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Preparing for What Can Go Wrong, Investing in What Can Go Right - Part 1 - Blog 3

Preparing for What Can Go Wrong, Investing in What Can Go Right - Part 1 - Blog 3

| September 21, 2022

Welcome back; I hope everyone is having a good September. Today I want to discuss preparing for the possibility of unexpected health issues or disabilities. If misfortune strikes, having a plan is incredibly important when it comes to your health and the health of your family. So, what can you do?

Health Care Proxy

For starters, you can create a healthcare proxy so your wishes will be followed if others have to make decisions on your behalf. A health care proxy allows you to appoint someone else to act as your agent for medical decisions. It will ensure that your medical treatment instructions are carried out, and it is especially important to have a health care proxy if you and your family may disagree about treatment. Without a health care proxy, your doctor may be required to provide you with medical treatment that you would have refused if you were able to do so.

In general, a health care proxy takes effect only when you require medical treatment and a physician determines that you are unable to communicate your wishes concerning treatment. How this works exactly can depend on the laws of the particular state and the terms of the health care proxy itself. If you later become able to express your own wishes, you will be listened to, and the health care proxy will have no effect.

FSAs and HSAs

And then there is the question of covering healthcare expenses, both normal and emergency. Two ways this can be done is through a Flexible Spending Account or a Health Savings Account. Both a healthcare flexible spending account (FSA) and a health savings account (HSA) can cut your taxes and help you save money on medical, dental, vision, and other qualified medical expenses. And while they are alike in some ways, each offers different features and benefits.

An FSA is a great tax savings tool to pay for qualified out-of-pocket healthcare expenses effectively. It is a tax-advantaged savings account established by your employer that allows you to stash money away for yourself, your spouse, or your dependents.

However, since you can only establish an FSA with your employer, this means your employer owns your FSA account. If you separate from your job, you would forfeit your FSA funds. Both you and your employer can contribute to your FSA; however, the IRS doesn’t require your employer to do that. There is much more to an FSA; however, for the purposes of this blog, a basic introduction can get you started on thinking about protections you can put in place for yourself and your family.

Similar to an FSA, an HSA also allows you to stash money away into a pretax account but works a little differently. Unlike an FSA, to contribute to an HSA, you must qualify and meet the following requirements: You cannot be claimed as a dependent on anyone else’s tax return, enrolled in Medicare, or covered under a high deductible health plan. 

You can also establish an HSA either independently or with your employer. If you have an employer-sponsored HSA account, the amounts you contribute are not subject to payroll or income taxes. However, if you set up your HSA account on your own, you can deduct your HSA contributions on your federal income tax return. You qualify for the tax deduction whether you elect to itemize your deductions or not. But keep in mind that the IRS limits the amount you can contribute to an HSA.

Please join me again next week when  I will dive into the importance of considering long-term care insurance.

Until next time…

One last thought, I believe an educated investor is an empowered investor. If you like what you’ve read and think your friends and family can benefit as well, please share.


1 What's a Health Care Proxy and Why Do I Need One?

2 Healthcare FSA Vs. HSA—Understanding The Differences – Forbes Advisor.  


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.