Win-Win or Bad Bet? HSAs For Small Employers
December 4, 2007
Providing attractive health care benefits doesn’t have to be expensive.
An employer-sponsored HSA can help you share the cost of health care with employees in ways that benefit your employees and your business. HSAs are available to eligible individuals who are covered by an HSA-qualified high deductible health plan (HDHP). Your business can provide HDHP coverage, or employees can obtain the coverage on their own.
Benefits to employers who offer HSAs:
* Share the cost of health care benefits with your employees giving them a way to build a savings account with tax benefits—a win-win for all parties.
* Avoid most of the costs and hassles of administering benefits. Employees self-administer their HSAs, so there is minimal administration for your business.
* Contribute in a lump sum, or any frequency you choose, to your employee’s HSA; also, no minimum contributions are required.
* Enhance your benefits package by adding health care benefits, which will help you attract and retain your employees.
Your employees also benefit from an HSA:
* Affordable health care—Your employees pay less for premiums with an HDHP, and can use their savings to help fund the HSA.
* Tax savings—Pre-tax contributions, tax-free interest earnings and tax-free withdrawals when used for qualified medical expenses.
* Control—Employees have more control over their health care decisions. They decide whether to save the money or use it for medical expenses they want to pay from the account.
* Flexibility—HSA money can be used for a wide range of health care–related expenses not typically covered by other health care accounts, such as purchasing long-term care insurance.
* Ownership—HSA funds are an asset that employees own. They can use it to supplement retirement income.
But for many employers, HSAs can be an extremely bad bet.
Why?
Because the employee owns the HSA account. If they walk, they take the employers contribution with them. So it’s important to work with a Benefits Architect (sm) who understands ALL the pros and cons of the new benefit plan designs that are available.
HSAs Can Be Easy To Understand
December 4, 2007
Using your HSA is a lot easier than you might expect, which is one reason why they are popular with so many consumers. Here are the basics on how HSAs work to benefit you.
Using your HSA for Covered Qualified Expenses
You can choose to use your HSA funds to pay for qualified medical expenses (for example, office visits, lab work and prescription drugs) before you have met your annual deductible. These covered expenses will still count toward your annual deductible.
Using Your HSA for Uncovered Qualified Expenses
You may also choose to use your HSA funds for qualified services not covered by the health plan, such as dental care, weight loss programs and eyeglasses. These expenses, however, do not count toward your annual deductible.
Your Annual Deductible
If you prefer, you can save any or all of your HSA funds and pay for your medical expenses out of pocket until you meet your annual deductible. Once you’ve met this, additional health care expenses are covered by your medical plan, but you can still use your HSA funds to pay for fixed expenses such as co-payments.
Carrying an Account Balance
If you don’t use all of your HSA dollars, the remaining amount will carry over into the next year. This is without question the most important aspect of Health SAVINGS Accounts! They are the only triple-tax-advantaged account available to you as a consumer. Tax-free going into the account. Tax-free accumulation inside the account. And (even better than IRA or 401(k) because…) it’s tax-free when it comes out of the account in a proper manner!
Section 105 & The Small Employer
December 1, 2007
The Problem:
California group medical insurance premiums have skyrocketed 75% in the past 5 years and additional increases of 9% to 18% are being reported for the upcoming year.
Employers are being forced to resort to painful measures to cope with these recent medical cost increases: Read more
