You may already be planning ahead for retirement by contributing to the Rockwell Automation Retirement Savings Plan. But will that money be enough to cover your future medical bills? Once you reach age 65, Medicare helps, but it doesn’t pay for everything. And if you retire before age 65, you may have to pay the full cost of medical coverage until you qualify for Medicare.
Fortunately, a Health Savings Account (HSA) is a great way to save money on health care expenses today AND supplement your retirement savings tomorrow. The HSA, available to you if you are enrolled in the HSA medical option, is like a savings plan for your health care expenses.
How Your Account Grows
When you enroll in the HSA option, Rockwell Automation contributes to your account ($200 for individual coverage and $400 for family coverage). You can make pre-tax contributions* too, up to IRS limits.
You can use your HSA to pay for eligible expenses during the year. At the end of the year, any money left in your account automatically rolls over to the next year, potentially allowing your account to grow each year—and even earn interest!
The money is always yours to keep, even if you change medical plans, and you can take it with you if you leave the company or retire.
How You Can Use Your HSA at Retirement
During retirement, you can use money in your HSA to pay for expenses such as:
- Medicare Part B and D premiums
- Premiums for a Medicare HMO (but not a Medicare supplemental policy)
- Deductibles, copays and coinsurance
- Prescription drug expenses
- Other medical expenses not covered by health insurance, such as dental care, eyeglasses, prescription sunglasses, contact lenses, hearing aids, medical home modifications and over-the counter medications for which you have a prescription
If you’re under age 65 and use your HSA funds for non-qualified expenses, you’ll pay a 20% tax penalty in addition to income taxes. Once you reach age 65, you can use the money for non-health care expenses without the additional tax penalty. For more information, read the HSA option Summary Plan Description or discuss with your financial planner. Learn more about the Health Savings Account.
*State income taxes apply in Alabama, California and New Jersey.
Published: September 19, 2013