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Why You Should Offer HSA Benefits

Health Savings Accounts (HSAs) are fast becoming an essential part of a company's competitive benefits package. An HSA is an excellent way for employees to save up money for future medical expenses. Let's assume your team consists of healthy, casual healthcare users. In that case, HSAs may be the right incentive for them to plan, save, and ultimately increase their healthcare literacy.

How HSAs Benefit Employees

An HSA acts like an interest-earning account that your staff can use to pay for pre-approved medical expenses:

  1. HSAs give your employees the benefit of the laws of compound interest.

  2. The money doesn't leave employee HSAs at the end of the year, unlike an FSA.

  3. Employees' contributions to their accounts are pre-tax and deductible as a work expense.

They can use their HSAs completely tax-free (as long as they use the funds for medical purposes).

How HSAs Benefit Employers

HSAs are probably one of the least expensive health benefits you can offer as a small business owner. You also have the option of whether or not to provide initial seed funding for your employees' accounts. All in all, HSAs serve as a great employee retention tool and can go a long way in proving that you care about the well-being of your team.

Who is Eligible to Contribute to an HSA?

Not all of your employees may be eligible to put money into their HSA. Therefore, employers must take note of a few rules to stay compliant with the law while offering this benefit:

  1. Employees must derive the majority of their coverage from a High Deductible Health Plan (HDHP). Supplemental coverages like dental, vision, life, or disability are allowed, of course. Still, a secondary health plan (like coverage through employee spouses) won't make the cut.

  2. Employees cannot be enrolled in Medicare and simultaneously contribute to HSAs. But if they're eligible for Medicare but have declined or postponed enrollment, then they may contribute to their HSAs.

  3. Finally, eligible employees must be legal adults who cannot be claimed as dependents on someone else's tax return.

Even if an employee loses their eligibility (by changing to another health plan or enrolling into Medicare), they can still use the money already in their HSAs - for qualified medical expenses. They just won't be able to continue contributing to the account.

HSAs help employees plan their finances for their future or sudden healthcare needs. But there is a world of insurance benefits that you can offer your team.

To learn more about the other health benefits that you can offer to your employees, visit If you want to discuss small business health insurance for your New York-based company, contact an insurance expert today.

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