Yes, with proper health care planning. Although health savings accounts are offered with high deductible health care plans and are often thought of as a current benefit, individuals may want to consider using their HSA balances as a future health care benefit.

What are the short and long term benefits of HSAs? For 2016, individuals can contribute $3, 350 to a health savings account, families $6,750.  Individuals age 55 and older can make an additional $1000 “catchup” contribution annually. In many cases, an employer will also make a contribution to the health savings account. All contributions are tax deductible and are tax free if used for an unreimbursed medical expense. Often, those employees who establish HSAs will use the funds during the course of the year to pay those expenses.

From a long term perspective, using HSAs to subsidize retiree medical expenses can be an attractive strategy for these funds. Unlike traditional flexible spending accounts (FSAs), health savings accounts need not be depleted by the end of each year. And although contributions to HSAs aren’t permitted after age 65, funds which have been contributed prior to that point may be used during retirement for health care.

High deductible plans generally result in increased out-of-pocket expenses for employees. Including balances in HSAs towards future retiree health care expenses from a financial planning perspective, can ease what is frequently a primary concern among pre-retirees and retirees. Younger employees who take advantage of the tax benefits of HSAs have the opportunity to build a significant health care fund for retirement.