Health savings accounts (HSAs) provide many benefits to employees and can be a great way for them to save money on taxes1 and save for the future. However, you as an employer can also benefit from HSAs, and the savings can really add up. Below are three main benefits you can realize with HSAs.
Benefit #1: Drive down monthly premiums
Anyone who wants to open an HSA must enroll in a qualifying high deductible health plan. One of the benefits of a high deductible health plan is that monthly premiums lower than traditional health plans. This is true for both employees and employers.
As an employer, the money you save in premiums can be put back in the business or can be used to contribute to your employees’ HSAs. Why could it be a good idea to contribute money to your employees’ HSAs? Let’s move on to benefit number two.
Benefit #2: Make tax-deductible contributions
When employers contribute money to their employees’ HSAs, 100 percent of those contributions are tax deductible. HSA tax savings are exclusive to employees and employers. Others can contribute to someone’s HSA but cannot realize tax savings.
Employee contributions can be taken pre-tax through payroll deductions, although any contributions they make after taxes can be tax deductible. However, when employees contribute to their HSA through payroll deductions, employers, you included, can receive a third benefit.
Benefit #3: Reduce FICA obligations
When your employees contribute to their HSAs through payroll deductions, the contribution is made pre-tax, which saves you their portion of FICA taxes (7.65 percent). Add that up across every employee account and you could have a healthy boost to your bottom line
Employees are not the only ones who benefit from having an HSA. You as an employer can also realize savings through lower medical premiums, tax deductible contributions to your employees’ HSAs and lower FICA taxes when employees contribute to their HSA through payroll deductions.
Visit HealthEquity.com/learn/HSA to see how your company can save money with health savings accounts.
1 HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-free with very few exceptions. Please consult a tax advisor regarding your state’s specific rules.
HealthEquity does not provide legal, tax, financial or medical advice. Always consult a professional when making life-changing decisions.