Health Savings Accounts
Health Savings Accounts (HSAs) have become the fastest-growing product in the health benefits industry for good reasons. High Deductible Health Plans dramatically lower health insurance costs for employers while employee-owned accounts provide control and freedom for routine health expenses.
What is an HSA?
An HSA allows your employees to open a pre-tax savings account and combine it with a High-Deductible Health Plan. The HSA pays for qualified health care expenses with tax-free money until the individual has met the deductible; then the insurance coverage takes over.
What can an HSA do for your Company?
- Payroll Savings – You can save at least 7.65% in payroll taxes for every employee dollar contributed to a pre-tax benefit plan. With HSAs, which can be run though your 125 Cafeteria Plan, you can offer your employees an incentive that will increase participation. Higher participation and more contributions generate more savings for you through decreased payroll taxes.
- Offset Rising Premiums – You can offer your employees an alternative to insurance policies with high premiums. This is particularly beneficial to small employers, who can continue to provide safety-net coverage through a low-cost, high-deductible health plan.
- A More Diverse Benefits Package – Employees can use their Section 125 Cafeteria Plan funds to pay for their HSA insurance premiums, thereby using pre-tax Cafeteria Plan dollars over after-tax dollars. Imagine the increased participation levels to a Cafeteria Plan when employees are offered this new benefit.
- Portability – The individual owns the account. That means the HSA remains with the employee even if you change your company’s health insurance offerings.
- Employer Contributions – Both employers and employees can contribute to an HSA in the same plan year, up to the maximum contributions. This will provide another participation incentive.
HSA Limits for 2018
- HSA holders can choose to save up to $3,450 for an individual and $6,850 for a family (HSA holders 55 and older get to save an extra $1,000 which means $4,450 for an individual and $7,850 for a family) - and these contributions are 100% tax deductible from gross income.
- Minimum annual deductibles are $1,350 for self-only coverage or $2,700 for family coverage.
- Annual out-of-pocket expenses (deductibles, copayments, and other amounts, but not premiums) cannot exceed $6,650 for self-only coverage and $13,300 for family coverage.
|Maximum Out-of-Pocket||$6,650 single/$13,300 family||$6,750 single/$13,300 family|
|Minimum Deductible||$1,330 single/$2,700 family||$1,350 single/$2,700 family|
|Maximum Contribution||$3,450 single/$6,900 family||$3,500 single/$7,000 family|
|Maximum catch-up contribution
for individuals age 55 or older