Smart Healthcare Options for Employers
Annual increases in healthcare costs show no sign of slowing down. As a result, business owners are frequently challenged with finding affordable ways to offer employees quality, flexible health benefits in order to compete for and retain top talent in their companies.
Compared with more traditional fixed-payment healthcare plans, Health Savings Accounts (HSAs) allow employers to offer employees a tax-advantaged way to proactively manage their healthcare costs and pay for qualified medical expenses like co-payments, pharmacy bills, dental and vision care without sacrificing the quality of care.
The Innate Flexibility of an HSA
An HSA is funded by an employee’s pre-tax contributions, which are determined by the employee and withheld from each paycheck before payroll taxes are deducted. Employers and other third parties (such as family and spouses) can also contribute. Earnings accumulate tax-free from a variety of investment options. When an employee incurs a qualified medical expense, they can draw from these pre-tax funds to pay their bills with a debit card or online bill payment. In the event that an employee does not have enough money in their HSA to cover a medical expense, they can make a partial payment based on the funds that are available and pay the difference using another source. As a further benefit, any HSA funds left over at the end of the year are not subject to a “use it or lose it” condition. Any unused funds remain in the account and continue to accrue interest over time.
Looking to the Future
An HSA account holder who reaches age 65 has additional benefits to consider. Withdrawals for account holders over 65 are not subject to the qualified medical expense limitation. This feature makes an HSA more powerfully tax advantaged than other popular retirement accounts, such as an IRAs or 401(k).
HSAs offer employers an innovative strategy to fight rising health insurance costs, offer greater depth and flexibility in their employee health benefits and retirement plans with secure, FDIC-insured financial accounts, and promote healthy lifestyles for employees, which can result in higher productivity and greater retention.
From an administration perspective, HSAs also offer employers and employees a more functional, reliable, and efficient way to access high quality, affordable healthcare through technology. Some unique features include automated payroll contributions, online distribution request platforms for employees, and paperless, automatic monthly reporting for employers.
First American Bank’s Health Account Services offers a cloud-based benefit account platform that helps efficiently administer HSAs, Health Reimbursement Accounts (HRAs), Flexible Spending Accounts (FSAs), and transit plans – to make your life as an employer, much simpler.
Stay connected with us through our Business Insights Newsletter, as we’ll continue to outline the benefits of each product so you can make the best decision for your team.