As we mentioned in a recent blog post, health savings accounts are frequently brought up during open enrollment, but not all employees have a good grasp of what this type of account entails or how it would benefit them.
Here are 4 reasons to talk to your employees about health savings accounts now:
1. It offers employees the ability to save for medical expenses tax-free.
When your employee opts for a high-deductible health insurance plan, he or she is having to pay a high portion of medical expenses out-of-pocket before the deductible is met. To help mitigate this financial burden, the employee can set up an HSA and have a portion of his or her income be contributed pre-tax to this account. Since employees can withdraw money from this account at any time tax-free to pay for qualified medical expenses, the employee benefits by getting a full dollar saved for every dollar deposited.
2. Your employees can roll funds in HSAs over each year.
One of the more common misunderstandings about HSAs is that if the funds aren't being used, the employee loses it. This is not true at all. In fact, the savings in an HSA can continue to grow as unused funds can roll over into the next year.
3. Your employees can earn interest or dividends with HSAs.
While the returns are certainly not phenomenal, they may be better than what employees would be earning if they had their money in a traditional checking account. Plus, employees have control over which qualified expenses they want to use their HSA to pay for and how to invest the HSA funds.
4. Paying for qualified medical expenses from an HSA is very easy.
When an employee signs up for an HSA, he or she will be given a debit card that is tied directly to that HSA to make the payment process very easy.
As an employer, encouraging your employees to take advantage of HSAs can be beneficial to you as well because you'll get a federal income tax deduction for any contributions that you make to your employees' HSA accounts.
To learn more about HSAs and how they can be a win-win situation for both your employees and your company, please contact us at Summerlin-Roberts.