Health Savings Account (HSA)

Texas Estate Planning and Health Savings Accounts

Published on: April 12, 2022 | By Thomas W. McCulloch

health savings accounts in estate planning

There is more to an estate plan than just a will. Other assets are included in estate plans, including financial accounts. Most financial accounts function the same for estate planning purposes. However, health savings accounts—often referred to as HSAs are treated differently in estate plans and from a tax perspective. Health savings accounts allow individuals to contribute money to them to then be used for medical expenses. Because health savings accounts are treated differently than other accounts, below are common questions and explanations about HSAs in estate plans.

What is a Health Savings Account?

A health savings account (HSA) is a health insurance account where qualified individuals can contribute up to $3,600 per year—and $7,200 for families—on a pre-tax basis. These funds can then be withdrawn, tax-free, to use on medical expenses. However, individuals can only contribute to health savings accounts if they have a high deductible health plan.

Health Savings Accounts in Texas Estate Plans

Published on: February 9, 2022 | By McCulloch & Miller, PLLC

Many individuals think about various accounts listed in their estate plan—financial bank accounts, insurance policies, and others. However, health savings accounts function differently than most other accounts but can be critical. They benefit both the creator of the estate plan and their beneficiaries—the individuals who will receive the assets and property after the creator of the estate plan has passed away. Below are common questions and solutions to estate planning problems involving health savings accounts. While Texans will have various uses for their health savings account, this information can assist individuals in their estate planning decisions.

What is a Health Savings Account?

A health savings account is an account that allows an individual to set aside money to pay for health expenses in the future. These funds are placed on a pre-tax basis, meaning they can be used to pay for deductibles, copayments, or other medical necessities.

Planning for Medical Expenses During Retirement

Published on: November 18, 2019 | By McCulloch & Miller, PLLC

The unknown about spending in retirement is not just whether it will be higher or lower, but when during the course of retirement, you’ll be spending more or less. If you downsize, housing costs will decrease, but if you travel more, recreational spending will rise.

According to a recent article from Investopedia, “How to Plan for Medical Expenses in Retirement,” healthcare is likely to be the biggest expense in retirement. A survey from Fidelity Investments found that a 65-year-old newly retired couple should budget about $285,000 for medical expenses in retirement. It is better to have the money set aside than to be surprised by the cost. That number also does not include long-term care. Depending on where you live, those costs can range from $18,720 for adult day care services to $100,375 for a private room in a nursing home.

Despite saving and preparing for retirement their entire lives, many retirees aren't mentally or financially prepared for these types of expenses. A survey by HSA Bank found that 67% of adults 65 and older thought that they’d need less than $100,000 for healthcare. However, Fidelity calculated that males 65 and older will need $133,000—and females, $147,000—to pay for healthcare in retirement.