You know the headlines, millennials are terrible savers. They love to spend, spend and spend. The truth is they are great savers. To top that off, HSA participation among millennials has skyrocketed by 76% in 2018. So, why are HSAs such a good fit for millennials?
HSAs Fit the Millennial Mindset
As a quick reminder, an HSA or Health Savings Account 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 allow for 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.
Millennials love HSAs because they create incredible flexibility and convenience in an otherwise outdated and stringent healthcare experience.
- Set It and Forget It Mentality – Automated savings is easy, convenient and only requires one quick set up. This means you can contribute to your HSA at set intervals, without wasting any time. Your HSA savings will grow without any work on your end.
- Portable Job Benefits – Always on the lookout for a new job opportunity? No problem! HSAs go with you from job to job (and provider to provider). You own them, not your employer.
- Cheaper Healthcare – HSA-eligibility is based on your healthcare coverage. HSA-eligible health plans, like high deductible health plans (HDHPs) offer lower set monthly premiums. HSAs help you plan for all of them just in case health costs with tax-free savings and investments.
- Savings for Life – Unlike FSAs, HSAs never expire. Whatever you save (or invest) today will be available for the rest of your life. Your HSA funds will always be there if you need them. Save today, your future self will thank you.
HSA savings help you plan for all of the expected and unexpected health costs that might come your way. And, they work with your existing lifestyle.
Retirement and Healthcare Combined
One final perk of HSA savings is the added retirement value. While HSAs were not designed as a personal retirement saving account, their tax structure and function is nearly identical to a 401(k) or IRA. After the age of 65, you can use your HSA funds for anything. Unlike a 401(k) or IRA, HSAs have no mandatory distributions.
You can let your HSA investments grow well into your 70s, 80s, and 90s. You can use your HSA funds to save and plan for the expected $275,000 per couple in health costs in retirement. This is on top of Medicare coverage. With your HSA, you can pay for these costs 100% tax-free.
HSAs create a clear path to save for healthcare and limit your yearly tax liability. You get to save more of the money you earn and pay for health expense 100% tax-free. Millennial or not, you can review your eligibility and open an HSA here.