With all of the recent media hype regarding federal health insurance reform and the state of the health insurance industry, you have no doubt heard the term HSA. HSA stands for Health Savings Account. It is a form of consumer directed health coverage which pairs a high-deductible health plan with a tax-free savings account for medical expenses. These plans are designed to reduce healthcare insurance costs for employers and employees alike & causes people with an HSA qualified policy to have a little skin in the game.
These are the main advantages of this strategy:
Individual plans are 100% portable, meaning that they are not tied to the employer’s business. The employees can take the coverage with them, wherever they go, as well as deal with the grunt work involved, thus removing it off of your plate and allowing you to concentrate on running your business.
- Contributions from the business are expendable, so you can create an attractive & deductible employee benefit.
- HSA accounts qualify for year to year “rollovers,” which enable the employee to create a sizeable health insurance cushion.
Saving for the Future:
Proponents of HSAs believe that it is an important reform that will help reduce the growth of health care costs and increase the efficiency of the health care system. They contend that HSAs encourage savings for future health care expenses, allow the patient to receive needed care without a gatekeeper to determine what benefits are allowed, and make consumers more responsible for their own health care choices through the required high deductible health plan options which they will choose. Funds in an HSA account can be used to meet your deductible as well as other non-covered legitimate medical expenses including vision and dental expenses. Funds in an HSA can be used for any family member’s eligible medical expenses even though HSA accounts are individual accounts. Small businesses need a creative solution to health insurance that will enable them to retain their valued employees and not “break the bank”. Like any health care option, health savings accounts have advantages and disadvantages. When considering a health savings account, think about your anticipated health care expenses, your financial situation and how much control you want over your health care spending. If you’re generally healthy and want to save for future health care expenses, an HSA may be an attractive choice. On the other hand, if you anticipate needing expensive medical care in the next year and would find it hard to meet a high deductible, an HSA might not be your best option. Therefore you will need to determine what works best for you.
As always, we are here to help you any way we can. Please don’t hesitate to call or email if you need us.
The Deerfield Team
This article is intended only as a general discussion of these issues & we cannot guarantee the accuracy thereof. It does not purport to provide legal, accounting, or other professional advice. If such advice is needed, please consult with your attorney, accountant, or other qualified adviser. The Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Accordingly, the information provided herein is provided with the understanding that Deerfield Advisors is not engaged in rendering legal advice. Deerfield Advisors strongly advises that clients and/or the reader of this publication contact an attorney to obtain advice with respect to any particular issue or problem discussed here. Also, please know that discussions of insurance policy language is descriptive only. We strongly advise that one’s individual policy & one’s advisor be consulted regarding this subject matter before any action is taken in any way. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. The Deerfield Advisor White Paper Series is a registered trademark of Deerfield Asset Management Inc. DBA, Deerfield Advisors and is produced by Deerfield Advisors for the benefit of its clients, and any other use is strictly prohibited. All rights reserved. Copyright © 2015