So this is turning 29: I spent my birthday evening having a responsible glass of wine with two girlfriends at a classy bar, and we called it a night around 10:30. We didn’t gossip about men or even about our coworkers; we talked about the benefits of Health Savings Accounts.
“I’ve been thinking,” Emily said, setting the wine glass carefully on the granite bar, “I drive an old car, and I always expect to put around $800 into maintaining it every year. But how come I don’t plan on spending at least the same–if not more—to take care of myself? I mean, this–” she moved her arms to motion around her body—“is the machinery I’m going to have for the rest of my life. So, I’ve decided. I’m going to get my jaw fixed.”
She went on to say that she wasn’t sure what form the treatment would take, but that it should alleviate her headaches and help her sleep better at night. She was saving up for it, for both the appointments and the treatment, and expected it could cost anywhere from six hundred to a thousand dollars.
“You should get an HSA,” I advised, sagely, the wine making me a little braver with my advice. I had just a few days before had my annual meeting with Chip, my health insurance broker, an appointment so boring and obligatory that it never fails to make me realize I have graduated into true “adult” status.
Twenty-five used to be the last mile-marker of youth, when renting a car was the final frontier of your prolonged adolescence. Now, however, the true mile marker has pushed back to 26, the last year that Peter Pans are eligible to stay on their parents’ health insurance plan.
The year I turned 26, I was admittedly terrified. I went to an open enrollment meeting for people who needed help registering for individual health insurance plans, clutching a notebook to my chest like a high school student who forgot to wear a bra. I was the only person who showed up for the meeting.
It goes to show how little I knew about buying insurance that I actually shared office space with an insurance company at the time, yet I was utterly stunned to find my coworkers there, helping people buy insurance. “So that’s what you guys do!” I said to Chip and Bill, who nodded accordingly.
Since then, I meet each year with Chip to choose my plan, and last year, we got deep into a conversation about Health Savings Accounts. The meeting lasted an hour and a half, and I couldn’t help but think there had to be a more efficient way to understand the impact of insurance on my financial well-being. Still, I came away feeling especially savvy, and when you have good advice, you want to share it, so I passed that info along to Emily, at the bar, the night I turned 29.
“Look, the money you put in there is not taxed; it’s amazing. Since the bookstore doesn’t pay your insurance, you’d have to open the account yourself and fund it, but all that money is yours to keep, and you can claim it off your income next year on your taxes. The savings are around twenty percent,” I told her.
While health insurance remains a complex system, especially for individuals who are self-employed, like so many Millennials, a Health Savings Account is a vital part of the thinking person’s financial plan. Health care costs will continue to rise, and you’ll need the services eventually, not matter how invincible you might feel right now. While today a deductible of five or six thousand dollars sounds like a remote possibility, one routine shoulder or knee surgery would make that deductible look like chump change, and the twenty percent savings on that deductible is around $1,200. There’s a lot you can do with $1,200.
Emily almost didn’t believe me, but I explained how the money she puts into the account is hers, and it carries over from year to year. She can use it to pay for dental or vision, and she is investing in her future health by saving the money—pre-tax—now. By the end of the glass of wine, Emily was super excited to open her HSA, and I was glad to help. Even before Emily gets her jaw fixed, she can sleep a little better at night.