As the cost of health care continues to rise, many employers believe that their only solution is to shrink employee benefit plans. Health Savings Accounts can provide a better solution.
Health Savings Accounts (HSA) are tax-free savings accounts that Employees can open if they have a Qualified High Deductible Health Plan (HDHP). With an HSA, you save money by having a high deductible insurance plan with lower premiums. In some cases the insurance premiums are up to 50% less than the typical low-deductible insurance plans. The HSA can then be used to reimburse qualified expenses until the deductible is met and then insurance coverage takes over.
A health savings account is a portable account that the employee can keep even if they change jobs, change medical coverage, become unemployed, move to another state or change marital status. An HSA provides a tax deduction when contributions are made to the account. Also, the employee can receive tax-free earnings through investment and tax-free withdrawals for qualified medical expenses.
There are two components that make an HSA.
1. You have a qualified high deductible health plan.
2. You open a Health Savings Account.
Contributions can be made to an HSA each year that the employee is eligible. These contributions can be made by the employer, the employee or both.
Once a contribution has been made to the account, the employee can start to use the HSA to get reimbursed for qualified expenses. One thing to keep in mind is that employees can only withdrawal the amount of money which is already in the account. HSA funds can be used to cover health insurance deductibles, coinsurance, out of pocket medical expenses, dental expenses, and vision expenses. The funds can also be used to pay health insurance premiums during any period of unemployment.
The contribution limits change annually. Here are the 2017 limits:
For individuals age 55 and up, “catch-up” contributions are allowed. Contributions must stop once an individual is enrolled in Medicare.
Why Flex Administrators is the Best Option
Flex Administrators, Inc. maximizes health savings account benefits by providing the following services in additional to the basic set-up a bank would provide:
- Health Plan Eligibility Certification to determine that the health plan is HSA qualified
- Personal Enrollment Services for help setting up the HSA
- Contribution Reconciliation to make sure participants don’t exceed contribution limits
- Online Access so participants can view their account balance, make contributions, request disbursements, select investment options, and much more!
- The Claims Vault to store claims for later use (ie., to delay disbursement and build account balances, or for use in the event of an IRS audit)
- Claims Certification provides peace of mind that claims meet IRS requirements for tax-free status
- Electronic Funds Transfer makes contributions and disbursements from your HSA easy
- A Debit Card provides access to your HSA funds with a simple “swipe”
- Tax Form Assistance to assure compliance with IRS rules and regulations
- Customer Service Support so that employees can direct their calls away from your desk and have their questions be answered directly by the experts.