Health Spending Accounts (HSAs): What Small Businesses Need to Know

Being a small business owner has its challenges, especially when it comes to employee benefits. Health Spending Accounts (HSAs) can be transformative for your business. Keep reading to learn the advantages of HSAs for both employers and employees.

HSA Benefits for Employers

• Cost Control: Unlike traditional health insurance, HSAs do not have premiums. This enables businesses to better manage their finances and still offer attractive benefits.
• Ease of Management: As a small business owner, your time is precious. HSAs are straightforward to set up and manage.
• Customization: Health Spending Account plans can be tailored to align with a company’s budget and unique needs.

HSA Benefits for Employees

• Tax-Free Contributions: HSA contributions are tax-free. This provides employees more funds to cover health care expenses.
• Coverage: HSAs provide coverage for a wide range of services and treatments.
• Flexibility: There aren’t specific categories of benefit providers that are covered. This lets employees choose the treatments they need, without worry.

How Health Spending Accounts Work

• Customized Limits: Employers set spending limits for job roles. E.g., a manager may receive a higher spending limit than someone on the frontline.
• Employer Funding: Each month, the employer contributes a set amount of money into the HSA.
• Employee Payments: When an employee has a health care expense, like a physiotherapy appointment, they pay for it themselves.
• Tax-Free Reimbursement: Employees then make a claim and get reimbursed from the HSA. They get 100% of the money back tax-free.
• Employer Charges and Deductions: Employers pay the health care cost plus an 8% administration fee. The employer can deduct the total amount from their taxes.
• Unused Funds Return to Employer: If there is money left over in the Health Spending Account, it goes back to the employer. No misspending.

Learn More About the Power of Health Spending Accounts

HSAs offer excellent advantages, from financial management to tax deductions. And your benefits offering will make your company more attractive to prospective employees. Want to learn more about the potential of HSAs? Get in touch with one of our health insurance advisors today.