If your business has at least one HR person managing your fiduciary process, you are likely already aware of the benefits of a health savings account (HSA), both for an employer and its employees. HSAs give today’s businesses a great way to provide employee benefits while keeping monthly premiums low.
HSAs are relatively new on the medical benefits scene, having only been introduced in 2003. In order to participate in an HSA, the employee must also be enrolled in a high-deductible insurance plan, so businesses must continue to offer traditional health insurance. But if you’re interested in implementing an HSA as part of your benefits package, here’s what you need to know.
How It Works
As an employer, your responsibility will be to ensure your employees are enrolled in a high-deductible health plan (HDHP). These plans dominate the corporate landscape, so this is likely a prominent option from any health insurance provider. Once employees are enrolled they’ll choose the HSA options they prefer, and you, as the employer, will see to it that funds from their paychecks are directed toward the appropriate savings account each payday. From that point, you’ll merely need to reassess the provider and confirm your employees remain enrolled from one year to the next.
What Your Employees Need to Know Perhaps the most important part of implementation is employee education. If workers were previously used to low-deductible insurance plans, you must explain to them why this type of account is in their best interest. HSAs are ideal for many reasons, including the fact that the funds are pre-taxed and any money accrued rolls over from one year to the next. They are a great choice for for younger, healthier employees who have minimal health expenses; however, employers with an older workforce in poorer health may find that an HSA isn’t their best option.
If reviewing health plans are a part of your business’s fiduciary process, it’s important to learn as much as possible before introducing them to employees, so you are able to present the best plan confidently and skillfully.
FiduciaryFirst is a Maitland, Florida based company that provides independent retirement plan fiduciary support with a holistic approach. Our comprehensive Prudent Fiduciary ProcessSM (PFP) enables employer groups to address fiduciary standards. For more information about pension consulting call us at 866-625-4611 or contact us online.
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This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.