Shopping Advice for a Group HSA
HSAs are on the edge of revolutionizing the way small business
owners provide healthcare to their employees. How? By being the
most flexible, customer-friendly health plans yet!
What Should I Know About a Group HSA?
- HSAs are tax-free savings accounts that work like
IRAs, except that the money is targeted to pay for qualifying
medical
expenses. In fact, most of the rules and procedures that
apply to an IRA also apply to an HSA Account.
- The accounts
were specifically designed to correct a flaw in our tax laws,
that has helped distort the entire healthcare
system. Before the HSA, the tax code actually subsidized third-party
insurance plans while penalizing individual ones.
- This new
law, part of the Medicare prescription drug act enacted in
2003, gives deposits to an
HSA the same tax benefits third-party health insurance premiums
once enjoyed.
What this means is that HSAs aren’t simple. If you or
your employees are struggling to figure out how to deal with
high deductible health insurance plans and HSA Accounts, here
are a few tips you may want to keep in mind:
4 Tips for HSA Shoppers
- Start by providing an affordably priced qualifying health
plan. Be especially sure to find one that provides 100% coverage
above its deductible.
- The premium on your high deductible
health plan should save you and your employees around 30 to
35 percent over a traditional
plan. Don’t settle for a savings number lower than that.
- Shop
around for a plan that provides what’s known
as a “hospitalization rider”. These are particularly
valuable benefits to employees who are just starting to fund
their HSAs. The rider will help protect them financially if
they land in a hospital before they’ve had time to build
up the balance in their Health Savings Account.
- Shop for
a reputable brokerage, mutual fund company or bank willing
to set up and manage your HSA Program free of charge.
Over time, the high fees certain firms charge will eat away
at the interest your employees earn on their accounts.
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