Account for Health Care
Rx for today and tomorrow.
Workplace Thought Leadership & Public Policy - 07/30/2015
A prescription for rising costs
A High-Deductible Health Plan (HDHP) paired with a Health Savings Account (HSA)—also known as an HSA-eligible health plan—can be a key part of a strategy to help control costs. Here’s a look at how employers are embracing these plans:
The pressure on employees
Your employees are feeling similar pressures as their costs rise and they are asked to take on more responsibility for their own health care. You can increase their comfort level by educating them on the benefits of an HSA, both today and far into the future.
An HSA can help employees across the spectrum — from those who use it to pay today’s medical expenses to those who see it as a way to save for health care costs during retirement.
Learning to shop around
Your employees are probably not accustomed to "shopping around" for health care, but as they shoulder more of the cost of care, they are becoming more careful of how they spend their money. Employees with HSA-eligible health plans have proven to be more cost-conscious, which can help both employees and employers save.
How HSAs help spenders save
TRIPLE TAX ADVANTAGE
Employees who fund an HSA can save money on taxes now and later:
1. When they contribute
They don't pay federal income tax on their contribution. So, a $6,750 HSA contribution in 2016 could cut a family's tax bill by $1,687 (assuming a 25% federal income tax rate).
2. As the money grows
If they invest what they don't spend, they aren't taxed on any potential earnings as their balance grows.
3. When they pay their medical bills
Withdrawals made to pay qualified medical expenses are never taxed.
HSAs may help employees spend less on their out-of-pocket health care expenses today — both because of their tax advantages and the notion that they are spending their own money on health care. They also help employees save for tomorrow. More than 90% of HSA account holders carried a balance into 20143. Even a small balance carried over from year to year can accumulate savings over time.
Satisfaction grows over time
Learning how to become a smart health care consumer is challenging and requires an extra level of employee communication support. But employees who participate in these plans are broadly satisfied with their health coverage — and that comfort level rises over time.12
How HSAs help savers
Employees who are healthy or can afford to cover their current expenses out-of-pocket can save their HSA balances well into the future — even into retirement. For savers, an HSA is another powerful tax-advantaged way to save for retirement.
3 uses for an HSA during retirement
Health care often is the second-biggest expense for retirees, after housing. Fidelity estimates an average 65-year-old couple retiring today will spend about $245,000 on health care during retirement.4 Money saved in an HSA can help in three important ways during retirement:14
How you can help
Across the spectrum, you as an employer can help your employees make the most of an HSA, no matter where they are on the spending-to-saving spectrum.
