Don't ignore this Healthcare Plan

Using Health Savings Accounts (HSAs) could be the best way to give health benefits to your employees. Its features ultimately provide ease, convenience, and cost savings to you and your employees as well.

It's now easy to provide the best health insurance to your employees.

Today, many self-employed professionals and small businesses choose HSAs (Health Savings Accounts) as their insurance coverage of choice. It was created in 2004 as a follow up to MSA (Medical Savings Account), which has many flaws. Aside from restrictions and availability requirements (Congress warned that it’s restricted to only 750,000), MSA also needs a lot of accounting and paperwork which turns off small business owners.

Fortunately, the arrival of HSA solved this problem. Maybe the best characteristic that employers like about it is its high-deductible coverage. According to the plan, it can only qualify as HSA if there’s a deductible of $2,000 for families and $1,000 for individuals at the very least. Here are other features of the plan:

Act as savings account for out-of-pocket costs of employees

To act as a saving account, employees need to put a certain amount (most likely equal to their deductible) – for individuals, it should only be up to $2,650 while families can contribute up to $5,250. Depending on the insurance firm, this account may be opened with brokerages, banks, or other financial institutions.

Contributions can be rolled over

This is similar to FSA (Flexible Spending Account) where the funds can be set aside for tax-free medical expenses. However, HSA doesn’t have FSA’s “use-it-or-lose-it” provision. If you were not able to use your money for this year in HSA, then you can simply roll it over to the net year. In addition, your money could be invested and the interest or earnings will also be tax free if it’s taken out for qualifying medical expenses only.

Potential retirement funds

An employee would be charged a penalty (10% of withdrawn amount) if he or she will take out money from this fund to be used for non-medical expenses. However, a 65-year old and above will no longer be subject to this provision. Therefore, healthy seniors may consider HSA as another retirement account.

Has deductible medical expenses

Another significant benefit is the ability of HSA to qualify as tax deduction on the federal income taxes of employees. Aside from waiving the withdrawal tax, there’s also no phase-out or income limit on the deduction.

So if you have a low-deductible health plan with your employees right now, you may want to switch to a high-deductible one like HSA. Employees will only oppose this if they see that you’re the only one who saves money. But if you explain to them that they’ll surely benefit more from it, then they would look at it more favorably.


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