Boost Enrollment in Your Company HSA

Posted on Monday, June 03, 2019

If your company is offering a Health Savings Account (HSA) as part of its benefits mix, you can boost employee participation by helping them understand the advantages the accounts offer.

For your business of course, the accounts help contain health care costs, leaving more money for product innovation, capital investment and other corporate and employee requirements. 

How HSAs Work with Other Programs 

   If your company has wellness, direct management or employee assistance programs, staff members can still participate in a Health  Savings Account as long as the other plans don't provide "significant benefits in the nature of medical care or treatment." according to the IRS.
   Under the tax agency's guidelines, programs that meet this requirement include:
    Employee Assistance Programs that consist primarily of counseling and referrals, even though these services provide assistance with mental health issues and substance abuse.
    Direct management programs that identify  individuals who have, or are at risk for, certain chronic conditions and that provide disease-specific support and coordinate care and treatment under a health plan.
    Wellness programs that offer education, fitness, sports and recreational activities, along with stress management and health screenings.

 Part of the education process is to make your staff aware of these business advantages. 

Of course your employees are likely to be more interested in what the accounts do for them, so you need to highlight such direct benefits as:

Tax breaks: Personal contributions to the accounts provide above the line tax deductions. Even if contributions are made by a relative or someone else,  the employee takes the deduction. Employer contributions are not considered taxable income to the employee. If your business offers a Section 125 plan, the employee can make pre-tax contributions. Withdrawals are tax-free, as long as they are used for allowed expenses.

Financial control: HSAs allow employees to manage their health care dollars. Provided the IRS and the plan your business set up allow the medical expense, employees can use the account to cover the cost without worrying about health plan authorization requirements or other limitations.

Rollovers and interest: Unused contributions are rolled over and the money earns interest. There are no "use it or lose it" restrictions, so employees can let the account continue to grow, building a safety net for future medical needs even after they retire.

Better choices: Increased involvement in how health care dollars are spent can lead to better decisions about treatments and medications.

Broader coverage: Health care expenses that typically are not covered by the primary health plan -- such as vision, dental, and orthodontic costs -- can be paid for from the account.

Portability: Employees can maintain the accounts if they leave the sponsoring employer, move to another state or change medical coverage or marital status.

Generally, in order to participate, an employee must be covered by a high deductible health plan (HDHP) or other type of "permitted insurance." (See right-hand box to see how other programs work with health savings accounts.) 

Permitted coverage includes such disease-specific insurance as policies for cancer, diabetes, asthma, and congestive heart failure. Take care, however. Disease-specific policies are allowed only if they are not self-insured and an HDHP provides the principal health coverage. An exception is made if the coverage satisfies a statutory requirement, such as Workers' Compensation, and the health care benefits are incidental to other benefits. In that case, the coverage may be self-insured.

HSAs offer a win-win health solution for your company and its staff. Employees get to decide how to spend their health-care dollars and potentially make more informed medical choices, while your company keeps costs down.

Posted in Tax Topics For Individuals

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.