Health Savings Accounts for Small Business Owners
Finding the best health insurance for your small business in NY can be challenging, especially with the rising health care costs. To respond to these increasing costs, many employers are offering tax-favored accounts, such as health savings accounts (HSAs).
What is a health savings account?
An HSA is a tax-exempt trust established to pay qualified medical expenses. An HSA accompanies a high deductible health plan.
HSAs can be a powerful tax savings tool. In general, HSA contributions are tax-deductible, and employer HSA contributions made on behalf of an eligible employee are excluded from the employee’s gross income. Interest and other earnings on HSA contributions accumulate tax-free
Advantages of HSAs
Security–Your HSA can provide a buffer for unexpected medical bills.
Affordability–In most cases, you can lower your health insurance premiums by switching to health insurance coverage with a higher deductible.
Flexibility–You can use your HSA to pay for current medical expenses, including expenses that your insurance may not cover, or save your funds for future needs, such as:
Health insurance or medical expenses if unemployed
Medical expenses after retirement (before Medicare)
Out-of-pocket expenses when covered by Medicare
Long-term care expenses and insurance
Savings–You can save the money in your HSA for future medical expenses and grow your account through investment earnings.
Control–You make the decisions regarding:
How much money you will put in the account
Which medical costs to pay from the account
Whether to invest any of the money in the account
Which investments to make
Portability–Accounts are completely portable even if you:
Change your medical coverage
Move to another state
Change your marital status
Ownership–Funds remain in the account yearly, just like an IRA. There are no “use it or lose it” rules for HSAs.
Tax Savings–A HSA provides you triple tax savings:
Tax deductions when you contribute to your account
Tax-free earnings through investment
Tax-free withdrawals for qualified medical expenses
Where can I find more information on HSAs?
To find more information about HSAs, visit www.irs.gov/publications/p969/ar02.html.
Health savings accounts may not be suitable for all small business owners or individuals. For the best health insurance for your small business in NY, contact NY Small Health at +1 (212)-548-3941 or visit here. Our team of experts is here for assistance in determining what tax-advantaged account will best meet your goals.