Health Savings Accounts

A newer form of health insurance is getting more and more attention. A Health Savings Account (HSA) allows you to save and pay for current and future health care expenses in a tax-advantaged way. You can contribute to an HSA on a pre-tax basis through payroll deductions. Contributions to your HSA belong to you – even if you choose to retire or leave your current employer in the future. There is no “use it or lose it” rule like a Flexible Spending Account. In an HSA you can use your funds as needed to pay for current health care expenses or rollover unused funds from year-to-year and continue to grow your account tax-free.

Assets contributed to and invested in an HSA actually have a tax deferred status that combines both the advantage of pre-tax contributions and tax-free withdrawals, making it the most tax favored investment account available. The maximum contribution to an HSA plan in 2012 is $3,100 for an individual and $6,250 for a family. An annual catch-up contribution is allowed for participants age 55 and older, which is $1,000 for an individual.

General Motors, Ford Motor Co., and Delphi are among the many employers now offering HSAs as an option for employee health insurance. Each company’s HSA offers a number of investment options in which you can invest contributions. Currently, GM offers fifteen investment options within the HSA, Delphi offers twelve, and Ford offers nine.

We have developed model portfolios (below) for each of these plans. Assets invested in these model portfolios should have at least a five year time horizon. Assets in your HSA needed for near-term medical expenses should be held in a very conservative investment option.

Visit our website in the future for updates on HSA plans and periodic updates to our HSA model portfolios.

January 23, 2012 HSA Model Portfolio Updates

Explanation of GM HSA Portfolio Changes for New Quarter: In the Growth Model Portfolio, transfer 10% of the account from Columbia Mid Cap Growth to John Hancock Large Cap Equity.

Explanation of Ford HSA Portfolio Changes for New Quarter: In both the Conservative and Growth Model Portfolios, transfer entire position from Neuberger Berman Regency to Victory Diversified Stock.

Explanation of Delphi HSA Portfolio Changes for New Quarter: In both the Conservative and Growth Model Portfolios, transfer 10% of the account from Goldman Sachs Growth & Income to John Hancock Large Cap Equity.

To follow a model portfolio strategy, simply allocate your current HSA holdings among the funds and allocations shown for the model portfolio strategy. For questions concerning the HSA Model Portfolios, call Mainstay Capital Management toll-free at 1-866-444-6246.

*MainStay mutual funds are offered by MainStay Funds of New York Life Investment Management, LLC. Mainstay Capital Management, LLC is not affiliated with and does not endorse MainStay Funds or New York Life Investment Management, LLC.

The HSA Model Portfolios are provided as a courtesy of Mainstay Capital Management as general investment advice and do not constitute a specific investment recommendation. All material presented concerning HSAs and contained in the HSA Model Portfolios is compiled from sources believed reliable, but its accuracy and completeness, and the opinions based thereon, are not guaranteed and MCM assumes no responsibility for errors and omissions. Before buying any mutual fund, an investor should read its prospectus and Statement of Additional Information carefully.