An HSA account is an excellent benefit to offer employees at your organization. If you are new to the world of HSAs or maybe need a better understanding of how these accounts work, keep reading to learn more from the experts at Prescott HR.
What is an HSA?
HSA stands for Health Savings Account. Similar to other employer-related accounts like 401ks, a Health Savings Account offers your employees a tax benefit by reducing their taxable income. HSAs are very flexible and money can be spent on a wide range of qualified medical expenses and products without being taxed. HSA funds can even be invested into the stock market and help your employees earn a return on their money. Some organizations also choose to match their employees’ contributions as an added benefit.
How Do HSAs Work?
Employees can choose how much they want to invest into their HSA account. Many HSA accounts provide account holders with a debit card that is linked to their account. One caveat is that Health Savings Accounts must be linked to a high-deductible health plan, which are health insurance plans that have low premiums and high out-of-pocket maximums. There are contribution limits to how much you can put into your Health Savings Account. The individual contribution limit is $3,650 and the family contribution is $7,300.
What Expenses Do HSAs Cover?
As mentioned above, HSAs can cover a wide range of medical expenses and products. Here is a list of common services or items covered under an HSA plan:
- Over-the-counter medications like aspirin and ibuprofen
- Feminine products
- COVID-19 tests
- Allergy medications
- Acne treatments
- Copays for doctor office visits
- Dental care
- Flu or vaccine shots
- Vision care
Check with your HSA provider to learn a full list of benefits and coverage with your employer plan.
What are the Benefits of HSAs?
Now that you have a better understanding of what an HSA is, here are some reasons why your organization may want to offer this as a benefit for your employees.
- Employees control their contributions: You put the power of contributions into your employees’ hands, so they have control. Your employees can decide how much to contribute and how to spend their funds.
- Earn interest: Your employees can earn tax-free interest on their contributions. They can also earn gains on their investment when HSA funds are placed into the stock market.
- Help their tax burden: Allowing your employees to use some of their money to contribute to an HSA account will help alleviate their overall tax burden.
- Save for the future: Even if you do not have any health expenses coming up this year, you can use the funds you contribute to your HSA in the future, if a medical need or expense should arise.
- It’s easy: Most HSA accounts provide a debit card to use when purchasing medical expenses or products.
Work with Prescott HR
Does your organization need help to evaluate your employee benefits? We are here to help! Prescott HR offers a wide range of services that can help your organization evaluate your current policies and incorporate new ones, as needed. Our unintimated HR practices allow us to be focused and effective, providing your business with precisely what you need. Give us a call today at 443-351-8818 or contact us online.