HSAs for Millennials

When it comes to HSA savings, millennials are on top of their game. In a study of 1.3 million employees from 540 large employers, HSA participation among millennials has skyrocketed by 76% in 2018. This was a significant increase from the 40% increase in 2017. Millennials are already using an HSA to increase their health savings, so if you don’t have one now, the chances you will have one soon are very likely.

Now that we know that millennials are HSA experts, let’s dive into why millennials love HSAs and how they can save more.

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Save on Health Insurance

Younger individuals have an incredible opportunity to save on health costs by selecting plans that fit their healthy lifestyles. If your health costs are lower, why should you pay high monthly health insurance premiums?

 

While health insurance plans like PPOs or HMOs offer high coverage levels, they also have high fixed monthly premiums. Millennials can use more cost-effective plans like high deductible health plans (HDHPs) that offer significantly lower monthly premiums. They are ideal for individuals with lower expected health costs. This means more money for you and less sunk into unused healthcare coverage. All HSA-eligible plans are indeed an HDHP.

 

HSAs Help You Save for Tomorrow

While you might be young and healthy now, you need to plan for lifestyle health changes that come with aging and the expected health expenses that accompany them. Planning for the unexpected might not be fun, but more savings just might be sexy. Trust us!

HSAs are the only way to save dedicated funds for health costs. An HSA is a personal savings account for health expenses. An HSA is not a health plan, but can be used in conjunction with HSA-eligible health plans, like HDHPs, to save tax-free dollars on health expenses.

HSAs create triple tax-advantages with tax-deductible contributions, tax-free interest and tax-free withdrawals (for medical expenses). In 2019 individuals can contribute up to $3,500 in tax-free savings and families can contribute $7,000.

HSAs, Take it When You Leave Your Job

Unlike an FSA (flexible spending account), individuals own their HSA. That means you can save it this year and use those unused funds in years to come. Because you own your HSA, if you leave your job, you can take your HSA with you. It’s your money. It’s nice to have a benefit you can carry with you as your career zigs and zags until you find your perfect fit. Your HSA will be there for every medical expense.

 

The HSA Retirement Bonus

But what if you don’t need those HSA funds you saved for health costs? After the age of 65, your HSA funds can be used for anything, just like a 401(k). An HSA is an additional retirement account. 

Healthcare costs are expected to exceed $275,000 per couple in retirement, on top of Medicare. This may seem a long way off, but if you start saving with an HSA today, you won’t have to worry about these costs in 20 or 30 years.

Opening an HSA means you get to keep more of your money, 100% tax-free. HSA savings will be there for you if you need it for health expenses and if not, you will have that money saved for whatever you want in retirement.