Millennials Health Savings Accounts Contributions

HSA Enrollment Data: Millennials in Better Financial Shape

If you're like most benefit professionals, you're probably concerned about the financial well-being of your millennial employees, in particular.

Over the past few years, millennials have assumed a reputation for poor financial habits, especially with respect to saving.

Part of the reputation is certainly self-inflicted (a recent study suggests that many millennials spend more on coffee than they put into retirement funds), and part of it is simply a consequence of the times (average student loan debt has doubled over the last decade, shrinking millennial budgets).

Regardless, much of the evidence paints a fairly bleak picture of the financial outlook for millennials, many of whom are having to move back in with their parents, put off buying a home or delay starting a family.

But, according to the latest open enrollment research from Benefitfocus, there is cause for encouragement.

Millennial HSA contributions are up significantly.

The State of Employee Benefits 2017 report on large employers indicates that millennials are most likely to be enrolled in a high-deductible health plan (HDHP), which makes them eligible for a health savings account (HSA).

Well-funded HSAs are powerful because not only do they provide tax-free money to help cover increasingly high annual out-of-pocket health care costs, but they also can act like a retirement account as funds roll over from year to year and accumulate interest. The more millennials can contribute to these accounts, the better position they'll be in to manage their current and future health care needs.

In 2016, it was no surprise to learn that millennials contributed to HSAs at the lowest rate of all age groups in the workforce. The average 25 year-old employee contributed less than 16 percent of the IRS annual maximum amount.

But for 2017, while millennials were still the lowest contributors to HSAs, they increased their contributions at a higher rate than all other age groups, with the average 25 year-old employee contributing approximately 20 percent more year over year.

Though millennial HSA contributions are still well below the IRS maximum, it appears that millennials, just in the past year, have become more savings-minded and better understand the value a well-funded HSA can provide them. And it's benefit professionals like you who, in large part, have helped them take this big step.

As employers continue to invest in technology that enables straightforward financial education and decision support before and during benefits enrollment, as well as in financial wellness programs and products that help workers gain breathing room in their budget (e.g., student loan consolidation and repayment), employees - particularly millennials - are able to make better decisions for their health and wealth.

That picture doesn't look so bleak now, does it?

Get more insight into employee benefit trends for the 2017 plan year. Click here to get your free copy of Benefitfocus' State of Employee Benefits 2017 report!