Everything You Need to Know About HSA Plans

In a world where health insurance is the second largest expense businesses face after salary, it’s more important than ever to offer a range of options to help reduce the overwhelming cost of healthcare. Voluntary benefits like accident insurance, pet insurance, telemedicine, and tax-exempt savings accounts have become a staple of any comprehensive benefits package. To stay competitive as an employer, it’s critical to give employees access to supplemental offerings that help protect them against the high costs of healthcare.


While health savings accounts (HSAs) are just one piece of that puzzle, they serve an important function that benefits both employees and employers. Here, we’ll share the ins and outs of HSAs and provide tips to effectively implement them at your company.


What is an HSA?

Health savings accounts are pre-tax medical savings accounts that are funded by employees but can also receive employer contributions. These funds accumulate over time and can be used to pay any out-of-pocket medical expenses. HSAs are often confused with flexible spending accounts (FSAs) and health reimbursement accounts (HRAs), but the key difference is that FSAs do not roll over and HRAs are employer-funded. Another key difference is that to be eligible for an HSA, you need to be on a qualifying high deductible health plan.

 

Not only do HSAs roll over from year to year, but they can also roll over from company to company. Unlike an FSA, you can use as much as you have saved in your HSA. In comparison,  an FSA is funded at the first of the year and the full amount is immediately available for use.

 

Once you meet the threshold set by your carrier, you can start investing your HSA funds into mutual funds. This makes HSA plans not only a great safety net for unforeseen medical expenses, but also a great vehicle for savings and retirement.


Why Should Companies Offer HSAs?

When it comes to health benefits, employer and employee best interests align. Reduced claims lead to lower costs, healthier employees minimize the use of sick leave, and competitive benefits can help build employer brand. While HSAs are just one piece in the world of perks and benefits, but they can have a meaningful impact on the above factors.



According to the Vice President of HR Florida State Council, Jennifer Gunter, “the future of benefits is going to be about employee choice. A one-size-fits all approach simply won't work as individuals seek out to the healthcare package that’s best for their family. From healthcare to retirement, the best employers will provide employees with a menu of customizable options.”


Tax-exempt savings accounts, like HSAs, are one of many supplementary benefits available to employees but the array of voluntary benefits extends from pet insurance to hospital indemnity to telehealth. Offering these types of choices under a group plan can be hugely enticing to employees, and helps engage top talent at no extra cost to the company.



How to Encourage Use of HSAs

As more employees opt for lower premium, higher deductible HDHP insurance plans, HSAs provide a safety net as well as a savings vehicle for employees. However, because most individuals who opt for HDHPs do so to reduce costs, employers must clearly communicate their long term benefits to encourage employee adoption.


Because HSAs roll over, they can have a long-term impact on employee savings for retirement. “When employees think about saving for retirement, they don’t always think about the medical expenses,” says Gunter. “HSAs can be a huge savings vehicle for medical expenses after retirement.”


A comprehensive benefits offering ensures employees can focus on their work rather than medical or financial stressors. Even if they don’t see an immediate impact, they’ll be thankful to be prepared if an emergency arises. According to Gunter, “in order for employees to perform well and stay engaged, good health coverage is a must.”




It’s said that variety is the spice of life. When it comes to employee benefits, variety will continue to be a staple of a comprehensive benefits package. Work closely with your benefits broker to make sure you’re taking advantage of low cost, high impact voluntary benefits. With a thoughtful and customizable offering, employee engagement and productivity will keep going up.

Topics: Benefits, Voluntary Benefits

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