In today’s marketplace, employers need to offer a competitive benefit package to hire and retain quality employees. More employers are solving the medical insurance aspect of benefits by offering a high-deductible health plan (HDHP). This plan is generally less expensive than more traditional medical insurance plans offered in the workplace, but can still provide necessary coverage even with higher deductibles at the outset.
A qualifying HDHP allows the employee to be eligible to establish and contribute to a health savings account (HSA) to offset the deductibles and save unused dollars year after year to cover future expenses and develop an account for potential larger expenses in the future. With more than 22 million HSAs open nationwide, this account is becoming a new cornerstone in saving for healthcare long-term.
Why the HSA and HDHP is Important to Your Business
Better health care for consumers. HDHPs save on the cost of premiums that can benefit both your business and your employees. As consumers take more responsibility for their health care, they become more aware of where their health care dollars are spent. Combining that with a Bank Midwest HSA option allows them to save dollars for future health care needs that could ultimately shift their contributions from being tax-deferred to tax-exempt for qualified medical expenses. Better use of health insurance can also lead to further reducing premiums as future providers review past consumption.
Lower administration costs. When comparing an HSA to a flexible savings account (FSA) that many employers offer today, the cost per account is generally lower as the HSA requires no approvals by the employer to process a claim. Your employees would be provided a debit card that is associated with their HSA and they maintain control of the HSA dollars and how they are used. Our Bank Midwest HSA debit card puts them in control of when and how these dollars are used.
Reduced tax burden. Allowing employees to contribute through payroll deduction can reduce their tax liability for payroll items such as FICA and FUTA by decreasing their taxable income. If you as the employer elect to make a contribution on their behalf, that contribution is also a tax deductible expense.
Stability – With the Bank Midwest HSA, your business can change where the HDHP is purchased in the future, but you will not be forced to change your HSA provider as many plans require employers to do today. This consistency provides peace of mind for your business and your employees as they simply continue to contribute into the same HSA, keep the same account and login, and use the same debit card as they did before.
The Triple Tax Benefit
Everyone benefits from the triple tax advantage provided by the HSA.
By opening an HSA and establishing Day 11, the HSA owner benefits from
- Tax-deductible contributions made directly and/or through payroll deduction reducing overall taxable income for the year the contribution is made.
- Tax deferred earnings growth on the contributions
Tax free distributions on qualified medical expenses incurred after Day 1 Bank Midwest has developed a payroll deferral process that is easy to use and can provide access for your employees to a local bank with a full service offering to assist them and remove any support burden from the employer.
You As the Employer Also Benefit
As an employer, you can also benefit directly from providing an HSA through your organization. Here’s how.
- Same triple tax benefit applies to you (and your spouse under family coverage).
- Contribution amounts are not affected by 401(k), IRA or similar types of retirement savings contributions allowing you to build a stronger nest egg.
- No income limits apply to HSAs allowing you to maximize your annual deductible contributions.
- $1,000 catch-up contribution available for individuals age 55 and up (spouse eligible for an additional $1,000 under family plan and over age 55).
As your financial success continues, the HSA can grow with you and be a long-term investment plan and we can show you how.
Change can be hard. One of the key points of anxiety for employees is understanding how both the HDHP and the HSA function. Many of them will have a history with different types of health care insurance and potentially an FSA offering or a health reimbursement arrangement. In order for your employees to see the overall value of what you provide, they need solid baseline education from a trusted source…you or someone you bring in to help.
The Bank Midwest HSA Solution can provide this necessary component.
Education Booklets – These booklets provide an overview of how the HSA works, how employees can make contributions through payroll, and how they can pay future expenses directly. This booklet also emphasizes the need to open the HSA immediately as the benefits do not begin until they do.
Open Enrollment Meetings – A Bank Midwest representative can be available (fee required) to present the HSA solution and help employees understand how it works and how to save for future needs. We coordinate with you to choose the appropriate place and time, but also to emphasize key items as highlighting the employer contribution. We continue to remind them that the HSA dollars that they contribute are theirs to keep until they choose to use them.
Online Education – When your business uses the Bank Midwest HSA Solution, you and your employees gain access to our online education library that can provide additional education about the HSA and how to save for the future.
By offering the Bank Midwest HSA Solution, your business ensures that your employees have a full service bank where they live. We are here to help them succeed in healthcare and beyond.