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Carla Fried - Headshots

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Healthcare

In a study of 1.3 million employees from 540 large employers, HSA participation among millennials has skyrocketed by 76% in 2018. This was a significant increase from the 40% increase in 2017.

Millennials Love HSAs

Employee Benefits

Carla specializes in service journalism for news outlets including The New York Times, Money magazine, and CNBC.com. For the past 15 years she has writen for traditional news outlets, ghostwriting books and articles for clients, creating content for major financial service firms, and editing investment newsletters and white papers.  

Her work appears in The New York Times, Money Magazine, Barron's and Consumer Reports.

Carla Fried

Health Insurance

Personal Finance

What if I have or was offered job-based insurance?

Series: Best Financial Decisions

Financial Health

Taxes

Lively is the modern HSA experience built for—and by—those seeking stability in the ever-shifting healthcare landscape. By harnessing modern innovation and deep industry expertise, Lively is committed to bridging today’s savings with tomorrow’s unknowns. Unlike traditional institutions hindered by bureaucracy, Lively’s commitment extends beyond initial set up to providing dedicated, ongoing support and education for every step. So each HSA can reach its maximum potential with minimal headache. 

Lively

What if I am under 30?

Vicky Warren, once a nurse, now a freelance healthcare writer and social media coach.

Vicky Warren

Choosing your first health insurance plan can be confusing - there may be words or concepts you don't understand, and that's okay! We break down some basic concepts that involve choosing your first healthcare plan.

How to Choose Your First Health Insurance Plan

Retirement Planning

HSA (Health Savings Account)

There is a lot to juggle in your 20s, but that is no reason not to stay on top of your taxes since there are things you can do now that will benefit you in the future.

How to Approach Taxes in your 20s

How to pay down your student debt, set a budget, and start savings to get ahead in your 20s.

5 Best Financial Decisions in Your 20s

Entering the adult world comes with several emotions. Some fear, mixed with a feeling of accomplishment, is pretty normal. You know you’re really “adulting” when you have to choose your first health insurance plan.

Choosing your first plan may seem overwhelming, so take time to study the basics to make the right choice for you. Here are a few key points to consider when you’re choosing your first health insurance plan.

## You can stay on a parent's plan until your turn 26

Once you’re on your parents job-based insurance plan, you can stay on their plan until you turn 26, even if you:

- Start or leave school
- Live in or out of your parent’s home 
- Are no longer claimed as a tax dependent
- Turn down job-based coverage 
- Get married
- Have or adopt a child

If your parent’s have a job-based plan, your coverage typically ends when you turn 26. If you are on your parent’s Marketplace plan, you can be covered through December 31st of the year you turn 26 (or the age your state allows).

## First job? Ask about your healthcare coverage options

Landing your first job is a monumental accomplishment. When you get that first position, be sure to ask about your healthcare coverage - and be sure to understand the options they provide. 

Companies with over 50 full-time employees are required to offer health insurance coverage under the Affordable Care Act. Employers typically offer insurance plans that make financial sense for them. Employers usually pay a portion of the monthly premium, and the employee pays the rest. Some companies pay the entire monthly premium. 
 
Some companies offer coverage as soon as you start. However, many require new employees to wait for a specific time period - often ninety days - before coverage kicks in. If you have to wait for coverage to begin, consider purchasing a short term policy to be covered while you wait.

In addition to health insurance, many employers offer additional health benefits such as vision and dental plans, wellness programs, Health Saving Accounts (HSA) or Flexible Spending Accounts (FSA). Be sure to learn about the entire health benefits package when you begin a new job to ensure you are using all the offered benefits.

## Know your personal healthcare needs

It's essential to do a health assessment for yourself and anyone you will add to your plan to know what type of coverage you need. Here are a few questions to ask yourself:

- How often do we go to the doctor? 
- Do I have chronic conditions that require additional healthcare resources or specialized care? 
- Do I have medications? Do we anticipate needing more? 
- Do I want to see specific healthcare providers? 

Considering these needs allows you to have a future picture of your healthcare needs so you can choose the coverage that makes sense for you.  
 
In addition, be sure to look at the monthly premium you’ll be responsible for paying, the deductible, co-pays, and the out-of-pocket-maximums for each plan to choose the one that meets your needs. 

## Main Types of Health Plans

There are several health plan types available. They all have pros and cons. Here’s a quick overview of the three most common types of health plans you'll see:

#### A Preferred Provider Organization (PPO)

A Preferred Provider Organization is a health plan that allows you to choose your healthcare providers. These plans have preferred providers in the network, but you can also see doctors outside of the network with PPOs. 

#### Health Maintenance Organization (HMO)

A Health Maintenance Organization is a plan that has specific providers you can see to have your insurance cover the costs. 

#### High Deductible Health Plan (HDHP)

High Deductible Health Plans have a high deductible that you must meet before insurance coverage begins. HDHPs usually have lower monthly premiums but higher out of pocket costs. Many HDHPs can be paired with a Health Savings Account (HSA), which allows you to use pre-tax money to help with healthcare costs.

Choosing your first insurance plan can be overwhelming. Once you take the time to consider your healthcare needs, you’ll be ready to study the options carefully and make the best decision for you. The best part is that you can make changes year to year if need be. 

When you are starting out, there is a lot to juggle. Student loans, office politics, dating, and roommates to name a few. Your mountain of responsibilities may not leave time for anything else. So being proactive with money — especially taxes — may be at the bottom of your priorities.



No one expects you to be a tax expert, but a little advance planning could make a big difference. Being proactive now may instill good habits for your 30s, 40s — and beyond. These are the best places to start.



<h4>Look for ways to save on taxes at work</h4>



Working full-time is more than just a steady paycheck. Your company may offer a slew of benefits, many of which could save you money in taxes. These are some of the most common tax savings opportunities you will see:



<ul><li>401(k) or 403(b) &#8211; Many companies offer 401(k) or 403(b) retirement savings plans. The power of automation allows you to save a percentage of every paycheck. Often, these contributions happen before taxes. This may lower your taxable income for the year. Tip: Companies are often willing to match a percentage of your savings. Always take &nbsp;advantage of this extra money. </li></ul>



<ul><li><a href="https://livelyme.com/hsa-guide/">Health savings accounts (HSAs)</a> &#8211; If you have a high-deductible health insurance plan, you know how expensive it can be. To offset the costs, some companies may offer an HSA. Like your 401(k), the money goes in before taxes. You can use it anytime for qualified medical expenses. The money is yours even when you leave the company. </li></ul>



<ul><li>Flexible spending account (FSA) &#8211; FSAs are another way to save money pre-tax for medical expenses. These are &#8220;use-it-or-lose-it&#8221; accounts, so you have to spend the balance by the end of the year. You will also lose your FSA when you change jobs.</li></ul>



<h4>Consider opening an individual retirement account (IRA)</h4>



When you are in your 20s, time is on your side. The more you save and invest now, the more you could have by retirement. On top of your savings plan at work, you may also save money for the future with an individual retirement account (IRA). These accounts come in two flavors:



<ul><li>Traditional IRA &#8211; Like your 401(k) or 403(b), traditional IRA contributions are pre-tax. This means you don&#8217;t owe taxes on the money now — you will have to pay when you withdraw the money. </li></ul>



<ul><li>Roth IRA &#8211; Roth IRAs are exactly the opposite. Your money goes in after taxes, so you don’t get an immediate tax benefit. But the money grows tax-free and you won&#8217;t owe income taxes when you take it out in retirement.</li></ul>



<h4>Invest in your career</h4>



With decades ahead of you, there is no better time to invest in your career. Even if you are paying off student loans, and most folks are, you shouldn&#8217;t overlook future career growth. Your company may offer tax-free reimbursements for taking courses. Or, if you pay for courses yourself, you may qualify for education-related tax credits. &nbsp;



<h4>Get organized with tax documents</h4>



There is nothing worse than repeating the same mistakes every tax season. Set a goal of creating a system to stay organized. Stick with it. There needs to be a specific place, year-round, for all your important tax documents. Rather than tossing them into your giant stack of paperwork — a.k.a. the abyss — be deliberate and file them. You will be grateful once next year’s tax season rolls around.



Related Readings:



<ul><li><a href="https://livelyme.com/should-i-get-an-fsa/">Should I get a Flexible Spending Account (FSA)?</a></li><li><a href="https://livelyme.com/hsas-vs-fsas/">HSA vs. FSA: Is it better to have an HSA or FSA?</a></li><li><a href="https://livelyme.com/young-healthy-with-hsa/">I am Young and Healthy. Why I have an HSA</a></li></ul>

For all that you learned in school, chances are it didn’t include much in the way of how to ace the personal finance stuff. It’s rare for high schools and colleges to focus on these vital life skills.
No worries. Follow these five financial moves and you will be off to a great start.

<ol>
<li>Stay on Top of Your Student Loans Repayments. Falling behind in payments can make a mess of your financial life for years. Even if you declare bankruptcy, you’ll still be required to pay back the student loans. Not staying current on your payments will also hurt your credit score, and that is going to end up costing you in all sorts of ways.</li>
</ol>
Tip: No ostrich-ing, even if you have yet to land a job that pays enough. You still must contact the lender and get on a repayment plan, or formally apply to have your loan repayments temporarily suspended, though interest will continue to run up what you owe.
<ol start="2">
<li>Start Saving for Unhappy Surprises. Look, life happens. The great gig you’re enjoying loses its funding, or changes gears and you are out of a job. Your car needs a big-time repair. You wrench your knee in a pick-up game or on the ski slope, and “learn” that your health insurance requires you to pay part of your medical bills. This is where having an emergency savings fund can save you. When you’ve got some money tucked away, you won’t need to put an unexpected expense on a credit card that then charges you an interest rate of 15% or more.</li>
</ol>
Tip: Search online for “high rate savings accounts”—online banks offer much better rates than traditional brick-and-mortar banks. Sign up to have automatic monthly deposits sent from your checking account into your new online savings account.
<ol start="3">
<li>Start Savings for an Older You. Suggesting you start saving for retirement might seem highly clueless given everything you’re juggling. But every penny you save today will be far more valuable than money you start to save 10 or 20 years from now.</li>
</ol>
Right now is your one chance to make the most of compounding: money you save today has more time to grow. For instance, if you start saving $100 a week at age 25 and earn an annualized 6% you will have nearly $870,000 saved up by age 65. And most of that will be from compounding: your total contributions will be $208,000. If you wait until age 40 to start saving, you will have just $300,000 saved up at 65. To end up with around $870,000 you would need to start saving $290 a week at age 40.
Tip: If you have a workplace retirement plan that offers you a matching contribution, make sure you contribute enough to qualify for the biggest possible match. No workplace plan? Anyone with earned income can open a Roth IRA at a discount brokerage and set up monthly or quarterly direct deposits from a checking account.
<ol start="4">
<li>Make Sure You Have Health Insurance. Even if you’re currently covered on a parent’s health plan, you will be kicked off at age 26. Don’t get twisted in knots about all the headlines about how expensive health insurance is. You can likely use your age to great advantage. If you don’t have a workplace plan, you will want to buy an individual plan through the Affordable Care Act. Chances are your income will qualify you for subsidies. </li>
</ol>
Tip: Whether you have health insurance at work or the ACA, you may have the option to choose a High Deductible Health Plan (HDHP). If you’ve nailed step 2 –an emergency saving plan—an HDHP can be a great option as your premium costs will be lower, and you have your emergency savings ready to cover the deductible, if need be. When you have an HDHP you are eligible to save in a Health Savings Account. An <a href="https://livelyme.com/what-is-an-hsa/">HSA</a> offers unbeatable tax breaks for paying any medical bills: those you run up this year, or decades from now.
<ol start="5">
<li>Set your Indulgence Budget. If you are a FIRE devotee, you are going to be resolutely focused on reducing your spending to the essentials. That’s great. But not everyone is up for FIRE. And it can be easier to stay committed to saving and building financial security if you also allow yourself to spend on “wants” once in a while.</li>
</ol>
Tip: The key is to have a conscious plan for how much you will allow yourself to spend on “whatever/whenever.” Maybe it’s 10% or 15% of your take-home pay.
<h2>Financial Decision Series</h2>
<ul>
<li><a href="https://livelyme.com/5-best-financial-decisions-in-your-20s">5 Best Financial Decisions in Your 20s</a></li>
<li><a href="https://livelyme.com/5-best-financial-decisions-in-your-30s">5 Best Financial Decisions in Your 30s</a></li>
<li><a href="https://livelyme.com/5-best-financial-decisions-in-your-40s">5 Best Financial Decisions in Your 40s</a></li>
<li><a href="https://livelyme.com/5-best-financial-decisions-in-your-50s">5 Best Financial Decisions in Your 50s</a></li>
<li><a href="https://livelyme.com/5-best-financial-decisions-in-your-60s">5 Best Financial Decisions in Your 60s</a></li>
</ul>

Millennials are often chastised for their <a href="https://www.cnbc.com/2017/06/30/heres-how-millennials-spend-their-money-compared-to-their-parents.html">spending and savings habits</a>. They love their morning coffee but aren&#8217;t saving enough money for their future. You might not know, they love HSAs as much as they love their morning frappuccinos.

<h2>Millennial HSA Growth</h2>
In a study of 1.3 million employees from 540 large employers, HSA participation among millennials has skyrocketed by 76% in 2018. This was a significant increase from the 40% increase in 2017.
Millennial HSA contributions also increased by 15% for family plans ($2,305) and 13% for individual plans ($1,139). Please note the <a href="https://livelyme.com/2019-hsa-contribution-limits">HSA maximum contributions for 2019</a> are $3,500 for individuals and $00 7,0for families, so millennials have lots of room to increase their yearly contributions to save more for their health.
<h4>Generation X and Baby Boomer HSA Participation</h4>
But not to be outdone, HSA participation for Generation X increased to 85%, following closely by Baby Boomers at 84%. In general, <a href="https://resources.benefitfocus.com/blog/employee-benefit-trends-after-2020-what-s-changed">this study</a> showed the nuances of a more general trend in employer-sponsored HSAs.  In 2016, <a href="https://www.mercurynews.com/2016/10/23/while-obamacare-premiums-rise-employer-based-health-plans-shift-to-higher-deductibles/">29% of employers offered an HSA-eligible health plan</a>. One of the many reasons HSA accounts grew to over <a href="http://www.devenir.com/research/2017-year-end-devenir-hsa-research-report/">22 million</a> in 2017.

If you are under 30 and have a high deductible health care plan find out how an HSA can save you money.

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