1The Pew Charitable Trusts, “More Than Half Of Americans In Their 40s Are ‘Sandwiched’ Between An Aging Parent And Their Own Children,” September 20, 2022.
2U.S. Census Bureau, “Living Longer: Historical and Projected Life Expectancy in the United States, 1960 to 2060,” February 2020.
3U.S. Census Bureau, “Fertility Rates: Declined for Younger Women, Increased for Older Women,” April 2022.
4Chief Investment Office, Bank of America, “Financial Security for the Caregiver,” Winter 2022.
This material should be regarded as educational information on health care considerations and is not intended to provide specific health care advice. If you have questions regarding your particular situation, please contact your legal or tax advisor.
Please consult with your own attorney or tax advisor to understand the tax and legal consequences of establishing and maintaining an HSA plan account and how it could impact your particular situation.
While you can use your HSA to pay or be reimbursed for qualified medical expenses, if you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% federal tax. Contributions made by your employer or contributions that you make on a pre-tax basis through an employer plan are subject to certain non-discrimination requirements that may limit contributions for highly compensated employees and/or key employees. Bank of America recommends you contact qualified tax or legal counsel before establishing a HSA.
Participants can receive federal income tax-free distributions from their HSA to pay or be reimbursed for qualified medical expenses they, their spouses or dependents incur after they establish the HSA. If they receive distributions for other reasons, the amount they withdraw will be subject to federal income tax and may be subject to an additional 20% federal tax. Any interest or earnings on the assets in the account are federal income tax-free. Amounts contributed directly to an HSA by an employer are generally not included in taxable income. Also, if participants or someone else make after-tax contributions to their HSA the contribution may be tax deductible. Contributions made by your employer or contributions that you make on a pre-tax basis through an employer are subject to certain non-discrimination requirements that may limit contributions for highly compensated employees and/or key employees. Bank of America recommends employees contact qualified tax or legal counsel before establishing an HSA.
You can take tax-free distributions for qualified medical expenses for you, your spouse and any dependents at any time, including after age 65. The Internal Revenue Service publishes a list of qualified medical expenses in Publication 502, Medical and Dental Expenses available at irs.gov. If you use distributions before age 65 for non-qualified medical expenses, those withdrawals are subject to ordinary income tax plus an additional 20 percent federal tax (although the additional 20 percent tax will not apply under certain circumstances). At age 65 and thereafter, you can withdraw funds that are not for qualified medical expenses without paying the additional 20 percent federal tax. However, you’ll still pay ordinary income tax on withdrawals used for non-qualified medical expenses. If you die and your spouse is your HSA beneficiary, your HSA balance can be transferred to your spouse without taxes due. If your HSA assets transfer to a beneficiary other than a spouse the account will cease to be an HSA on the date of death, and the beneficiary must report those HSA assets received in his or her gross income. However, the beneficiary can reduce their income from the assets by any qualified medical expenses of the decedent paid by the beneficiary within one year of the date of death. If no beneficiary is named or still living, HSA assets transfer to your estate.
Long-term-care insurance coverage contains benefits, exclusions, limitations, eligibility requirements and specific terms and conditions under which the insurance coverage may be continued in force or discontinued. Not all insurance policies and types of coverage may be available in your state.
All guarantees and benefits of the insurance policy are backed by the claims-paying ability of the issuing insurance company. They are not obligations of, nor backed by, Merrill or its affiliates, nor do Merrill or its affiliates make any representations or guarantees regarding the claims-paying ability of the issuing insurance company.
The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).
