Modeling HSA and Retiree Medical Account Expenses

WealthTrace allows you to model Health Savings Accounts (HSAs) and Retiree Health Accounts (RHAs), including investment growth and tax-free qualified withdrawals.

However, WealthTrace does not automatically withdraw funds from an HSA or RHA to cover Medicare Part B and Part D premiums, including any IRMAA adjustments.

Setting Up an HSA or RHA

1. Disable Automatic Medicare Estimates

Navigate to Plan Settings > Other and turn off Use Program Estimate for Medicare Parts B & D Premiums.

This disables WealthTrace's automatic Medicare premium estimates, including IRMAA adjustments, so you can enter the expenses manually without double-counting them.

For more information, see Medicare Premiums and Cost of Health Care Once on Medicare.

2. Add Your HSA or RHA

Navigate to Cash Flow Inputs > Investments and add the account using the HSA account type.

This allows WealthTrace to:

• Project investment growth using your assumed rate of return.
• Apply the appropriate tax treatment to qualified HSA withdrawals.

3. Enter Healthcare Expenses

Navigate to Cash Flow Inputs > Expenses and add your estimated Medicare premiums and other eligible healthcare expenses.

• Enter the estimated annual expense amounts and applicable years.
• Select the HSA as the Funding Source.
• Adjust the expenses as needed to reflect changes in Medicare premiums, IRMAA, and other healthcare costs.

Important: WealthTrace does not automatically adjust HSA or RHA withdrawals based on changing Medicare costs. Variable expenses must be estimated and entered manually.

Modeling a Use-It-or-Lose-It RHA

Some employer-provided Retiree Health Accounts have restrictions on unused funds, including balances that may be forfeited upon death.

WealthTrace does not automatically exclude forfeitable RHA balances from projected ending wealth.

If your RHA has a use-it-or-lose-it provision, you will need to account for any remaining balance that would be forfeited when evaluating your plan's ending assets.