As employers strive to keep their workforce safe and healthy, they are likely to experience an increase in the cost of health care benefits as a result of the coronavirus and related legislation requiring health plans to cover testing and related expenses. Some sources are quoting a recent analysis that reports insurance premiums could spike as much as 40% next year.1
If you don’t already offer a low-premium, health savings account (HSA)-qualified health plan, now might be the right time to explore how it may benefit your organization and your employees. Following are a few highlights.
|•||Cost savings: Employers generally save money on their monthly insurance premiums when switching from a traditional health plan to an HSA-qualified plan.|
|•||Tax savings: There are no payroll taxes on employee HSA payroll contributions. Companies save nearly eight cents in FICA tax for every dollar an employee contributes to their HSA through payroll deductions.|
|•||Income tax deduction: Employers can take a federal income tax deduction for contributions they make to employees’ HSAs.|
|•||Workforce productivity: Helping employees take control of their health care expenses with an HSA can help alleviate some of the stress employees feel about managing their finances and can lead to a more satisfied and productive workforce.|
|•||Triple tax benefits2: HSAs offer (1) tax-free contributions; (2) tax-free interest and investment gains; and (3) tax-free withdrawals for qualified medical expenses now and in retirement.|
|•||Portability: Accounts can stay with employees even if they change jobs.|
|•||Flexibility: No “use it or lose it” policy—funds roll over each year.|
|•||Investment ability: Account balances over the threshold of $1,000 can be invested, so accounts have the potential to grow—tax free.|
|•||Long-term savings vehicle: HSAs can cover the cost of health care in retirement, making it less likely that employees would need to tap into their 401(k) plans for medical expenses.|
Be sure to read “What can the coronavirus teach us about the value of HSAs?”, which provides timely insights and a legislative update related to the role HSAs can play in helping employees be prepared for unexpected and long-term health care expenses.
Talk with your Bank of America representative to learn more about the benefits of an HSA and the features of our offering.
If you already offer a Bank of America HSA, we can work with you to tailor educational programs to help you and your employees make the most of this valuable benefit.
With National HSA Awareness Day observed on October 15, consider activities and resources that can help your employees learn more about the value of HSAs. Contact your Bank of America representative for a schedule of our national educational webcasts and strategies to promote the sessions to employees. And, browse articles, videos and tools on our health accounts Learn Center.
1 New York Times, Coronavirus May Add Billions to U.S. Health Care Bill, April 2020.
2 About tax benefits: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Any interest or earnings on the assets in the account are tax free. You may be able to claim a tax deduction for contributions you, or someone other than your employer, make to your HSA. Bank of America recommends you contact qualified tax or legal counsel before establishing an HSA.