Why You Should Encourage Employees to Use an HSA
As health care costs continue to rise, your employees may be looking for all possible ways to stretch their dollars. Meanwhile, employers must be aware of the current labor market and the critical role optimal employee benefits play in attracting and retaining the best available talent. Regardless of market conditions, the health and wellness of your workforce is an integral part of smooth operations and sustainable growth. With these things in mind, your employees should understand the potential benefits of health savings accounts (HSAs).
What Are HSAs?
HSAs are tax-exempt trusts or custodial accounts that can provide employees with valuable savings. These arrangements typically accompany high deductible health plans (HDHP) and can help pay for various health care expenses. Both employees and employers can contribute to these accounts, although the IRS does establish an annual limit for individuals and families. HSAs may be made available to any employee who elects an HDHP if they do not have other health coverage, cannot be claimed as a dependent on another person’s tax return and are not eligible for Medicare.
What Are the Advantages of Having an HSA?
HSAs can be valuable investments for your employees, but they must understand the various benefits of such accounts, including the following:
- Tax incentives—HSA contributions are made before taxes. As such, the funds employees put into their accounts may lower their taxable income. Employer contributions, accrued interest and payments from an HSA for qualified medical expenses are also generally tax-free.
- Access to medical services—In addition to contributing toward an HDHP’s deductible, co-insurance and co-pays, HSAs can also help pay for health care expenses not included in an employee’s health plan, such as dental and vision.
- Savings—Funds in an HSA do not expire and will roll over year-to-year. As such, employees have the freedom to spend their balance or save it for future expenses or retirement. After reaching age 65, employees who have retained HSA funds are free to utilize funds for any purpose without any fees or penalties.
- Investment opportunities—An employee may also be able to use a portion of their HSA funds to invest in various mutual funds, stocks and bonds.
We’re Here to Help
Employee benefits can be an invaluable investment for your organization and its workers. However, it’s necessary to ensure your employees fully understand their options and how to make ideal use of them to maximize the effectiveness of various programs and incentives.
At Lyceum Insurance Services, our dedicated professionals have over 40 years of experience helping employers optimize their employee benefits portfolios and maintain workers’ health and wellness. Visit our website or call 301-840-6624 to get started today.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.
Categories: Employee Benefits