. Whether you are looking to create an HSA bank account, or rollover an HSA account to invest, First National Bank and Trust Company is here for you. We are happy to assist with these niche products and work towards all of your future financial goals. Visit our website at or give us a call at 217.935.2148, and ask about our HSA products.

About First National Bank and Trust Company: First National Bank & Trust Company is a community bank located in Clinton, Illinois. Dedicated to community prosperity, the bank was chartered in 1872 under the name DeWitt County National Bank. The name was changed First National Bank and Trust Company in 1974, and was acquired by TS Banking Group in 2017. With $181 million in assets, First National Bank is dedicated to community reinvestment and gives 10% of its net income back to the community. For more information visit