1Pew Research Center, “More than half of Americans in their 40s are ‘sandwiched’ between an aging parent and their own children,” April 8, 2022.
2National Center for Health Statistics, “Provisional Life Expectancy Estimates for 2022,” November 2023.
3National Center for Health Statistics, “Births in the United States, 2022,” August 2023.
4Chief Investment Office, Bank of America, “Financial Security for the Caregiver,” Winter 2023.
Important Disclosures
Opinions are as of 11/22/2023 and are subject to change.
Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.
Neither Merrill nor its representatives provide tax, accounting or legal advice. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional advisors.
This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.
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.”).
This material should be regarded as educational information on healthcare considerations and is not intended to provide specific healthcare advice. If you have questions regarding your particular situation, please contact your healthcare, 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.
State tax consequences for HSAs may vary. You should check with a qualified tax advisor for specific state tax consequences that are applicable to you.
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. Certain limits may apply to employees who are considered highly compensated key employees. Bank of America recommends you contact qualified tax or legal counsel before establishing an HSA.
You can receive federal income tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you, your spouse or dependents incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to federal income tax and may be subject to an additional 20% federal tax, unless an exception applies. Any interest or earnings on the assets in the account are federal income tax-free. You may be able to claim a tax deduction for contributions you, or someone other than your employer, make to your HSA directly (not through payroll deductions). In addition, HSA contributions may reduce your state income taxes in certain states. Certain limits may apply to employees who are considered highly compensated key employees. Bank of America recommends you 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% federal tax (although the additional 20% 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% 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.
Before you invest in a Section 529 plan, request the plan's official statement and read it carefully. The official statement contains more complete information, including investment objectives, charges, expenses and risks of investing in the 529 plan, which you should consider carefully before investing. You should also consider whether your home state or your beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds and protection from creditors that are only available for investments in such state's 529 plan. Section 529 plans are not guaranteed by any state or federal agency.
