You strive to be a competitive employer, but as a small business it has become increasingly difficult to attract the great candidates you want who can best supplement the team you currently have.
Just because you can’t afford the best dental plan or medical package doesn’t mean you shouldn’t still have this capability to recruit high-quality talent. We have a solution to your benefits budget constraints: Healthcare Savings Account.
What is a Healthcare Savings Account?
Basically, an HSA is a tax-deferred medical savings account for individuals with qualifying high deductible healthcare plans. Money in this account can be used to help pay the medical deductibles until the deductible is met, at which point insurance begins to pay for the remaining bills.
The contributions to an HSA are 100% tax deductible and are tax-free when employees withdraw money to pay for medical expenses. The best part: it’s never forfeited at the end of the year meaning employees get to keep the money they’ve invested into their healthcare deductibles.
What You Need to Know…
As you change (or create new) features in your benefits package to help attract great talent, there are some requirements you should be aware of if you choose a high-deductible plan.
To qualify for a high-deductible healthcare plan, employers must have at least two employees. Although they can count themselves as part of this team, a spouse won’t count as a second employee.
Commonly, employers cover 80% of the insurance premium, leaving employees to cover the cost of the remaining 20%, despite the 50/50 legal requirement.
What you need to know about healthcare savings before offering them to your employees:
But as a small business employer, you want ways to provide benefits to your team at a smaller blow to the company wallet. So how can you compete with the organizations that cover a large majority of the health insurance premium?
By offering a high-deductible healthcare plan at 50/50 coverage in combination with ancillary benefits and a great culture, you’ve got the recipe for great perks to add to your recruitment and retention strategies.
How Employees Can Build a Healthcare Savings
As part of the high-deductible plan, your employees can opt for an HSA. But like the plan you offer, there are specifications your team needs to know. For 2015 these are some regulations for the HSAs:
● The out-of-pocket HSA deductible is $1,300 for individuals and $2,600 for families.
● The maximum out-of-pocket liability is $6,450 for individuals and $12,900 for families – at which point insurance pays 100% of costs.
● Annual contributions are up to $3,350 for singles and $6,650 for families, with individuals 55 and older allowed to make an extra $1,000 catch-up contribution.
An employee’s HSA can’t be used for just about anything, there are specific stipulations as to when they can use this money they’ve set aside to cover for the high-deductible expenses. Last year, the IRS gave a good definition of what qualifies as a medical expense that can dip into the HSA:
“Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.”
Although a number of procedures can be covered by an HSA, it’s better for the employer (and the employee) if they hold seminars or offer education so the team better understands the coverage of their benefits.
Be sure to educate your employees about HSA coverage of benefits. Learn more:
With a high-deductible healthcare plan, you can provide your employees with the benefits they want without busting your budget.
If you have at least two employees, and can pay at least 50% of the premium, your organization is eligible for a high-deductible plan.
Ensure your employees are aware of the requirements they are responsible for, and they’ll be able to build a healthcare savings account that they can continuously grow.
Learn more about how The Olson Group’s employee benefit consultants can help your small business budget healthcare into your employee benefits offering.
Planning your employee benefits budget for 2016? Prepare yourself with these tips: