Expert Interview With W. Patrick Jarrett About Retirement and Health Savings Accounts

Want to amp up your efforts to save money for retirement and take care of your financial health? Luckily, it’s all in your hands. W. Patrick Jarrett, COO of HealthSavings Administrators, was kind enough to answer our questions about retirement and health savings accounts. What is your professional background? How has it served you in your position at HealthSavings Administrators? Prior to joining HealthSavings Administrators 11 years ago, I worked in healthcare, specifically mental health. I started as a counselor after I graduated from West Virginia University, then moved into administrative and executive positions after I received my Master of Science in Health Administration (MSHA) from the Medical College of Virginia at Virginia Commonwealth University. All told, I spent about 20 years in the mental health profession prior to transitioning to health savings accounts (HSAs) and financial services. When the legislation enacting HSAs was launched 11 years ago, people were apprehensive about assuming more responsibility for their healthcare expenses. They had to think differently about their healthcare and change their spending and saving behaviors. One of the hardest changes people can make is changing current behavior for future gain; however, this is exactly the type of thing that mental health professionals help people do every day! So, in that sense, my background prepared me for educating people about HSAs and helping them take more responsibility for their health and healthcare dollars so that they could invest and grow their money for the future. Please tell us more about HealthSavings Administrators. HealthSavings started in 1996 as a medical savings account (MSA) administrator. After the legislation enacting HSAs passed in January 2004, we turned our focus to HSAs. At the time, we were one of only 16 HSA providers in the country, most of whom were banks. Because we weren’t a bank, we thought about HSAs differently. From the beginning, we embraced HSAs as a long-term investment solution for saving for future healthcare and retirement expenses. Today, we thrive in the top 1% of HSA companies nationwide, and we’re one of the few providers that works exclusively with HSAs. Many people refer to us as “the investor’s HSA.” That’s because our relationship with Vanguard® dates back to 2006, when the company first recognized the value of our products and services. Since 2008, we’ve been the only HSA provider recognized on the Vanguard® website, not only for our choice of 22 Vanguard® funds (12 of which are Admiral™ Shares), but also because we allow investing with no minimum balance requirements. Over the years, HealthSavings has been nationally recognized as one of the best values in HSAs. In fact, we’ve been noted in Forbes, Money magazine, the Wall Street Journal, Kiplinger’s and Reuters as well as various online publications, including 20 Something Finance, Investment News, Market Watch, Nerd Wallet and others. Who should be visiting the HealthSavings Administrators website and why? What can they expect to find there? I think that anyone who wants to learn more about HSAs would find value on HealthSavings.com. Also, anyone who has been frustrated with having to keep their HSA funds in a checking account, rather than investments, while trying to save for future healthcare expenses. Our website provides simple, easy-to-understand language and infographics that articulate how HSAs work and how they can benefit. We also serve anyone who has been frustrated with having to reach or maintain a minimum balance in their HSA checking account before they can invest for the future. We would also be of interest to employers looking for an experienced administrator that knows HSAs inside and out; can answer their questions as well as their employees’ questions; and can serve as a better HSA alternative than their local bank. Lastly, anyone who respects and appreciates fee transparency. From the beginning, we’ve prided ourselves on providing customers with the details needed to make informed decisions about their HSA – and that includes fees. What do you think people need to know about retirement and health savings accounts that most don’t? There are so many things that I would love to tell people about HSAs and retirement planning, but if I had to narrow it down to the most important things, they would be: Your HSA funds are always available to reimburse yourself tax free for qualified healthcare expenses, no matter what your age. Many people don’t understand the fantastic tax advantages of HSAs. If the money is being used for a qualified healthcare expense, it can always be withdrawn from your HSA tax free. Also, you are not required to reimburse yourself from your HSA in the same year of the expense. Sometimes people confuse HSAs with flexible spending accounts (FSAs), which do require reimbursement in the same year. HSAs are different. They are individual accounts that belong to the account holder for as long as they wish to have the account; therefore, there’s no time limit for reimbursing yourself from the account. Simply save your receipts and reimburse yourself whenever you want! Your HSA is dual purpose; the account not only helps you save and invest for healthcare expenses, but the funds can also be used for retirement expenses as well. After age 65, there’s no longer a penalty for using your HSA to pay non-qualified healthcare expenses. Therefore, you can withdraw funds for non-qualified expenses and simply pay the same tax you would pay on distributions from your IRA, 401(k) or other retirement plan. What is one thing someone can start doing today to help with retirement and health savings? Here’s the biggest thing I would recommend: ask more questions in the doctor’s office. Become a better healthcare consumer. Most of us don’t think to question our doctors. We don’t think that the money we’re spending at the doctor’s office is our money. But every dollar our employer gives to the insurance company is a dollar that is not available for a raise or a bonus. So, not caring about the fact that the test you are about to get costs $3,000 (when a $400 test would suffice) ultimately comes out of your pocket as a payment for next year’s increased insurance premiums. With high deductible health plans (HDHPs) and HSAs, it is even more obvious that the money we’re spending is our money. We can save more of that money by asking questions and shopping around. I’ll give you a personal example to illustrate the point. Years ago, my wife and I were doing yard work and accidentally came into contact with poison ivy. My wife was the first to react and went to the doctor. Her doctor prescribed a cream that cost about $51. Then, it was my turn. I went to the same doctor, mentioned the expensive cream that was prescribed to my wife and asked if there was a generic version of the same cream. There was, and I was able to get a larger tube of the cream for $3.41. So, I received the same treatment, but it cost $47.59 less than what my wife paid. The moral of the story is this: always ask questions. The more you save now, the more you will have for future healthcare and retirement expenses. What sort of feedback do you receive from those who have used your services? One of the phrases we hear most frequently is, “Wow, I didn’t know that!” We’re really proud of our HSA-certified member services advisors who educate our customers and answer their questions – often before they even think to ask those questions! In many cases, I think education is equally (f not more) important than the investment options. Our transparency of fees, in particular, is a welcome relief for many of our investors. Please share with us anything that you think has contributed to the success of HealthSavings Administrators. What are some of the things that you have learned along the way? I think that several things have contributed to our success. First, our focus on investments and saving for the future has set us apart from other HSA providers. We were one of the first HSA providers to draw the connection between HSAs and saving for retirement. And now that more and more people are opening HSAs and understanding that link, we’re uniquely positioned to meet the demand. Second, we were fortunate enough early on to develop a relationship with an excellent mutual fund company in Vanguard®. We love our first dollar investment options in 22 Vanguard® funds, and our investors do, too. Third, we realize that our real product is not recordkeeping; it’s education and support. In the early years, we didn’t have the bells and whistles that our competition had, but we were good at educating people and answering questions – often adding those one or two extra sentences that answered questions our customers even didn’t think to ask. You can follow Patrick on Twitter and LinkedIn.