The workforce is getting younger. According to Credit Karma, millennials’ average total debt is $48,611. As of September of 2023, prices have increased by 3.7% compared to September 2022 according to the 12-month percentage change in the consumer price index — the monthly inflation rate for goods and services in the US. Inflation persists in diminishing consumer savings as consumer savings rate fell to 3.8% in Q3.
Unfortunately, this is impacting the younger generation more than older generations. In fact, more than 7 in 10 Gen Zers and millennials are saving less due to those price pressures, compared with 66% of Gen X and 63% of baby boomers, according to Bankrate. Younger generations are seeking additional ways to save for the future other than just a 401(k) or Roth IRA account.
The Advantages of Health Savings Accounts
HSAs allow organizations to utilize pre-tax funds for employee health coverage, offering up to $3,500 for individuals and $7,000 for families. The flexibility to carry over and accumulate unused funds from year to year is extremely valuable. It’s important to note that these funds can only be utilized with an ACA-qualified High Deductible Health Plan (HDHP) which is decided by the insurance carrier and then filed with the state. HSAs can cover expenses such as deductibles, copays, prescriptions, out-of-network costs, and other charges.
Another benefit of HSAs is they offer a triple tax advantage. Contributions made to the HSA are exempt from taxes, and if contributions are made via payroll deductions, they are not subjected to Social Security or Medicare taxes.
HSAs have certainly gained traction over the last few years. As of last year, HSAs assets eclipsed $100 billion by the end of last January, according to Devenir, an HAS investment consultant. Devenir predicted that HSA funds will reach $150 billion by the end of next year.
What Can Employers Do?
To attract and retain employees, it's crucial for employers to familiarize themselves with the multitude of benefit choices and ensure accessibility for their workforce. Health saving accounts (HSAs) provide significant benefits specifically to the younger workforce, whether their goal is to increase their retirement savings, or they appreciate the flexibility to select from a broad range of medical providers.
These tax-advantaged, interest-bearing savings accounts serve as a valuable tool for both employees and employers in managing the rising costs associated with healthcare. Additionally, they help contribute to employees looking to achieve long-term financial security.
Giving employees the necessary technology and resources ensures to become more engaged and well-informed participants is imperative when it comes to healthcare consumerism. This holds true at a time where patients are seeking out medical care based on factors like cost-effectiveness and the overall experience. HSAs provide a proactive approach that serve as a win-win for both employees and the organization as they can also help lower the cost of healthcare for employers and their employees.
About the Author
Steve Rosenthal is one of the most widely recognized leaders in the employee benefits and human resource industry. Before becoming CEO of Triton Benefits and HR Solutions, Rosenthal was the CEO and pioneer of CheckPoint HR. Rosenthal previously served as Chairman of EPIX of what became under his leadership, one of the largest human resources outsourcing companies in the country. Steve began his career at Automatic Data Processing as an intern and later became a District Manager. Steve graduated from Fairleigh Dickenson University and earned a Bachelor of Science Degree in Management.