As a small business owner it can be a balancing act to keep good employees happy while managing costs. Understanding employee benefits and choosing the right ones to meet needs and budget can be tough. Take a look at Health Spending Accounts (HSAs). They can change the game for small businesses.
Nowadays, traditional health insurance isn’t the only option out there. HSAs are a smart and customizable alternative that both employers and employees can capitalize on. Adding an HSA in your benefits package could be a savvy move.
What is a Health Spending Account?
- The employer sets customized spending limits for different types of employees. For instance, a manager might have a higher spending limit than full-time staff.
- Each month, the employer puts a fixed amount of money into the HSA.
- When employees incur a health care expense, they pay for them upfront.
- After covering the health care costs, employees file a claim to be reimbursed from the HSA. They get back 100% of the money tax-free.
- Employers pay for the expense as well as an 8% administration fee. But, both the cost of the health care and the admin fee are tax-deductible for the employer.
- If employees don’t use all the money in the HSA, the funds are returned to the business, so there is no waste.
Benefits of HSAs for Employers: Saving Money and Tailored Plans
HSAs help businesses keep costs in check. Unlike conventional health insurance, HSAs don’t have fixed premiums. So as a small business, you can handle your finances better while still offering excellent benefits. HSA plans can be tailored to suit your company’s specific needs and budget. And, setting up and managing HSAs is relatively simple.
Benefits of HSAs for Employees: Tax-Free Healthcare
Health Spending Accounts also benefit employees. One major perk is that contributions to HSAs are tax-free. This allocates more money to employees to pay for medical treatments and services. The other benefit is that, because an HSA is a pool of money, employees can choose the treatments and services. There aren’t specific categories and limits, such as $500 for physio, or $400 for orthotics.
Are Health Spending Accounts Right for Your Business?
As you can see, the value of HSA benefits goes straight from the business to its employees. The complexity of insurance premiums and deductibles is side-stepped. Employees have flexibility and coverage. Employers maximize value because they are cost-effective, and have great tax benefits. And it makes your business more attractive to potential employees.
Want to discover how you can save money, empower employees, and take charge of health care benefits for your business? Reach out to one of our Blue Cross agents.