HSA – Health Savings Account
As more and more employers make the switch to a High-Deductible Health Plan (HDHP), the Health Savings Account (HSA) continues to rise in popularity. It's an account that puts employees in control, allowing them to save on healthcare expenses and build a nest egg for retirement, much like a 401(k). An HSA is a consumer-driven health plan that is designed to empower employees to take control of their health and the dollars spent on health care. An HSA is a powerful, tax-exempt trust account established for the purpose of paying qualified medical expenses. Paired with a high deductible health plan, employees and/or employers contribute pretax dollars to the HSA, which over time accumulates interest and allows tax-free withdrawals for medical expenses.
Unlike a Flexible Spending Account (FSA), HSA funds roll over and accumulate year to year if not spent. HSAs are owned by the employee, which distinguishes them from company-owned Health Reimbursement Arrangements (HRA). Because HSAs accumulate overtime and are entirely owned by the employee, the plan encourages individuals to “price-shop” for health care needs, ultimately working to lower the cost of health care for employees and employers alike.
By combining Health Savings Account (HSAs) with a high deductible health plan, employers will reduce premiums, lower the fixed costs of health insurance plans, deliver more benefit dollars to employees, provide an incentive to employees to get involved in their health care decisions and achieve tax savings.
Experience the American Health Value / IntegraFlex difference. Let us help you:
- Determine savings arrangements that help offset out-of-pocket medical expenses
- Empower your employees to be informed and responsible healthcare consumers
- Enjoy the flexibility to design a plan that works best for your company and its employees
How much can your business save with a HSA?
Employer Benefits:
- Reduced Premium. Employers can reduce insurance premiums substantially by switching to an HSA-qualified high-deductible health plan.
- Tax savings. All contributions to the Health Savings Account are pre-tax, lowering the gross payroll and reducing the amount of taxes the employer must pay.
- HSAs are dependent on a high deductible insurance policy, which lowers the premiums of the employee’s plan.
- Attract and maintain quality employees. By offering competitive benefits, employers can attract top-notch employees.
Employee Benefits:
- Tax Savings. Both Employer and Employee can contribute pretax dollars to the HSA. Interest accumulates tax-free and funds are tax-free for employees to withdraw for qualified medical expenses.
- Reduce out-of-pocket costs. Employees can use the money in their HSA to pay for eligible medical expenses and prescriptions. The HSA funds can be used to help satisfy a plan’s annual deductible.
- Investing funds that employees can take with them. Unused account dollars are the employee's to keep even when retiring or leaving the company. Additionally, employees can invest their HSA funds, so those available health care dollars can grow over time.
- Employees can receive the benefits of preventive care, without the cost. Employees receive 100 percent coverage for nationally recommended preventive care, with no deduction from their HSA or out-of-pocket costs, when they see an in-network provider.
- HSAs allow the opportunity for long-term savings. Employees can save unused HSA funds from year to year, allowing that money to reduce future out-of-pocket health expenses. Employees can even save HSA dollars to use after they retire.
- HSA is a “cash” account. HSAs empower consumers to negotiate pricing on many medical services, which can lead to significant savings on medical expenses. For example, standard imaging services can vary widely in price depending on location and payment method. An MRI, for example, can cost anywhere from $400 to $1,800 for the exact same service, so having the cash available to negotiate can be very beneficial.
Download our HSA Plan Design Guide to learn more about HSAs
