A health savings account (HSA) is an alternative to traditional health insurance. Paired with a qualified high-deductible health plan (HDHP), an HSA offers a different way for employees to pay for their health care expenses. An HSA allows employees to pay for current health care expenses and save for future qualified health care expenses on a tax-free basis.
HSAs were created to help give control back to consumers and lower health care costs. Employees own and control the money in their HSA. The employee decides how to spend the money and what types of investments to make with the money to help it grow.
Employees must be covered by a HDHP to take advantage of an HSA. An HDHP generally costs less than traditional health care insurance, so the money employees save on insurance can be put into an HSA.
Following are some general features of HSAs:
- The contributions employees make to their HSA are tax deductible, which reduces employees' taxable income.
- Interest earned on HSA money is not subject to income taxes — in other words, employees don’t have to pay income tax on the earnings generated by the investments in their HSA.
- Employees may make tax-free withdrawals to pay for qualified health care expenses.
- Employees own all of the money in their HSA and it is the employee's to keep — even if the employee changes medical plans.
Consider establishing an HSA to help your employees maximize the benefits of an HDHP. While employees may open a health savings account with any institution of their choice, employees may establish their account with our assistance at BNY Mellon or U.S. Bank.
For more information, contact your insurance agent/broker or Blue Cross and Blue Shield of Nebraska representative today. Or, start the process now: