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What is the Short-Term Value of an HSA?

2 min read

30 sec brief

There are many benefits of an HSA. Helping employers understand their short-term value can create new health saving strategies. Understanding the short-term value of an HSA is important for employees because 82% of all HSA assets were withdrawn in 2017.

There are many benefits of an HSA. Helping employers understand their short-term value can create new health saving strategies. Understanding the short-term value of an HSA is important for employees because 82% of all HSA assets were withdrawn in 2017.

HSA Value

This makes sense when you understand the year-to-year health costs (and increases) employees face. Health costs are rising faster than inflation. More employers are providing HDHP (high deductible health plans) than ever. Today over 29% of all employer-sponsored health plans are HDHPs. These plans have higher out-of-pocket costs. Employees are using their HSAs to cover that financial gap. They can save or invest the remaining amount of their HSA fund for future health expenses.

Dedicated Savings for Yearly Health Costs

The first employee experience with an HSA is the opportunity to schedule recurring pre-tax payroll contributions. This is a fully automated way to set and forget HSA contributions. After which, employees have the money when they need it.

An HSA is the only dedicated health savings account that doesn’t expire each year. Therefore employees can add money and know it will be there for them for an expense tomorrow or a few months from now, no matter when their plan year started. This is a key differentiator of the HSA vs. the FSA.

Use Tax-Free HSA Money for Health Costs

Employees can use an HSA to pay for qualified out-of-pocket medical expenses. They have the option to use their HSA debit card or reimburse themselves at any set time in the future. In fact, once employees open and establish their HSA, they can add funds and reimburse themselves for expenses down the road.

Today, 86% of HSA transactions occurred with an HSA debit card. Clearly, the convenience of an HSA debit card is a major factor. It is also an incredible benefit to have these costs withdrawn directly from your HSA funds and not your personal checking or savings account.

Increasing short-term health costs and liabilities are ever present for employees. Understanding how to use the varied benefits of an HSA to limit costs and liabilities creates a clear path to health and financial success for employees.

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.

About the author

Lively

We are HSA Experts! Lively is a Health Savings Account (HSA) platform for employers and individuals. A 401(k) for healthcare.

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