What is a Health Savings Account? (HSA)
HSAs are a tax advantaged account associated with a qualified high deductible health plan (QHDHP). In addition to lower health plan premiums, an HSA can offer additional savings and benefits to individuals & employees.
HSA Benefits – At a Glance
- Lower monthly health insurance premiums
- More stability in premiums (annual increases are percentage-based, but the base is much lower with a high deductible plan).
- Immediate tax savings – use tax-savings to pay routine medical bills!
- Long-term growth potential – becomes another IRA at retirement.
- Tax-free withdrawals to pay for qualified medical expenses and even for expenses not covered by insurance (eyewear, eye exams, dental, acupuncture, etc.).
- Tax-free funds can pay premiums for COBRA, qualified long term care insurance plans, or health insurance while unemployed & MEDICARE premiums.
- More control over your family’s health care decisions — make decisions in consultation with your physician.
What is a Health Reimbursement Arrangement (HRA)?
A Health Reimbursement Arrangement, is different from an HAS. It is a tax-advantaged benefit that allows both employees and employers to save on the cost of healthcare.
HRA plans are employer-funded medical reimbursement plans. The employer sets aside a specific amount of pre-tax dollars for employees to pay for health care expenses on an annual basis and can generate significant savings in overall health benefits, and it is one of the most flexible types of employee benefit plans making it very attractive to most employers.
In addition, these funds are often administered by the Group Health Carrier at no additional charge
Benefits at a Glance
As a rule, moving to a high deductible plan will result in reduced premium costs creating real savings on healthcare costs for the employer. HRA contributions may then be funded using the savings gained from the lower premium costs. Funding an HRA allows the employer to bridge the gap between the higher deductible and when the insurance coverage “kicks in” for their employees.
Most importantly, all employer contributions to the Plan are 100% tax deductible to the employer, and tax-free to the employee.
With an HRA, employee healthcare expenditures are visible and clear to both you and your employees, creating a greater understanding of the costs of healthcare. In addition, by providing employees more visibility to and control over their healthcare they become smarter healthcare consumers leading to healthier, more productive employees and lower utilization-based rate increases on the Health Plan.
Call to set schedule your FREE Consultation with one of our Employer Benefit Coordinators and see what a little ingenuity can do for your benefit bottom line!