What is more important to a small business owner than keeping costs low and employees happy? Its hard to find both, especially when selecting a health plan. Lower costs, that still offers the benefits employees expect, are why a small business owner should choose an HSA-eligible health plan.
HSA Health Plan Cost
HSA-eligible health plans, like HDHPs, typically have lower monthly premiums (for both employers and employees). This means immediate savings and lower expected health expenses. But what about any unexpected health expenses and the out-of-pocket expenses that can accompany them?
HSA-eligible health plans do have higher deductibles than traditional health plans, like PPOs and HMOs. In fact, to be considered an eligible HSA health plan in 2018, plans must have minimum deductibles of $1,350 for individuals and $2,700 for families. What can you do to safeguard your employees against these potential costs?
HSA Health Plan and Employee Satisfaction
Without an HSA, employees will have no dedicated funds for these “just in case” out-of-pocket medical expenses. They are left without a financial safety net.
With an HSA, employees get to decide how to allocate HSA funds they (or you) choose to contribute. They can use those pre-tax dollars to offset the tax burden of qualified out-of-pocket expenses or invest those funds for the years to come. Finding opportunities to empower employers with health benefits will keep them happy and healthy (and with more money next year for health expenses than this year).
Is There A One Size Fits All Health Option?
There is truly no “one size fits all” health benefits plan, but this strategy might be as close as you can get. Coupling an HSA with an HDHP balances short-term health cost (premiums and out of pocket expenses), with the only long-term dedicated health savings option.
Your employees get to decide how they want to use any HSA money they save. Employees can use this tax-free money for qualified medical expenses today or they can choose to save it for years to come. Choice is hard to come by in the healthcare space. It’s nice to have options.
401k, Not Required?
We wouldn’t go that far, but like a 401k or IRA, employees can save pre-tax dollars. They can use those funds today for qualified out-of-pocket medical expenses or invest them for retirement. After the age of 65, an HSA can be used for anything, just like a 401k or IRA. On top of that, an HSA has no mandatory distributions. An HSA might just be the new stealth IRA.
Getting more out of the benefits you already offer is key for any small business owner. Finding low-cost solutions like an HSA that help create health savings, make that even easier.
If you need more help with health account decisions, check out our blog. We will make you a healthcare benefits expert in no time, without any extra work or effort on your end.
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.