Can millennials and Generation Z benefit from having a Health Savings Account?
HSAs were created through legislation in 2003, making millennials the first generation to have this wealth-building tool available nearly their entire working lives.
Cora Tellez, Sterling Health Services Administration, Inc.
Originally published in: BenefitsPRO | June 4th, 2019
Although they are among the youngest generations, Millennials and Gen Zs make up 30% of today’s workforce—and are now faced with the very real problem of budgeting and saving.
When it comes to jobs, not only are these generations concerned about the dollar amount on the paycheck, they find it equally important that an employer offers a compensation package that works for them. They will look for positions with perks such as time off, charity/community service, ridesharing and most importantly, health benefits.
With the rise in high deductible health plans (HDHPs grew from 4.2% of all plans in 2007 to 18.9% in 2017), an important health benefit for these new workers are Health Savings Accounts (HSAs).
HSAs allow individuals to pay for qualified health expenses and at the same time, save for future medical and retiree health expenses on a tax-free basis federally and in most states. These unique accounts are only available for individuals with a high-deductible health care plan. So why does this matter for these two generations?
Millennials were born between 1980-1994, and in the next two years, they will make up half of the U.S. workforce. Contrary to popular belief, millennials are not as young as the imagination portrays. Many of them are in their 30s, starting families and facing the realities of aging—including how to pay for illnesses and health issues.
HSAs were created through legislation in 2003, making millennials the first generation to have this wealth-building tool available nearly their entire working lives, and giving them the biggest advantage in terms of health care savings.
Additionally, this particular generation either suffered financial struggles or witnessed their parents experience setbacks during the recession of 2007-2011. As a result of the recession, millennials are typically very money-conscious, having gained unique wealth building habits and formed a different perspective on the best health care practices.
According to a Fidelity Investments’ Millennial Money study, 23% of millennials trust no one when it comes to receiving credible financial advice and would opt to manage their funds individually. An added bonus of having an HSA is the ability to control and manage the funds going in and out of the account at all times. Users are in full control of their money, making it easy for users to access and manage, which is another appealing benefit for millennials.
Now, this is just as important for Generation Z, those who were born between 1995-2015. This generation is currently the fastest emerging generation cohort of employees, consumers and influencers.
As a portion of Gen Zs are currently on the cusp of graduation or taking on their first entry-level positions within the workplace, it is important to understand what benefits they are looking for.
How can Generation Z benefit from having an HSA account?
Born and raised in the era of smartphones, instant ride-sharing apps like Uber/Lyft and having easy access to purchases via Amazon, this generation is used to having everything at the tips of their fingers. The benefit of having an HSA account is the accessibility to review health care plans, enroll in benefits, check health savings account amounts and make all of those important decisions via smartphone.
Another unique aspect to having an HSA is the flexibility and portability of the account. A recent Gallup report showed that 21% of millennials say they have changed jobs within the past year. No matter the employer, the HSA account follows you with no penalty, another important feature for both generations as they navigate through various careers and jobs.
One of the best ways to attract millennials and Generation Zs to your company is by offering benefits that provide them flexibility, portability and support. Offering them the option of an HSA is an efficient and effective way to recruit and retain employees.
Written by Cora Tellez
Cora Tellez is the CEO and Founder of Sterling Administration, a leading provider of health savings accounts (HSAs), flexible spending accounts and other insurance-supplement programs. She is also CEO of the Amazing Care Network, which she started to help men and women redefine aging. Cora has 25 years of management experience in health care finance and delivery.