Not Eligible for Any of These? A High-Yield Savings Account Still Helps
Maybe you don't have an HDHP, so you can't open an HSA. Maybe your job doesn't offer an FSA or HRA. Maybe you work for yourself. That's OK. You can still save for health care. A high-yield savings account is a simple tool that anyone can use.
What is a high-yield savings account?
It's a savings account that pays you more interest than a regular one. Interest is money the bank pays you for keeping your money there. Many online banks and credit unions offer these accounts.
Why it's a good backup
Anyone can open one. No special health plan or job needed.
Your money grows. You earn interest while it sits there.
It's safe. At most banks, your money is protected by the government up to $250,000 through the FDIC. At credit unions, it's protected by the NCUA.
You can get your money any time. No deadlines, and no "use it or lose it."
It's flexible. You can use it for any cost, health care or not.
The trade-off
Unlike an HSA or FSA, there's no tax break. You put in money that's already been taxed, and you pay taxes on the interest you earn. Still, it's much better than having no plan when a bill shows up.
How to make it work for health care
Open a separate account. Don't mix it with your everyday savings. Give it a name, like "Health Fund."
Pick a goal. A good start is your plan's deductible. The Financial Health Wallet’s Healthcare Budget tool can help you find a number that fits your year.
Set it and forget it. Set up an automatic transfer from each paycheck, even if it's just $25.
Only use it for health costs. This keeps your health money ready when you need it.
Meet Sofia
Sofia drives for a delivery app and buys her own insurance. Her plan doesn't qualify for an HSA, and she has no job-based FSA. Her deductible is $2,000. So she opened a high-yield savings account and set up a $40 automatic transfer every week. In one year, she saved $2,080, plus interest. When she needed an MRI that cost $900, she paid it without stress.
Check every year
Your situation can change. A new job or a new health plan might make you eligible for an HSA or FSA. Check each year during open enrollment. You can still keep your high-yield savings account as an extra cushion.
Key takeaways
A high-yield savings account is a health savings backup that anyone can open.
It pays more interest than a regular savings account, but has no tax break.
Keep it separate, set a goal and save automatically.
