Employers: Should You Offer an HSA?
- 1 min read
Strategizing and selecting the benefits options for employees before open enrollment is a daunting process. Open enrollment strategy requires time, effort and more options every year. By default, this makes 2018 the most complex open enrollment period yet. There are layers of complexity, hype, providers and systems integrations to think about.
Employee benefits are a staple for your recruiting, retention and employee success. Before you get lost in the details of the process, let us help you understand the value of offering HSA as an employee benefit, in conjunction with an HSA-eligible health care plan (like a high deductible plan).
Start Simple: Do You Offer a 401k?
If you are still trying to weigh the value of an HSA for an employee, think of it like a 401k. In fact, 401ks and HSAs share similar tax advantages like tax-free savings. HSAs are just the new kid on the block (HSAs were established in 2004, 401ks in 1978).
401ks are a designed retirement savings vehicle. HSAs are a designed health savings vehicle. But in fact, HSAs have additional tax advantages, above and beyond a 401k (or IRA). After the age of 65, HSAs can be used for anything, not just qualified out-of-pocket medical expenses and unlike a 401k or IRA, HSAs do not require mandatory distributions. Neat perk!
HSAs – like a 401k for healthcare, but better. This comparison is the easiest way to explain the value and offering to your employees or executive team. Triple tax advantages and long-term savings create a unique benefits offerings. At Lively, HSAs are free for individuals and only $2.95 pepm for employers.
Benefits that Don’t Expire
Circling back to open enrollment and your benefits offerings, the most frustrating part of this process must be their yearly expiration dates. It would be great if some of these benefits expended for more than 1 year. Like a 401k, an HSA is one of the few benefits that don’t expire at plan year end. The money contributed (by employees or employers), can be used for qualified out-of-pocket medical expenses for years to come. An HSA is a benefit that doesn’t expire.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.