What Are the Advantages of Offering a High Deductible Health Plan with Health Savings Account To Your Employees?

More and more companies are offering higher deductible health plans to pair along with a health savings account (HSA). In the last five years, the share of employees enrolled in high deductible health plan has more than doubled.   Why? There are a number of advantages in offering a higher deductible HSA option to employees. Here are my top three:

  1. Lower Premiums

For employer and employee, moving from a standard lower deductible plan to a higher deductible plan will lower your premium payments. According to Mercer, individuals enrolling in a group health plan on average saved over $150/month in premiums by choosing a higher deductible plan option. With health care costs increasing faster than wages, this gives employees an option to reduce their deductions for health insurance coverage.

2.  Triple Tax Benefits

Money contributed to the HSA is tax deductible. Money withdrawn to pay for qualified medical expenses come out tax free. Money in the account can grow without incurring taxes for the life of the account. IRS has established contribution limits for 2018 of $3,450 for individual and $6,900 for family. There is also a $1,000 HSA catch-up allowance for those 55 or older. Those that have maxed out contributions to their 401k or IRA could also max out their HSA contribution for the year.

3.  Long Term Investment

People are often confused between flexible savings accounts (FSA) and health savings accounts (HSA). In the past, FSAs had the use it or lose it rule where people had to spend down their FSA money by the end of the year. With HSAs, money can continue to grow year after year without having to spend down any of the money in the HSA. Undoubtedly, future costs for medical expenses will occur and consistent contributions will allow those funds to be readily available.

As an employer, offering this high deductible plan option will give employees access to another health plan that might be more beneficial to them. Every individual has varying medical needs and this option could be the right fit for a large number of individuals and families.

Once the decision has been made to offer a high deductible plan along with an HSA, it is critical that a plan is established on how to educate the workforce. Employees must understand the advantages and disadvantages of a higher deductible option and determine if it is the right fit for them.

Would you like more information on how a high deductible plan paired with health savings account would lower costs and benefit your business? Contact me at slorince@insurancecenters.com.