The 401(k)/403(b) & HSA C ombo: A New Retirement Strategy

Presented by: Mark Deters, ARPC

Senior Sales Associate

What Can I Do to C ontrol My Retirement Savings? • Rate of Saving is the #1 indicator of balances upon retirement

• 401(k) & 403(b) Limits:

– $18,000 for 2016 – $24,000 for 2016 (if over 50)

• Pre-tax, Roth, or Combination of Both

– Pre-tax Contributions => Defer taxes today & pay taxes in retirement – Roth Contributions => Pay taxes now & never again (tax-free growth for life)

* Note – Government limits are based on a combination of pre-tax & Roth contributions between all plans (Company-Sponsored Plans & IRA’s).

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How can I do better with a 401(k)/403(b) & HSA C ombo?

Save more: – HSA Individual Limit: $3,350 for 2016 – HSA Family Limit: $6,750 for 2016

Enhance/diversify my tax strategy: • Realize an additional tax deduction of $3,350/$6,750 per year • Earmark a portion of retirement savings specifically for healthcare

expenses (AKA – The Healthcare IRA): – Retired couples are forecasted to spend $245k - $260k out-of-pocket

throughout their retirement – You would need approx. $350k in a taxable retirement account to

access $245k (pay $105k in taxes) • Health Savings Accounts are TRIPLE TAX FREE!

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How can I do better with a 401(k)/403(b) & HSA C ombo? Invest your balance over time: • HSA’s rollover from year-to-year (unlike Flex Spending Accounts) • Sentinel Plans allows you to set up asset allocations

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HSA Strategy Why to make the move

Presented By: Gregory Feigenbaum

Vice President, Senior Benefits Consultant

HSA C ontribution Limits

What if ?

H.R. 5445 HSA C ontribution Increase • June 21, 2016 - Under the measure that the House Ways and Means

Committee approved last week on a 23-15 vote, the maximum contribution limit for employees enrolled in high-deductible health plans in 2017 could contribute up to $6,500 for single coverage and $13,100 for family coverage.

• H.R. 5445 would nearly double the 2017 maximum HSA contributions, which now are $3,400 for employees with single coverage and $6,750 for workers with family coverage.

Employee / Employer C ost Share

End Results – A Win-Win

Employer

• Company reduced their healthcare costs by $222,344.00

• Equating to a 15% reduction on current year’s spend

• Benefit Equality • Enhanced Benefit

Employee • Employee gained the

following in HSA funds with no additional contribution increase:

• Single $ 1,700 • Employee/Spouse $2,400 • Employee / Child $2,200 • Family $3,000

Funding Solutions for HDHP Gaps Critical Illness Benefits • In the event that your employees suffer a critical illness, they

will not have adequate protection under normal medical and disability insurance plans to cover their expenses, as suffering from a critical injury can be extremely expensive—especially during the recovery process. Some of the costs associated with critical injuries are not even covered on many plans. Critical illness insurance can play an important role in strengthening your employees’ financial safety net.

• With a growing market that has limited savings, your employees may have a large financial exposure in the event of a critical illness. Beyond traditional medical costs, your employees and their families may also suffer financially because of the following:

• Traveling expenses to go to treatment facilities • Lost wages from taking time off to care for a critically ill

relative • Out-of-network treatment charges • Alternative treatment charges • To combat these expensive medical costs, consider providing

critical illness insurance coverage for your employees. This coverage provides a lump sum benefit for the six leading illnesses and health events:

• Cancer • Heart attack • Stroke • Major organ transplant • Kidney failure • Coronary artery bypass graft

Benefits of Critical Illness Insurance to the Employer and Employee

• Complements high deductible health plans (HDHPs) by

eliminating the worry of having to pay for a high deductible in the middle of suffering a major illness

• Serves as an affordable way to fill a gap in coverage • Employees reduce their financial risks in the event that

serious illness occurs • Employers can offer the benefit as a recruiting tool or as a

way to compensate for changes in core medical plans • Employers can offer a wellness benefit option under a critical

illness plan that reimburses an employee each year for having certain tests and routine exams done

Overall, a critical illness can have a devastating effect on your employees, both to their health and their pocketbook. Consider offering this coverage in your benefits package to alleviate some of the financial burdens of suffering a major illness or accident.

HSA Implementation Highlights

• Employee Education • Open Enrollment Strategy • Empowerment and Management Support • Provide Tools