Why Millennials Should Embrace HSA as a Financial Planning Tool
June 22, 2019
By Thomas O’Banion
Originally Posted on Healthcare Business Today
A Health Savings Account (HSA) is a smart investment for anyone at any age. But for Millennials in the early stages of their adult lives, opening an HSA in conjunction with a high deductible health plan, and maintaining the account, is a no-brainer.
An HSA is a type of healthcare account that acts like a savings account. Individuals deposit pre-tax money into their account, which can then be used to pay for a wide variety of IRS-approved medical and healthcare expenses. When used as part of an overall financial strategy, HSAs help lower healthcare costs for individuals and families, and can also be used to set aside money to augment traditional retirement savings plans.
HSAs are the only type of healthcare benefit to offer a “triple tax advantage” by allowing account holders to:
- Deposit money into the account tax-free
- Withdraw the money tax-free to pay for qualified healthcare expenses
- Earn tax-free interest and investment income
The ability to put away money tax-free can lead to significant savings in healthcare costs while allowing account holders to build their account balances without paying taxes.
Why HSAs Are So Good for Millennials
HSAs are especially beneficial to Millennials for several reasons. First, Millennials are young and they tend to be in good health. They also have decades ahead of them to use the HSA as a savings vehicle for their retirement years.
Unlike other types of healthcare accounts, HSAs do not have a “use it or lose it” feature. Accordingly, any unused funds at the end of the year automatically roll over to the next year, and can continue to grow tax-free for as long as it remains in the account.
Read the full article, Why Millennials Should Embrace HSA as a Financial Planning Tool, on Healthcare Business Today.