Employees might prefer health savings accounts (HSAs) over traditional healthcare coverage options provided by many companies. Businesses may perform data analysis and conduct surveys to determine the value of HSAs and whether these accounts are a viable option.
According to the Internal Revenue Service (IRS), an HSA can include a tax-exempt trust or custodial account that is established to cover the cost of specific medical expenses a worker may incur. The IRS is not required to set up an HSA, but businesses must name a qualified trustee, which could be a bank or insurance company.
Human resource personnel might consider employee benefit consultants to deliver assistance during the evaluation process. With support from highly qualified experts, HR managers can make the best decisions regarding the employee benefits their companies provide employees.
1. Tax benefits – Employees will enjoy significant tax savings, as contributions provided by an employer are exempt from a worker's gross income. The IRS notes that workers can claim a tax deduction on the contributions provided to them from the plan. Additionally, employees are not required to itemize such deductions on Form 1040.
2. Flexibility – HSAs provide flexibility that sets them apart from traditional healthcare plans. Employees can control how they spend money added to this type of account, and may accrue interest and investment earnings over time. Meanwhile, the funds remain intact year-over-year, so there's no risk that workers will lose the money they invest in their accounts.
3. Lower premiums – Companies may offer HSAs to help workers make payments on unexpected medical costs that are not covered by a traditional employee benefit plan. Typically, HSAs feature lower premiums than a variety of health plan options, which makes them appealing to many workers.
