Young adults struggle to plan amid health-care uncertainty

Personal Finance

The biggest choice for young people is to decide whether or not it makes sense to use a high-deductible plan with a health savings account or not, said CFP Eric Roberge. HSA premiums are typically lower, but the deductibles are high, scaring many young people away.

“They simply see a huge deductible and want to avoid paying that at all costs,” said Roberge, of Beyond Your Hammock.

“The truth is that many people can benefit from such a plan, as long as they actually sock away the premium savings in case of emergencies,” he added. “Lower premium costs can help you save money if you don’t use the insurance all that often.”

For a healthy, young person who gets an annual physical and not much else, an HSA can be a fantastic opportunity, Roberge said. The trick is to put the premium savings into the HSA. You get a tax deduction for such a contribution, you may be able to invest that money inside the HSA and you can use the money for qualified medical expenses at anytime throughout your life, he explained.

HSAs are the only accounts, including retirement funds, where the money grows tax-free and can be taken out, for medical purposes, tax-free, Roberge added. What’s more, the unspent funds roll over year to year.

For those considering self-employment, Life Planning Partners’ McClanahan advised waiting to make that move until there’s clarity around what Congress is going to do. If you already have good health-insurance coverage, don’t make any changes quite yet.

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