How Does a Health Savings Account Work?
The United States spends an estimated $9,403 per capita on health care every year. This is almost double what other countries spend.
It’s no secret that health care in the United States can get expensive. This leads to business owners and employees alike constantly stressing about health care options.
To better assist employees, many business owners are introducing Health Savings Accounts (HSA) within their portfolio of health care options. An HSA is similar to a personal savings account, but the money can only be used for qualified medical expenses.
The below is a quick guide to help you better understand Health Savings Accounts.
1. Is an HSA In My Best Interest?
A Health Savings Account is not for everyone. Individuals or families that have small medical expenses and can afford to pay the fees to get the benefits of a tax deduction often benefit the most.
If you are self-employed and not in receipt of company insurance, then an HSA may also be a good option for you.
The money that you pay is a fixed amount and you can continue to pay as long as you are not eligible for Medicare. If you do become eligible for Medicare, you will need to stop putting money in your HSA.
2. Tax Deductible
One of the biggest benefits of having a Health Savings Account is that it is tax deductible and earns interest tax-free. Many people keep the interest in their account. You can even invest your interest in a Mutual fund or bond to get even more profit.
Any withdrawals you make from a health savings account are also tax deductible, as long as they are for your health expenses. If you withdraw for your other expenses then the money is taxable.
3. Enjoy a Roll Over
With regular health insurance coverage, the money that you do not spend by the end of each year, December 31st, is not rolled over. One of the biggest benefits of an HSA is that all the money you are saving will roll over into the following year.
4. Numerous IRS Approved Health Expenses
HSAs can provide access to impressive medical services. There are literally hundreds of medical expenses that are approved by the IRS through an HSA. These include but are not limited to:
- Hearing aids
- Laser eye surgery
- Chiropractic care
- Physical therapy
Final Thoughts on Health Savings Accounts
If you think a Health Savings Account is a good fit for you or your employees, reach out to a qualified benefits broker for more information.
The Benefits team at GIGA works closely with business owners to implement top-notch employee benefit programs, including Health Savings Accounts. After a brief information gathering session, they will reach out to a variety of insurance providers for a business, matching them with only the best benefit packages.
The GIGA Benefits team can also identify cost savings and administrative efficiencies in the areas of services around benefit administration, education, implementation, and benefit enrollment. Contact GIGA for more information.