As of 2010, the industry estimates that more than $10 billion in employee contributions had made their way into Health Savings Accounts, or HSAs. Started in 2003, this type of health benefit was designed to assist participants in saving up funds that will be used to cover health expenses of themselves and their dependents.
Why Are HSAs So Popular?
The rise in popularity of these plans is no surprise. They are available to any employee who participates in a HDHP, or High Deductible Health Plan, which many employers offer to keep benefit costs in check. The money the employee puts into it grows tax-free. This account differs from a Flexible Spending Account (FSA) in that there is no pressure to "lose it or use it." In brief, the employee does not need to use all the money in the account within a specific length of time. And, if the employee opts for another job, this account is portable and remains available to him. In case of death, the amount that is still in the HSA can still benefit his spouse or other dependents if he/she is single. There are a wide variety of IRS-defined "eligible expenditures" that these accounts can be used to fund.
Offer an HSA Through a Section 125 Plan for Even Bigger Savings
If an employer has a Section 125 POP, offering an HSA through the plan is a great way to pick up additional cost savings and is required if you allow employees to make contributions via payroll deduct. A Section 125 Plan is tax-advantaged; employees' payroll deductions reduce their taxable income, reducing the employer's share of payroll taxes. A health savings account ran under a Cafeteria or POP Plan therefore increases the employee's contribution, and with the taxable income reduced, the employer also realizes savings as his share of FICA, Medicare, and FUTA taxes are also lowered.
How to Offer an HSA
Employers who are worried about the hassle of administering an HSA through a Section 125 POP Plan need not worry because there are competent plan advisers that can help with this matter. Hiring to guide you through the process of making the mandatory changes to your plan documents to incorporate the HSA is both easy and inexpensive. Companies who specialize in these services can offer the necessary plan documents within minutes so your employees' HSAs can be set up in no time.
Latest Updates
As more and more employers adopt the HDHP's into their benefit offering, the market continues to mature. For instance, plan administrators have recently removed over-the-counter medicines from the list of qualified expenses covered. Your plan document needs to be updated to contain specific HSA language, or should be updated to reflect the current law.
Why Are HSAs So Popular?
The rise in popularity of these plans is no surprise. They are available to any employee who participates in a HDHP, or High Deductible Health Plan, which many employers offer to keep benefit costs in check. The money the employee puts into it grows tax-free. This account differs from a Flexible Spending Account (FSA) in that there is no pressure to "lose it or use it." In brief, the employee does not need to use all the money in the account within a specific length of time. And, if the employee opts for another job, this account is portable and remains available to him. In case of death, the amount that is still in the HSA can still benefit his spouse or other dependents if he/she is single. There are a wide variety of IRS-defined "eligible expenditures" that these accounts can be used to fund.
Offer an HSA Through a Section 125 Plan for Even Bigger Savings
If an employer has a Section 125 POP, offering an HSA through the plan is a great way to pick up additional cost savings and is required if you allow employees to make contributions via payroll deduct. A Section 125 Plan is tax-advantaged; employees' payroll deductions reduce their taxable income, reducing the employer's share of payroll taxes. A health savings account ran under a Cafeteria or POP Plan therefore increases the employee's contribution, and with the taxable income reduced, the employer also realizes savings as his share of FICA, Medicare, and FUTA taxes are also lowered.
How to Offer an HSA
Employers who are worried about the hassle of administering an HSA through a Section 125 POP Plan need not worry because there are competent plan advisers that can help with this matter. Hiring to guide you through the process of making the mandatory changes to your plan documents to incorporate the HSA is both easy and inexpensive. Companies who specialize in these services can offer the necessary plan documents within minutes so your employees' HSAs can be set up in no time.
Latest Updates
As more and more employers adopt the HDHP's into their benefit offering, the market continues to mature. For instance, plan administrators have recently removed over-the-counter medicines from the list of qualified expenses covered. Your plan document needs to be updated to contain specific HSA language, or should be updated to reflect the current law.
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Don't miss out on the great benefits that a Section 125 POP can provide you and your employees! Give us a visit at taxfreepremiums.com and learn more about a reliable and cost-effective way of getting your HSA and POP plan document ready and updated all the time.