In a recent study, 88 percent of employees ranked health insurance as a must-have employee benefit, as protection against exorbitantly high costs of medical care for serious illnesses.
In addition to this, 61 percent of employers consider employees’ health and wellness their responsibility.
Health insurance can perhaps be pegged the most essential benefit program that all employees require, making it all the more important for you to offer the right kind of health insurance plan.
Let’s take a look at HSA and FSA, in order to develop a comprehensive health insurance plan that keeps employees engaged in long-run.
What is HSA?
Health Saving Account—a saving account with tax privileges—saves funds for future medical emergencies.
Health insurance can take multiple forms to adapt to individual needs. That being said, not all your employees will require regular medial aid. For such people, catastrophic health insurance plans, or a high-deductible insurance plan, can be formulated.
By linking a HSA to high-deductible health plan, you can provide sufficient medical coverage to your employees. An employee needs to fulfill certain criteria to become eligible for this insurance plan.
Guidelines For HSA
An employee can contribute to a HSA if he/she is,
- Under the coverage of a high-deductible health plan.
- With exception of few plans like, dental, vision, and disability plans, the individual must not be a part of another high-deductible health plan.
- Must not be registered in Medicare.
- Doesn’t claim to be a dependent on tax returns of someone else’s income.
How Does It Works
- The account can be opened by an employer or employee, provided the individual holds a HDHP.
- The contributions made to the account are made before tax deduction. This reduces your taxable income and saves you a lot of money.
- The money saved in the HSA is tax-free.
- The saving can be used for medical expense, or be withdrawn when employee reaches the retirement age (65 years).
- It provides freedom to the accountholder to invest and spend money according to their plan.
- The return/earning from this account is tax free.
- According to ACA, the contribution limit for individual is $3,450 and $6,900 for family plan.
- The employee can carry the same account to the next employer.
- If an employee withdraws money, other than medical expense, a 20 percent fine is applied.
- Withdrawal of funds after the retirement age is penalty free.
What Is A FSA?
Flexible Spending Account is for people who are not covered by a high-deductible health plan. These accounts complement all other kinds of health plans offered in your medical benefits.
They are short-term saving accounts, and cannot be carried forward like HSA. This means that employees won’t be able to keep the remainder amount at the end of the financial year.
How Does It Work?
- The account is offered by a group or employer.
- The funds cannot be carried forward to the next year. Upon employer discretion, a grace period, or carry-over of certain amount of funds can be offered to employees.
- Contributions to these accounts are made before tax deduction.
- Can be used with various health insurance plans.
- It can be used to cover medical expense, prescribed medicines, coinsurance, copays, and deductibles.
- According to the ACA, contribution limit for this account is no more than $2,650.
- The employee can withdraw funds from this account after the first contribution is made.
- The employee can’t carry the funds to the next employer.
The Best Plan
We have all the tools and top insurance carriers to design and implement customized health insurance plan that covers employees’ dental and vision insurance, life insurance, medical insurance, disability coverage, and LTC.
For a better understanding of our health program, check out our subsidy calculator and healthcare reform resources. You can also call 877-355-6070 to get a quick group health insurance quote.
