Why We Need Health Saving Accounts
Almost a quarter of Americans have less than $100 in their emergency savings fund, according to a recent TNS survey for CashNetUSA. Of the 1,000 participants surveyed, a staggering 22.8 percent reported that if they needed to cover an emergency expense within one day, they would have less than $100 available.
Both males and females reported similar savings patterns, however, 55 percent of Americans with children under the age of 18 reported having less than $800 in emergency savings compared to 42 percent of those without.
Source: It’s Economic.
Considering the rate at which people (not just Americans) are accruing debt to support an unsustainable lifestyle, this isn’t surprising.
I’m not surprised by this, but it’s still painful to hear. I also wouldn’t be surprised if many of these people wouldn’t normally be considered poor or near poverty.
I agree with Alex.. How many of total percentage fall under the poverty level line?
Young people feel they can count on their parents in time of need. Older people feel they can count on their credit cards. Personally, I don’t like the idea of being one accident away from poverty or one job-loss away from being homeless. I’ve saved enough money over the years that I don’t worry about unanticipated expenses.
Take a look at the survey. Low emergency cash amounts are concentrated in the under 30s with kids. Not surprising. Those same households might have retirement accounts that could be turned into emergency funds. All depends on one’s definintion of emergency funds.
There is absolutely no information given about where the sample came from.
There’s no question that poeple dont save like they should (myself included). Keeping an emergency fund is definitely one of the most important parts of a balanced savings approach.
No surprise. However I don’t think this is a reason for HSAs; if people don’t save emergency cash then limiting the money to healthcare spending with HSA isn’t an incentive to save.
First, people need the means to save. Incentive does nothing if you’re living beyond paycheck to paycheck.
I agree with Robert. How can anybody expect to have money saved for emergency care if poverty levels are so high? Some people can’t even afford to buy healthy food, clothing for their families, or can’t even keep a roof over their heads…I’m sure saving for emergency care is not in their priority list. Perhaps creating incentives to save would make it all better…?
So to fix this you are suggesting people save $ in a HSA? Hmmm. If you put $ in a HSA you can only use it to pay for health expenses (not other emergencies, like to fix your car, your furnace, etc.) unless you are willing to pay a penalty. So if someone has the $ to save, they are NOT gonna put it in an HSA first – they want it available for any emergency. Plus, by virtue of having an HSA it means your paying annual medical costs first from that HSA under your high deductible plan. So how exactly does someone of moderate means actually “save” $ in their HSA – let alone be able to take advantage of the tax-deferral on earnings? Not every employer puts the $ they save on lower premiums into their employee’s HSA account. Plus, just one medical emergency will wipe out just about anyone’s HSA balance given the high cost of hospital stays. Remember, most employee’s are being asked to save for their own retirement (401k), college expenses (529) let alone emergency funds. So IMHO, HSA’s are another tax deferral opportunity for the wealthy. Those who can put $ into an HSA and still pay for annual medical costs from another pocket of $ – thereby allowing their HSA to grow and eventually become a medical IRA in retirement. They get to invest the $, gain some real tax savings on the earnings have a nice way to pay for medical costs later in life. HSA are growing simply because employers are pushing them onto their employees to save their own premium costs, not because employees want them.