With the Affordable Care Act and the increasing costs of medical expenses, employees are more pre-occupied with securing health benefits to avoid tax penalties. Providing these benefits to employees is a great way for small business owners to recruit and retain the best workers. But how can small businesses compete when every other company is also seeking the best talent? One answer may, in fact, come from health savings accounts (HSAs).
The value of an HSA
HSAs are an individually-owned savings account where employees and employers can contribute money to cover qualified medical expenses. Funds are not subject to taxes when deposited, and employees can use the funds for health-related expenses tax-free as well.1 Additionally, employees can earn tax-free interest on the funds in the account, and the entire remaining HSA balance rolls over each year.
For employers, one of the perks that comes from providing HSAs is that they can be paired with health plans that typically have lower monthly health insurance premiums. Premium savings can then be used to incentivize employees via their HSAs. What's more, employers benefit from additional FICA and Medicare tax savings on money contributed to employee HSAs. HSA-qualified health plans might be a less expensive way for employers to provide the health-related benefits that employees have come to expect from their employers.
HSA resources for small business owners
HealthEquity has worked with many small businesses, so we know how important it is to save time and money. HealthEquity provides an easy enrollment process. Our website includes online tools and educational resources for small business owners and their employees to learn how they can maximize the benefits that HSAs provide. For example, our HSA Contribution Calculator helps determine how much individuals can save by contributing to an HSA, and our Future Balance Calculator shows how to build HSAs and save money in taxes.
At HealthEquity, we work hard to equip our partners with personalized saving strategies that will give them the ability to control costs and maintain flexibility of the benefits they offer their employees.
HSAs have the potential to help both employees seeking health benefits and employers looking to recruit and retain the best employees. The right HSA partner can help provide tools and educational resources for employers to help maximize health-related benefits.
1HSAs 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.