Opinion - Invest in You: Ready. Set. Grow.

An HSA is a great way to manage health-care costs

Steve Odland
Here's how to get the most tax benefits out of a health savings account

Nothing is certain but death and taxes, Benjamin Franklin famously said.

Today, that adage should also include rising health-care costs.

As young adults start saving for the future, the ever-growing price tag of health care can throw a wrench into their plans. They should consider using a health savings account – it's not the right choice for everyone, though it is an option with much to like.

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An HSA is a personal account that the owner can use to pay for health care. Benefits include tax-free withdrawals to help finance medical expenses. Moreover, anyone can contribute funds, including the owner's relatives and employer. Any unspent money from each year rolls over to the next, allowing individuals to start building a nest egg.

HSA users must pair their account with a high-deductible insurance plan.

That means they typically pay a lower monthly premium than under a more traditional plan. In exchange, they pay more out of pocket before the insurance takes effect.

Since younger people use less care, the HSA/high-deductible combination appeals to them. In 2018, more than 7 in 10 eligible millennials were enrolled in one.

Yet today's young workers won't be invincible forever; as they age, they will need more care.

Consider using a health savings account. While it's not the right choice for everyone, it is an option with much to like.
Steven Odland

So, if they want to pursue this route, then they — and if possible, their company — should contribute funds on an ongoing basis. This would be their best opportunity to have enough cash to cover their medical needs while having money left over down the road, for other retirement purposes.

Ultimately, the U.S. can substantially lower the cost of health care only by reforming its public policies. The system needs more market-based, bipartisan reforms that increase value and decrease cost. In the meantime, HSAs are one of the prescriptions available to help individuals take matters into their own hands.

— Steve Odland is president and CEO of The Conference Board, a global, independent business membership and research association.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.