HSAs are helping gig workers prep for retirement

Health savings accounts (HSAs) exist to help everyone plan for both the near and far, even those who aren’t a part of the usual nine-to-five.

The gig economy is alive and well, and its growth rate doesn’t appear to be slowing down anytime soon. In 2018, 56.7 million Americans worked some type of “gig”. Companies like Instacart, Postmates, Uber, Lyft, and others allow us to earn extra cash or make a living in a completely new way.

We work gigs for many reasons. Some of us want complete control over our time, others do it for supplemental income. And because many of us don’t have access to traditional employer-sponsored health plans or retirement accounts to depend on, as gig workers, we’re often required to figure those things out on our own.

But you’re in luck! There is a type of account that can help reduce your tax burden, protect against unexpected expenses, and maximize funds for future health spending. It’s called a health savings account, or HSA … and you’re probably already eligible for one. Let’s talk about how a health savings account can set you up for a more secure financial future.

More Money in Your Pocket

A health savings account (HSA) is kind of like a personal savings account, but for spending on healthcare expenses. Additionally, every dollar that goes into the account results in a reduction of your overall taxable income. It’s like finding free money! Who doesn’t want to keep more hard-earned cash in their pockets and out of the hands of Uncle Sam? We certainly do.

So who can get an HSA, and where do you get one? To qualify for an HSA, you have to be enrolled in a specific health insurance plan–a high deductible health plan (HDHP). Many gig (or freelance) workers get their health plans from Healthcare.gov, or marketplaces like Stride, and many of the plans offered are actually HSA-eligible! If you don’t yet have an HSA or are looking to switch, Starship offers a 100% free health savings account built specifically with gig workers in mind.

A Financial Safety Net

Tucking extra money away for the future is hard for most people, and can be even tougher for gig workers who often have irregular income flows. Luckily, saving in an HSA can create a much-needed safety net in the event of an unexpected medical bill—now one of the main reasons people fall into bankruptcy.

We recommend leveraging your health savings account as an emergency fund by setting aside even $10 a month, which can help build your HSA into a long-term financial safety net. By planning ahead in this way, you could be saving yourself from potentially major pitfalls down the road. After all, life happens.

The Best Retirement Account

Get ahead by investing your HSA funds. You heard correctly: you can also invest and grow your extra funds tax-free for long-term retirement planning. While many gig workers don’t have access to employer-sponsored retirement accounts, like a 401(k), a health savings account can fill this void.

A health savings account and 401(k) have the same tax advantages when you contribute and invest money. But an HSA has an additional advantage – you can use your HSA funds to pay for medical expenses without penalty. If you were to dip into your 401(k) to pay for a medical expense it will cost you a pretty penny. Not with a health savings account.

The Takeaways

If you’re a member of the gig economy and weren’t already convinced, you really should consider signing up for a health savings account! Next time you complete a gig, consider setting aside a small percentage of your earnings into your HSA. After all, every dollar that goes into your HSA keeps more money in your pocket by reducing your overall tax burden, protecting you from unexpected medical bills, and providing an investment option that not even a 401(k) can compete with!