Health Savings Accounts (HSAs) aren’t necessarily the new kid on the block, but they’re definitely becoming the most popular kid in the neighborhood. As employers and employees are looking to save money on their healthcare expenses with an eye toward the future, HSAs represent an option that creates big wins both today and tomorrow.
With that in mind, there are a lot of misconceptions and questions being asked about HSAs, by both by employers and employees. Here are some insights about HSAs and their benefits that you should know:
- An HSA can grow from year to year. A traditional Flexible Spending Account (FSA) has always come with the caveat that whatever you don’t spend, you lose. HSAs break that mold and allow individuals to roll over their balance and let it grow over time.
- You can invest your HSA balance. HSAs allow you some great options when it comes to how you’ll invest your funds, and the interest can be earned tax-free! From mutual funds to index funds, there are options available to meet your risk tolerance and investment strategy, and grow your HSA.
- Your HSA can pay COBRA premiums. Although you can’t use an HSA to pay for your health insurance premiums, you can use it to pay your COBRA premiums. If you’re relying on COBRA for your health care benefits, this can be a big win!
- Your HSA is portable. If and when you change employers, your HSA can follow you to your next job. Once the money is in your account, it’s yours and it travels with you wherever you go!
- HSAs drive employee retention. Employers, in a job market when retention and employee engagement are more important than ever, offering an HSA option to your staff is an attractive option for your employee base with great benefits as outlined above!
- HSAs are flexible. Along with traditional medical expenses, your HSA can be used to pay dental and vision expenses as well. From your next pair of glasses to that crown you need, your HSA allows you to use tax-advantaged funds to pay the bills.
- HSAs have no expiration date. Once the money is in your account, it’s yours forever, and it can be passed on to beneficiaries upon death.
- Millennials love HSAs. Many of them are opting for employer-sponsored, higher deductible plans that have more affordable premiums. With that in mind, HSAs allow them a way to invest long term while protecting themselves today.
- Baby Boomers Love HSAs. For account holders ages 65 and up, funds can be withdrawn for any reason without penalty; normal taxes will apply. Contribution limits do apply, but the IRS allows “Catch Up” amounts for participants 55 years and older.
- HSAs come with a triple tax advantage. Account contributions come in pre-tax or tax-deductible, and all earnings, interest, and investment returns are tax-free. You can even roll over funds from an existing IRA to your HSA to compliment your current portfolio.
If reading this has piqued your interest in HSAs, we have an excellent resource for you to explore:
Flyte HCM is proud to deliver the only true multi-account solution for HSAs with a single platform, a debit card, and mobile app designed to make the HSA experience seamless and easy. For employers, we provide a comprehensive, one-stop, compliant HSA administration solution with in-depth reporting, white-label custodian, and a single administrator.
Curious and ready to learn more about how we can help your business? For more information, give us a call today or email: Quotes@FlyteHCM.com