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Dispelling the HSA Myth – HSAs Only for the Young and Healthy

Barry Beck
May 6, 2020 8:00:00 AM

Health savings accounts are oftentimes shrouded in myth, mystery and misinformation. And at Bend, we’ve heard pretty much every myth in the book (and online) regarding HSAs.

Fortunately, HSAs are pretty straightforward, assuming you get the right information upfront.

So, we’re back with a second installment of our “Dispelling the HSA Myth” series, aimed at debunking popular HSA topics that are just plain incorrect.

In our inaugural Dispelling the HSA Myth blog post, we covered why HSAs aren’t just for the old and wealthy. This time around, we’re flipping the script and detailing why HSAs aren’t just for the young and healthy. Sure, those who fit into that demographic can certainly benefit greatly from utilizing a health savings account, but so can many others, regardless of age or health status.

We hope our Dispelling the HSA Myth blogs help you find some clarity no matter where you’re at in your HSA journey, whether you’re a seasoned accountholder or just exploring the option of an HSA being the right choice for your specific circumstance.

Let’s dive in and dispel another HSA myth.

Not a Myth – HSAs are a Great Fit for the Young and Healthy

While HSAs aren’t only a good option for those who are young and healthy, they certainly provide scalable, short and long-term benefits if you fit into those categories.

When you’re young and healthy, you stand to benefit greatly from having a health savings account in a number of ways. With an HSA, you have the opportunity to take an active role in controlling your healthcare costs early on while bettering your overall financial health from the start. It’s a true win-win.

On the financial side, you save upfront on premium costs when you opt for an HSA-eligible high-deductible health insurance plan (HDHP) and open an HSA versus having a traditional HMO/PPO insurance plan. Simply put, an HDHP with an HSA is much more affordable than a traditional insurance plan. That monthly savings can add up quickly, and can be contributed straight into your HSA for even more tax-free savings and growth (more on that to come). Plus, if you have an employer who contributes to your HSA, you get that added financial benefit that you wouldn’t otherwise receive with traditional health insurance and no HSA.

If you’re young, healthy and rarely need healthcare, you’re able to keep saving money and adding to your HSA savings, setting yourself up with a substantial nest egg to use for future medical expenses—and even other expenses after you turn 65. It may seem like a long way off, but it’s never too early to plan for your future and your retirement. Even if you’re in perfect health today, you’ll be happy you thought ahead to save when a future need arises.

Another benefit of being young and healthy with an HSA is that the earlier you start contributing, the more you stand to save and take advantage of all the upsides an HSA provides. That means more tax savings, more investment opportunities and less pressure to contribute more if you were to get started at a later date. When you’re young, you have the ability to contribute less and still grow substantial savings compared to the amount you’d need to contribute if you waited five, 10 or more years to open an HSA. Just like most other investments, when it comes to an HSA, the sooner you start contributing, the better.

Let’s take a quick look at just some of the other unique advantages an HSA offers to those who are young and healthy:

  • “Triple tax savings” from the start of your career-Your HSA contributions are 100% tax deductible, your HSA funds can be used tax-free for any qualified medical expenses and those funds grow tax-free from day one.
  • Portability–Your HSA and the funds within it stay with you no matter what, regardless of job changes or health insurance changes, both of which can happen a lot when you’re early on in your career.
  • Infinite rollovers–You’ll never be faced with a “use it or lose it” scenario with your HSA—your funds roll over year after year or after a job or insurance plan change with no penalties.
  • Flexibility of use, even if you’re young and healthy–You might be surprised at all the “qualified medical expenses” you can pay for using your HSA funds—everything from walk-in visits and surgical costs, to dental expenses, mental health services, vision care, prescription drugs and much more. And with the CARES Act, you can even use your HSA to purchase over-the-counter medication and supplies, including menstrual care products like cups, liners, pads, sponges and tampons. So, even if you’re young and healthy, you can still use your HSA to your benefit for many routine expenses.
  • Ever-expanding preventive care list for HSA participants–You can bypass your deductible and receive immediate benefits for any care that falls under the IRS’s constantly evolving preventive care list. This saves you money both short and long-term, especially since the list now includes care for many common chronic conditions that even those who are young and otherwise healthy may suffer from, like asthma.
  • Multiple contributors–HSA contributions don’t have to come just from you. Your employer can contribute, as well as a family member or just about anyone else. It’s a great advantage to be able to fund contributions from multiple sources, especially when you’re young and just starting out.
  • Long-term investment opportunities–An industry-leading HSA like Bend HSA provides you with the ability to easily invest your HSA contributions just like a 401(k), helping you get a great start to saving more for the future even when you’re young.

Use the Power of Time to Boost Your Long-Term Financial Health

When you’re young and healthy, you might not be focused on what your life will look like 30 or 40 years from now. But with an HSA, you can leverage the power of time to boost your long-term financial health and set yourself up for a stable financial future.

By starting an HSA when you’re young and healthy, you have the unique opportunity to contribute funds that can grow tax-free for decades to come. Even if you’re just getting started and have other commitments, like paying off student loans or purchasing a vehicle or home, even contributing a small amount like $50 or $100 monthly adds up over time, while not putting any financial strain on you in your current stage of life. It’s an easy and savvy way to make the most of your money, your age and your health.

And not only are HSAs the best way to build equity for future healthcare expenses—quite frankly, they’re the only way to do so in such a tax-advantaged manner.

The longer you contribute to your HSA, combined with the tax-free growth of your HSA investments and interest, the more you build real equity and set yourself up to be able to fund your future medical expenses exclusively through your HSA. In fact, with the right HSA strategy when you’re young and healthy, you won’t even need to tap into any of your other investments for medical costs in retirement—meaning your 401(k), IRA, pension or other funds will be freed up to be used for all the other expenses that come with retirement.

And when you consider that a married couple will on average need $285,000 for medical expenses throughout their retirement, you can see just how important it is to get a jump on your savings and look at your HSA as a long-term investment vehicle beyond just a fund for yearly medical costs.

Don’t Forget – HSAs Work for Everyone

It’s clear HSAs are an excellent choice for those who are young and healthy. But they’re also an excellent choice for just about everyone else.

Combining an HSA-eligible HDHP with a health savings account is a simple equation with a powerful outcome for those of all ages, income levels and health circumstances. Using an HSA with an HDHP allows accountholders of all kinds to take full advantage of three types of tax savings, while also having a dedicated, portable, never-expiring savings account to invest and use for present and future medical expenses. And along with their flexibility, numerous tax advantages, investment opportunities and rollover capabilities, HSAs also offer a variety of other benefits for everyone who uses them.

If you’d like to learn more about why HSAs are a great choice no matter who you are, take a few minutes to read our blog on why HSAs work for everyone.

No Matter Who You Are, Bend is Here to Help You Make the Most of Your HSA

With Bend HSA, we’re here to help you make the most of your health savings account. We offer a simple-to-use, secure HSA with a superior user experience and unmatched customer service and support—for clients of all ages and income levels. Connect with us today and let’s build your best HSA together.

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