Health Savings Accounts, or HSAs, have seen a massive boost in popularity as both employers and employees look for creative ways to keep healthcare costs down while retaining high-quality benefits. The flexibility and cost-effectiveness of these plans allow individuals to save for the future and unlike FSA accounts, the participants don’t have to use the money or lose it, but instead unspent funds roll-over from year to year.
Recent surveys show that over 15 million employees have enrolled in HSA-linked plans in 2015, a more than 20.3% increase over the previous year. Health Savings Accounts offer flexibility, portability, and efficiency for employers, employees, and their families and they are a great option for those seeking quality care at a reasonable price.
When paired with a high-deductible health plan, HSAs help employees save money on premiums and receive tax advantages. Health Savings Accounts are tax-deductible for employees and tax-free for employers, meaning that both sides get to keep money that can be put towards healthcare costs or other expenses. Employees can contribute to an HSA even after they are maxed out on 401K or IRA contributions for the year and once they turn 65, employees can withdraw remaining funds for nonmedical expenses with no tax penalty.
As an employer, it’s important to find an HSA provider that provides tools and calculators so that employees can research and understand the different types of Health Savings Accounts and their benefits. It’s also important to make sure that the HSA provider allows for an easy conversion to an individual account for employees that change benefits plans, leave the company, or retire.