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Health Savings Accounts and What Women Should Know

Lauren Hargrave · May 16, 2023 · 10 min read

women and hsas

If you have the nagging feeling that it costs more to be a female consumer than it does to be a male consumer, turns out, your instincts are correct. The data shows that not only does a gender bias exist in retail product and service pricing (and often the sales taxes levied on those items), single women also pay more for health, auto, and life insurance than single men, all while making lower salaries on average.

The good news is that there is a way to take back some of your purchase power by contributing to a Health Savings Account (HSA) and using it to pay for qualified medical expenses as well as to save for retirement. Here’s how women can get the most out of their HSAs.

Why women should get an HSA

Before we can explain why women should get an HSA, we need to explain what an HSA is. HSAs are pre tax savings accounts into which you deposit money to pay for qualified medical expenses that include copays, coinsurance, prescriptions (including birth control and emergency contraceptives), menstrual products, and more. Your contributions roll over from year-to-year, you can invest them or keep them in a savings account and, as long as you use them on qualified medical expenses, your contributions and distributions remain tax-free.

This enables you to build a health safety net for a medical rainy day or a planned major medical expense (like childbirth). Once you turn 65, you can use your money on anything you want. Distributions for qualified medical expenses remain tax-free in retirement and all other distributions are taxed at the appropriate income tax rate.

To open and contribute to an HSA you must be currently enrolled in a High Deductible Health Plan (HDHP) and that must be your only health insurance coverage. If you lose that HDHP coverage, for whatever reason, you still maintain access to your previous HSA contributions.

These features make HSAs a power savings tool that helps women to save on costs, bolster their retirement savings, and improve their financial security. Here’s how an HSA can accomplish that.

What are the benefits?

There are many benefits to contributing to an HSA.

  1. Tax savings. You don’t pay income taxes on your contributions in the year they’re made, you don’t pay taxes on their growth and you don’t pay taxes on the amount you spend as long as it’s on a qualified medical expense.

  2. You can invest your contributions so they grow at the rate of the market. The IRS allows you to invest your HSA contributions, which is great news since the average rate of return of the investment market is 10% while the national average savings account interest rate is 0.24%. If you don’t feel comfortable picking your own investments, no problem! If you have an HSA administrator like Lively, you should have access to a guided investment portfolio. Lively offers its guided portfolio through Devenir, which provides account holders with a curated menu of high quality, low cost funds after they answer a quick survey about their needs.

  3. You own your account. Unlike other tax-advantaged savings and spending accounts, account holders own their HSAs. That means you’ll never lose access to it if you leave the company. Additionally, your employer doesn’t have to offer an HSA for you to participate in one as they are available on the private market. As long as you’re enrolled in an HDHP, you can contribute to an HSA. If you’re no longer covered by an HDHP, you can still use your previously made contributions on qualified medical expenses.

  4. You can use your contributions to pay for qualified medical expenses for you, your spouse and your dependents (even if you have an individual HDHP). There are 100’s of expenses that qualify for reimbursement through or payment from an HSA.

These are the general benefits to having an HSA. Here’s how HSAs can improve the financial stability and quality of life for women specifically.

HSAs help women save on costs

Did you know that, on average, women spend a greater percentage of their income on health insurance than men do? In fact, in 2020, single women spent an average of $2,406 on health insurance premiums, representing 6.8% of their annual income while single men spent an average of $1,896 on health insurance premiums (3.9% of their annual incomes). This while women are still paid an average of 20% less than men for the same jobs.

Women especially need help saving on healthcare costs. HSAs help them do that by:

  1. Lower premium costs. HDHPs are typically the most affordable health insurance option. By pairing your HDHP with an HSA, you can save pre tax dollars to pay for the medical expenses you need, rather than paying a higher monthly premium for care you might not need.

  2. The triple tax advantage of the HSA means you can save up to 37% on your medical expenses, depending on your tax bracket.

  3. Pay for expenses you would otherwise pay for post-tax by using your HSA. Expenses include an out-of-network provider, breastfeeding classes, baby sunscreen, epsom salt, and fertility treatments.

Use your account towards menstrual care products

Have you heard of the “pink tax”? The pink tax is a name given to the phenomena that women tend to pay more for products marketed to them, or products used exclusively by them (i.e. menstrual care products like tampons and pads), than men do for similar products or products they exclusively use.

Part of the “pink tax” is an actual tax that’s levied on menstrual care products like tampons. In many parts of the country these types of goods are taxed as a luxury item (meaning the tax rate is higher) as opposed to a necessity like groceries. In fact, when the state of California studied gender discrimination in pricing, it found that women in its state paid an average of $2,300 per year more than men on products marketed specifically to them.

Twenty states have legislated against gender discriminatory pricing, but there remains no federal law against this behavior. By using your HSA to pay for menstrual products like tampons and pads, hygiene products, pain relief during your period like Midol, and more, you can reduce the impact the “pink tax” has on your wallet.

Use your dollars toward family planning

Family planning, whether it’s for pregnancy prevention or termination, or pregnancy support (in terms of fertility treatments), these costs might not be covered under your health insurance plan. They are also considered qualified medical expenses for payment out of an HSA. Eligible family planning expenses include:

  1. Fertility treatments.

  2. Birth control including the pill, patch, and IUDs.

  3. Condoms.

  4. Emergency contraception.

  5. Pregnancy termination.

  6. Medical travel to receive fertility treatments or pregnancy termination services.

  7. Sterilization.

Women can use their HSA to fill the retirement gap

There is currently a gap between what men and women have saved for retirement. Women are more likely than men to have no retirement savings at all and only 22% of women have at least $100,000 in their retirement savings accounts compared to 30% of men.

To give you an idea of what you’ll need to have saved for retirement, just to pay for medical expenses, the average healthy 65-year old couple who retired in 2021 is expected to need between $156,208 and $1 million over the rest of their lifetime. So women need to catch up.

Workplace retirement savings accounts can be tricky to navigate as you lose the ability to contribute to a 401k once you leave an employer. This leads to 20% of accounts being lost or forgotten each year as people move jobs, leave the workforce or have their hours reduced to the point they no longer qualify for workplace benefits. But an HSA can be an important tool you can use to help bolster your retirement savings.

The HSA feature that makes this type of account especially user-friendly is that you never lose access to this account because it belongs to you. A 401k must be accessed through an employer but an HSA can be signed up for in the private market as long as you’re covered by an HDHP (which you can also access either through an employer or through the private market). And if you like your private market HSA, you can keep it even if your employer also offers this type of account through its group plan.

In addition, if you’re between employers or working for yourself, you don’t have the option to contribute to a 401k and the annual limits for IRAs are much lower. By maxing out your HSA as well as your IRA, you can help ensure you’re saving as much as possible toward your future.

Get your medical travel related expenses covered

HSAs have always covered travel expenses for medically necessary treatments. But this feature is receiving new attention in light of the Great Reshuffle as workers switch jobs and industries and may have led some people to move to a rural environment that could be far from specialists or necessary care. In addition, recent state legislation against certain procedures might also prompt a need for some residents to travel.

If you do need to travel for a medically necessary procedure (for which reproductive care is included), you can use your HSA to pay for the necessary travel expenses.

Build a safety net for your healthcare

If you can use your HSA as an investment and savings account (i.e. contributing more than you spend each year), you can build a medical safety net for the years when you need a major procedure, have a baby, or your spouse or dependent needs a major procedure or otherwise expensive care.

To make sure you save more than you spend, use the rule that just because it qualifies as an eligible expense, doesn’t mean you should use your HSA for it. If you can afford to pay for an eligible expense out-of-pocket (as long as you’re not using a credit card), you should. That way you can grow your health savings faster.

Gain more empowerment

Empowerment is all about stability, financial health and choice. Participating in an HSA and maxing out your savings and investment opportunities, can help you achieve this. It helps you save money on health insurance costs and helps to offset the “pink tax”, it gives you a safe investment vehicle for your savings and retirement, and provides you with a tax-free way to save for and ensure your reproductive freedom.

The ability to use your HSA to pay for an out-of-network provider also helps to ensure you have the ultimate choice when it comes to when, where and from whom you receive your care. An HSA helps to put financial power and choice back into your hands.

Get started with Lively today!

Lively has one of the most user-friendly HSAs in the market. We offer two different types of investment accounts, as well as a straightforward savings account, and award-winning customer support and design to help you in your health savings journey. If you’re interested in signing up for one of the most powerful HSAs out there, reach out today.

Lauren Hargrave

Lauren Hargrave

Lauren Hargrave is a writer from San Francisco who focuses on technology, finance and wellness. She follows comedians like most people follow bands and believes an outdoor sweat session can cure almost any bad mood. She’s also been writing her first novel for so long, her mom doesn’t ask about it anymore.

piggy bank on pink background


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Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.



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