Many articles and news reports discuss how health savings accounts (HSAs) can benefit the average worker. In fact, there are many reasons why HSAs are one of the best options for your employees to save money on healthcare costs and to plan for retirement. But, HSAs can also provide significant benefits for your business, including helping you save money on taxes and health insurance for your employees.
Here are just a few of the benefits that HSAs and HSA-qualified plans can offer employers:
1. Tax savings
HSAs are triple-tax advantaged for accountholders, meaning they can contribute to, grow and spend their HSA funds on qualified medical expenses, all tax-free.1 There are also tax savings for you, the employer.
First, contributing money to an employee’s HSA allows you to take a federal income tax deduction. Second, when an employee makes an HSA contribution through a payroll deduction, you don’t have payroll taxes on that amount, which lowers your FICA and unemployment tax liability. In short, the potential tax savings that come from HSAs is a benefit both to you and to your employees.
2. Save money on premiums
Many employers pay at least part of their employees’ health insurance premiums. HSA-qualified plans (in most cases) carry a less expensive monthly premium than most traditional plans, which can save both you and your employees money. When employees require medical services they will pay more upfront, but they can use their HSA funds to pay for qualified medical expenses and the funds they save on premiums can help offset those costs.
3. Recruiting and retention
When individuals are looking for a job, there are a lot of factors to consider before making the final decision. According to a report from the Society for Human Resource Management, a full 62 percent of employees ranked healthcare/medical benefits as “very important,” with another 30 percent calling it “important.” Offering employees an HSA provides employees with flexibility and significant tax-savings. This can be used as a highlighted benefit for those prospective employees.
4. Employees own the HSA
Unlike a 401(k) or a flexible spending account (FSA), the employee is the accountholder of the HSA. This means that, as the employer, you don’t need to manage substantiation of expenses for individual employees (unless it is your own HSA).
For more information about how HSAs can benefit you and your employees, please visit www.healthequity.com/partners/employers.
Notice any benefits we might have missed? Comment below!
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.
Nothing in this communication is intended as legal, tax, financial, or medical advice. Always consult a professional when making life-changing decisions.