BlogsThe Benefits of Using an HSA for the Employee
May 30, 2017, by Ryan Miller
A Health Savings Account (HSA) is a very valuable benefit that continues to increase in popularity. Employers wishing to give their employees the best benefits possible will definitely want to consider the advantages of an HSA program.
Let’s take a look at two valuable benefits of offering your employees an HSA compatible plan:
1. Tax Advantages
An HSA is arguably the most tax-advantaged investment an employee can make, while also providing great tax relief for the employers who offer one. An employee receives triple the tax benefits for every dollar contributed; a pre-tax investment into the HSA account, tax-free interest earnings on your balance, and tax-free (and penalty free) withdrawals for qualified medical expenses as necessary.
It is important to note that any withdrawals made for non-medical expenses or unqualified medical expenses will be subject to penalties similar to other individual retirement accounts (IRAs).
2. Peace of Mind
Medical costs represent a large portion of expenses encountered by most retired individuals. Fidelity Investments, which has been tracking retiree health care costs for more than a decade, estimates that a 65-year-old couple retiring this year will need $240,000 to cover future medical costs (Fidelity 2016). That doesn't include the high cost of long-term care. Nor does it take into account additional costs you may incur if you decide to take — or are forced into — early retirement before your Medicare kicks in. An HSA provides added peace of mind because money will have been set aside specifically for medical coverage. Likewise, when employees encounter unexpected medical costs or emergencies, they have access to these funds to offset the costs. Most people aren’t putting away money just for medical expenses, so this helps keep them covered when the unexpected happens.
These are the primary benefits of a Health Savings Account. To learn more about HSAs, the best plans available and how to implement them as part of your employee benefits package, contact Centennial by clicking here or calling (714) 740-1111 ext. 274. We’ll help you make the right decisions about all of your employee benefits.