At the close of a year, I like to take time to pause and reflect on the last 12-months. Where was I on January 1, 2020? Where am I now? Did I accomplish the goals I set for myself?
It would be an understatement to say 2020 has been a challenging year. But with the light in sight, we can turn the page and look towards the future. As Eleanor Roosevelt said, "With the new day comes new strength and new thoughts."
As a 3M employee, you inhabit an ecosystem with financial benefits enabling you to accomplish your goals. One of the tools at your disposal is a Health Savings Account.
An HSA is a tax efficient savings vehicle used to pay for medical expenses. It is like a piggy bank for doctor’s visits, medications, physical therapy, etc.
To qualify, you must be enrolled in a high deductible health plan. Below are the three 3M health plans and their HSA eligibility status.
If you have either of the Advantage plans, you can contribute.
For 2021, the maximum contribution is $3,600 (employee) and $7,200 (family). This includes 3M’s contribution.
Example 1: Jeff is 26 and single. He receives 3M’s $600 contribution. The maximum he can contribute is $3,000 ($3,600 - $600 = $3,000).
Example 2: Marla is age 45 and her family is enrolled in the plan. She receives 3M’s $1,200 contribution. The maximum she can contribute is $6,000 ($7,200 - $1,200 = $6,000).
A special “catch-up” provision allows those age 55 and older to contribute an additional $1,000/year i.e., $4,600 (employee) and $8,200 (family).
Example 3: Bill is single, age 55, and receives 3M’s $600 contribution. He can contribute $4,000 ($4,600 - $600 = $4,000).
Example 4: Betty is age 60 and her family is enrolled in the plan. She receives 3M’s $1,200 contribution. She can contribute $7,000 ($8,200 - $1,200 = $7,000).
This depends on your unique circumstances and goals. However, below are a few guidelines that can help point you in the right direction.
Note: Your deferral amount is not set in stone. You can change it at any point during the year.
While HSAs are a tax efficient investment vehicle, that does not mean accumulating the balance is best for you. A few considerations:
Generally, it is beneficial to hold expected short-term medical expenses in cash, so the funds are available when needed. Your annual deductible is a good target for money to keep liquid.
For excess funds, consider investing and taking advantage of tax-free growth. Fidelity is 3M’s HSA custodian and provides a broad array of low-cost investment options. Ensure investment selections align with your risk tolerance and overall portfolio.
Moving into 2021, think about utilizing 3M’s HSA within your personal finances. It could be a key pillar allowing you to navigate storms and reach the destinations you set out for.
From PrairieView to all of you, we wish you and your families health and happiness in the upcoming year.
In the words of Frank Sinatra, “The Best Is Yet to Come.”