Do your employees ever comment about how they don't get the most out of their health benefits? Often, your employees may only need coverage for one or two medical services and can quickly use up their benefits.
Health spending accounts (HSA), sometimes referred to as healthcare spending accounts, are highly efficient for allowing your company to cover your employees' medical costs without encumbering the employee with a taxable benefit. HSA's provide cost certainty, as your company is allowed to set the limits of the amount that each employee is entitled to submit through their account. It is important to note that all members of a similarly defined class within the company need to be treated equally.
Frequently Asked Questions
How do health spending accounts work?
- As a business, you determine how much each employee is allowed to run through their account
- Your employee incurs the initial cost for the medical service at the source
- Your employee submits the receipts through their HSA for reimbursement once the submission is approved
The list of allowable claims is significantly more comprehensive compared to a traditional employee benefits plan. An HSA allows your employees to control what they want to use their account for specific to their own unique needs.
How do I fund my employee's health spending account?
As the employer, you fund the healthcare spending account (usually with a small administration fee included). That money is sent directly to your employees tax-free with an annual allowance. You can then deduct this amount fully. Some companies allow for multiple years of room to be accumulated for a more significant claim situation.
What are some of the benefits of a health care spending account?
Overall, the HSA strategy allows your company to have more control over your spending. HSA's empower your employees to have a broader choice for what medical expenses they want to cover and are very cost-efficient for all parties involved.
How is a HSA Different from an Insurance Policy?
One thing to remember, a health care spending account is not an insurance policy and is not intended for catastrophic situations. However, HSA's work very well when dealing with day-to-day and more predictable medical expenses.
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