Employer Health Savings Accounts

If you’re thinking of changing your health care plan, you may want to explore the advantages of a Health Savings Account. A health savings account (HSA) lets your employees pay for qualified healthcare expenses with tax-free money. Plus they can grow their savings for future needs.

When combined with a qualified High-Deductible Health Plan, an HSA gives employees greater control over healthcare planning, savings and spending.  And it’s cost-effective for employers, too.  Community Shores Bank offers Health Savings Accounts and our team is ready to assist you.

What is a Health Savings Account?

An HSA is a tax-exempt custodial account which your employees use to pay qualified medical expenses for them and their families.

What makes your employees eligible for a Health Savings Account?

To be eligible, an employee must:

  • Be covered under a high-deductible health plan (HDHP) on the first day of that month.
  • Not be covered under another type of health plan that is not an HDHP (certain exceptions apply).
  • Not be enrolled in Medicare; and
  • Not be claimed as a dependent on another individual’s tax return.

What is a High-Deductible Health Plan (HDHP)?

An HDHP:

  • Has a higher annual deductible than typical health plans ($1,300 for individual coverage or $2,600 for family coverage in 2017; $1,350 for individual coverage or $2,700 for family coverage in 2018); and
  • A maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you must pay for covered expenses ($6,550 for individual coverage and $13,100 for family coverage in 2017; $6,650 for individual coverage and $13,300 for family coverage in 2018).  Out-of-pocket expenses include copayments and other amounts, but do not include premiums.

What are the benefits to the company?

When employers offer an HSA, they reduce FICA and federal unemployment tax liability.  You’ll likely save on state taxes, too.  Employees control their own accounts, so administration is easy.  Just send employee payroll deductions to the Community Shores account on behalf of the employee.

  • The HDHP/HSA combination is a lower-cost plan.
  • Contribute as much as you wish to employees’ HSAs, tax-free, within IRS guidelines.
  • Deduct contributions you make to employees’ HSAs.

What are the benefits to the employees?

Contributions to an HSA don’t count toward taxable income, so employees can make their healthcare dollars go further.  And with an HDHP, they may pay lower premiums for their medical insurance.

  • Employees decide how much to put in their HSAs and how to spend the funds.
  • Unused funds carry over from year to year, an incentive to spend wisely.
  • Money in an HSA earns interest in a Community Shores checking account.

How can I help my employees with this transition?

At Community Shores, we offer employers the option of paying the monthly maintenance fee for each of your employees’ HSA account.  When you enter into this agreement, we will confirm with you the number of open employee accounts as of December 31 of the prior year and bill you once in January for the current year’s account fees.

Can I open an HSA if I am self-employed?

Yes, after meeting the HDHP and the other eligibility requirements listed above.  Contributions to the limits listed above can be made by you, family members or any other person.

Where can I get more information?

To get more information, search on Health Savings Accounts at  www.irs.gov

Please be sure to consult with your tax or legal professional for guidance.