Health Savings Accounts: A Healthy HR Option
12th August 2011 · 0 Comments
If you want your business to attract the most desirable talent, you have to offer competitive benefits packages, including health coverage. But in today’s tumultuous healthcare environment, what kinds of coverage allow for a win-win situation for employees and employers alike? If you’ve been searching for a cost-efficient answer to that question, we suggest you take a look at Health Savings Accounts, or HSAs.
An HSA bears some similarities to flex spending accounts, but it has many more advantages in that employees can make contributions into an account with the purpose of paying future medical expenses. The funds roll over year after year, and the employee owns the account. The amount employees contribute counts as non-taxable income, making for a lower bill from Uncle Sam on April 15th.
But HSAs have one huge advantage over flex spending accounts: they roll over from year to year, so instead of the employee having to spend that year’s nest egg or lose it, he can build up a considerable sum over several years against a possible medical emergency. In fact, once your employees retire at age 65, they can access the accumulated funds in an HSA for non-medical uses as well, with no penalties.
How do HSAs help you, the employer? Well, for starters, HSA premiums are less expensive, and your company gets a tax benefit just as your employees do. You’re allowed to make employer contributions to any HSAs your company extends through its benefits program, and it can be counted as a business expense.
You can set up your employer contribution system in a variety of ways as long as it is applied universally. It’s up to you to decide whether to contribute recurring fixed amounts, a percentage of the employee’s contribution or a simple dollar-for-dollar match. Whatever system you implement can help you keep your business and its employees healthier.
