It’s undeniable: the cost of healthcare is rising and as a result it’s getting harder for your clients to pay for the care their employees need. Traditional health insurance policies aren’t right for everyone, and strong alternatives have emerged. Consumer Driven Health Plans can put the power back in the hands of members. Health Savings Accounts (HSAs) create a financial incentive to spend dollars wisely, because unspent dollars accumulate tax-free in their own personal accounts. This encourages consumers to shop around, compare prices and providers, and select the medical services that are most important for them.
Let’s take a closer look at HSAs:
What Are HSAs?
A HSA is a tax-free account in which funds can be deposited by individuals, employers or both to pay for out-of-pocket health care expenses (including medical, vision or dental expenses under Section 213(d) of the Internal Revenue Code), that may not be reimbursable by their individual or employer-sponsored health plan.
How Do I Know If My Client Is Eligible to Offer HSAs?
If your client currently has a high deductible plan that includes HSA in the name, they’re eligible! If your client’s plan name doesn’t include HSA, encourage them to consult with their insurer. The IRS has outlined that high deductible plans that offer a minimum annual deductible of $1,350 for individuals or $2,700 for families, as well as a maximum annual deductible of $6,650 for individuals and $13,300 for families, are eligible for HSAs.
Learn more about eligibility, see IRS Publication 969.
How Much Can Individuals Save in a HSA Annually?
As of 2018, members with individual coverage can save a maximum of $3,450 annually, while those with family coverage can save up to $6,900. For clients 55 or older by the end of the year, an additional $1,000 can be saved. This amount can be deposited as a lump sum or deposited over time.
For more details, including rules for married people, refer to IRS Publication 969.
HSAs are underutilized, but carry great benefits for individuals. If your clients aren’t utilizing a HSA because you haven’t recommended it as an option, you’re selling them short. Staying up-to-date on HSA qualifications and providing your clients with these and other cost saving techniques will set you apart from your competitors.