How Do You Even Understand Employee Benefits Packages? Chad Wilkins, President of HSA Bank, Helps Us Adult

A major concern for anyone approaching graduation, or just entering the ~real world~ of adult finances, is figuring out how the heck you're supposed to not only make money, but also save it responsibly enough to live and maybe someday even save enough retire

But that, of course, is an incredibly daunting task that can be overwhelming if you don't really know where to start. Luckily, Her Campus circled up with Chad Wilkins, the president of HSA Bank, to demystify this frontier of Adulting and make it all seem a lot less scary. 

We hope that this will be the thing to help you achieve all your personal finance guru dreams.

Her Campus: In the simplest of terms what is a health savings account and how does it work?

Chad Wilkins: A Health Savings Account (HSA) is an individually owned account that can be used to pay for current or future healthcare expenses tax free. HSA's are a unique benefit of enrolling in a high deductible health plan (HDHP) that is HSA eligible. Contributions can be made by the account holder, employer, or a third party (such as a spouse or parent). Money goes into, grows, and comes out of an HSA tax free —as long as funds are used to pay for IRS-qualified healthcare expenses. Unused funds roll over year to year and can be invested in stocks, bonds, and mutual funds tax free—making HSA's a valuable retirement savings tool.

HC: For soon to be college graduates looking to start saving, how should they approach retirement savings while paying off student loans?

CW: New graduates may be anxious to pay off student loans quickly, but it’s important to think long term. Contributions to a 401(k), HSA, or other retirement savings tool typically offer incentives—like tax advantages, company matches, and investment options—that can outweigh the interest saved by rapid student loan repayment. In addition, contributions made early in life have a longer time to grow, allowing them to become worth much more than contributions made later. Another consideration is that saving for retirement can become increasingly difficult as more financial responsibilities are incurred over time. Ultimately, graduates should always try to make at least the minimum contributions to their retirement plans to reap the incentives before paying off student loans at an accelerated pace. Soon to be college graduates may benefit from speaking with a retirement advisor to ensure retirement readiness.

"Ultimately, graduates should always try to make at least the minimum contributions to their retirement plans to reap the incentives before paying off student loans at an accelerated pace. Soon to be college graduates may benefit from speaking with a retirement advisor to ensure retirement readiness."

HC: Health care is a confusing system for most. There are several options, but what is your advice for young adults when trying to select the best option for themselves?

CW: The right health plan will provide sufficient coverage for an individual’s unique healthcare situation while balancing cost. In order to determine the best health plan, consumers should evaluate their options and take the following into consideration: monthly premiums, deductibles, out-of-pocket maximums, employer contributions to an HSA (if applicable), co-pays, coinsurance, and personal income, marginal tax bracket, ability to save, and anticipated medical needs. Using a health plan comparison calculator can help with the evaluation process. Consumers should also consider their long-term healthcare needs and whether a certain health plan will help them achieve their financial goals. An HSA-qualified HDHP may often be the best option for the long term because HSA funds are contributed tax free, grow tax deferred, and can be withdrawn tax free to pay for qualified healthcare expenses during working years and retirement.

HC: Employee benefit packages are another new thing college graduates have to navigate. Are there any specific benefits in a package that stand-out as exemplary? If so, what and what other benefits should young adults be looking for?

CW: In addition to looking into the advantages of an HSA, college graduates accepting employment offers in metropolitan areas may wish to consider commuter benefits as part of their employee benefits package. Commuter benefits include transit or parking accounts that enable employees to pay for certain workplace transit and parking expenses on a tax-free basis through payroll deductions. 

The cost of an unlimited monthly transit pass in a major city can add up. In New York City a monthly subway pass is $121, which amounts to $1,452 a year. In addition to the tax savings (at least 10%) from a commuter benefits program, having a card specifically to pay for transit provides peace of mind for recent graduates who are adjusting to a full-time work schedule and managing living expenses on their own.

"While college can be a hard time to save, students should try to put aside some money for after graduation or at least maintain minimal debt."

HC: So, what can college students be doing now to ensure or at least be proactive in creating a healthy financial future?

CW: While college can be a hard time to save, students should try to put aside some money for after graduation or at least maintain minimal debt. Expenses often increase after graduation, including student loan payments. Students would be wise to educate themselves about financial health, identify their long-term goals, and begin to adjust their habits accordingly. They should consider making a budget and prepare to allocate their income among living expenses, loan payments, and saving for the future. Learning about the benefits of an HSA now; graduates can start benefiting from the triple-tax advantages of an HSA earlier in life.