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Help Your Clients Create the Ultimate HSA Saving Plan

Tuesday September 6th, 2022

Estimated time to read: 2 minutes, 45 seconds

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Help Your Clients Create the Ultimate HSA Saving Plan

In today’s workplace, not only are employees looking for more benefit offerings, but they’re looking for financial security. Your clients are looking for ways to save money while attracting and retaining talent. So how can both be satisfied? A health savings account offering. 

What is an HSA and how does it work?

A health savings account (HSA) is an account that allows employees to set aside pretax money for medical costs. It reduces the employee’s taxable income and helps them save for health care expenses. To use an HSA to save, the employee must enroll in a qualified high-deductible health insurance plan (HDHP).

Employees set up automatic contributions directly from payroll and they’ll receive a debit card linked to their HSA balance and can then use the money toward eligible medical expenses (deductibles, copays, coinsurance, prescriptions and other expenses not covered by their plan). A great benefit to the HSA is that the balance rolls over annually, so employees do not lose unspent funds and it gains interest. This makes the HSA an amazing way for employees to save money.

A retirement benefit for employees

In the past, an HSA was thought to only be an alternative way to cover health expenses, this view has now changed. Today, many employees are realizing the benefits of an HSA, not just for covering health expenses but for the potential investment opportunities. What was once considered just a bonus, is now something many employees are specifically looking for when choosing an employer.

Depending on the situation, some employees can use their HSA as an additional way to save money. Much like a 401(k), an HSA can be treated as a retirement benefit, not just an account for health coverage. Since HSA money has no expiration, employees who are strategic can end up saving this money for themselves, almost like a nest egg for the future. This is a great way for your clients to offer employees additional financial benefits while potentially saving on premiums.

Advising your clients

Depending on the employee and their personal health situation, the value of the HSA will vary. In general, an employee who is relatively healthy and rarely visits the doctor tends to end up stocking money in their HSA because the funds go unused. This is when the HSA has tremendous value. It may end up saving client money on premiums and offers the employee a chance to save the money for retirement or other medical needs in the future.

While this plan works for the average healthy adult, the HSA can be beneficial for those with costly health conditions as well. For these individuals, they typically have high-cost prescriptions and visit the doctor frequently. However, the HSA helps them cover their deductible expenses, but also allows them the opportunity to have 100 percent of their expenses paid by the insurance company once their out-of-pocket limits are met. This is also a way for not only the employee to save money, but potentially your client.

While an HSA can save your clients money, adding a second option of a traditional PPO plan can also be beneficial. If an employee suffers from common chronic conditions, they may have some prescriptions and visit the doctor on a regular basis, and still not hit their deductible or out of pocket max. In this scenario an employee may benefit from a plan that has up front co-pays and first dollar coverage. This type of plan does now allow for participation in the HSA but may still be the best option for some employees. Premiums tend to be higher on Co-pay plans, and often it makes sense to offer the HDHP as a base plan and allow the PPO plan as a “buy-up” option. Choosing this scenario keeps the employer’s cost the same, while allowing options to address the diverse needs of the workforce.

Benefits of the HSA plan

Ultimately, an HSA is a great way for both your clients and their employees to save money. By lowering premiums and being able to offer employees the potential for additional financial savings and security, employers are winning.

Top benefits for employers:

  • HDHPs may cost less, which saves your clients money
  • Offering an HSA helps your clients attract and retain talent with competitive benefits
  • Employer contributions to an HSA are not subject to FICA, FUTA, or other withholding taxes
  • Employers can further reduce FICA tax liabilities with a section 125 plan to pre-tax HSA contributions

While HSA savings are dependent upon the type of employee enrolled in the plan, they are still a cost-effective way for your clients to offer employees financial benefits while also saving money.

To learn more about how you and your clients can benefit from isolved, contact your sales executive at 800.300.3838.