Health Savings Accounts

Health Savings Accounts (HSAs) have become the fastest-growing product in the health benefits industry for good reasons. High Deductible Health Plans dramatically lower health insurance costs for employers while employee-owned accounts provide control and freedom for routine health expenses.

What is an HSA?

An HSA allows your employees to open a pre-tax savings account and combine it with a High-Deductible Health Plan. The HSA pays for qualified health care expenses with tax-free money until the individual has met the deductible; then the insurance coverage takes over.

What can an HSA do for your Company?

• Payroll Savings – You can save at least 7.65% in payroll taxes for every employee dollar contributed to a pre-tax benefit plan. With HSAs, which can be run though your 125 Cafeteria Plan, you can offer your employees an incentive that will increase participation. Higher participation and more contributions generate more savings for you through decreased payroll taxes.
• Offset Rising Premiums – You can offer your employees an alternative to insurance policies with high premiums. This is particularly beneficial to small employers, who can continue to provide safety-net coverage through a low-cost, high-deductible health plan.
• A More Diverse Benefits Package – Employees can use their Section 125 Cafeteria Plan funds to pay for their HSA insurance premiums, thereby using pre-tax Cafeteria Plan dollars over after-tax dollars. Imagine the increased participation levels to a Cafeteria Plan when employees are offered this new benefit.
• Portability – The individual owns the account. That means the HSA remains with the employee even if you change your company’s health insurance offerings.
• Employer Contributions – Both employers and employees can contribute to an HSA in the same plan year, up to the maximum contributions. This will provide another participation incentive.