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Investing Specialists

Best Practices for Health Savings Accounts

Paying attention to fees, tax consequences, and asset allocation can help you maximize your HSA investments.

Participation in high-deductible health-care plans, or HDHPs, is growing by leaps and bounds, according to industry trade group America's Health Insurance Plans. More than 13 million people were covered by a high-deductible health-care plan in 2012, according to the trade organization, an 18% increase over 2011 and more than double the number of people covered by such a plan five years ago. A recent Towers Watson survey indicated that 70% of large employers expect to offer a HDHP by 2013, and 7% of employers will offer only a high-deductible plan.

It's easy to see why this pocket of the health-insurance market is growing so briskly: As health-care costs and insurance premiums have skyrocketed, HDHPs, combined with health savings accounts, provide employers with a way to offload some of the burden to their employees. For self-employed individuals shouldering their own health-care costs, high-deductible plans might be the most (or only) affordable option.

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