Money Smarts Blog
Should small businesses owners offer HSA health plans to employees?
Sep 21, 2020 || Lindsey Ramos, SVP of Member Experience
If you’re a business owner, figuring out how to reduce costs associated with employee healthcare benefits is probably a top concern.
One option might be to provide your employees with a High Deductible Health Plan (HDHP) along with a Health Savings Account (HSA).
HSAs are employee-owned savings accounts that can be established by individuals with a qualified employer-sponsored HDHP. The high deductible limits associated with these plans prevent most medical expenses, with the exception of preventative care, from being reimbursed. HSAs give employees the opportunity to be financially prepared for these expenses, and they offer several additional benefits for both employees and employers.
- Neither the employer nor the employee pay taxes on contributions made via payroll
- Employer HSA contributions may be deducted from federal taxes
- HSAs are easily transferred between qualifying HDHPs, usually without penalty
- Helps attract and retain employees with concerns about rising healthcare costs
- Contributions are made pre-tax when deducted directly from payroll
- Dividends paid on account balances accumulate tax-free
- Pay no taxes on withdrawals for qualified medical expenses
- Employees have the freedom to decide contribution amounts up to legal maximums as well as when and how funds are used
- Contributions never expire
With all the savings opportunities and tax benefits available to both employers and employees, HSAs are pretty much win-win.
If you’re an employer looking to provide HSAs to your employees, IHMVCU can help. We offer competitive rates and a streamlined onboarding process so you don’t have to waste time tracking down employee account information.
SVP, Member Experience
(309) 793-6200 ext. 8735