What You Need to Know About Financial Health Savings Accounts

Typically, maintaining our financial and health accounts can be an uphill task if not well planned. Most people tend to cast a blind eye on this vital issue that often causes a huge problem if not well prepared. However, let’s get to know more about these health savings accounts (HSA).

What Is A Health Saving Account?

Health Savings Accounts are individual-owned accounts that cover medical expenses for employers and employees.

Essentially, it allows individuals with high-deductible Health Plans to pay their healthcare expenses, and at the same time save for any future liability, usually on a tax-favored basis. This is an essential feature of HSA that would make the Frontline PR Company consider it as a wise option for its workers.

Let us consider some of the advantages that would occur as a result of the implementation of the HSA option in the company.

Advantages

Pre-tax Contributions In HSA’s

Typically, the contributions made through HSA comes with free-tax dollars. Thus, they are not subject to federal income tax deductions.
Convenience Ideally

HSA is a consumer-driven healthcare option where the contribution made by the employees gets in their account anytime. Also, HSA issues debit cards, which would allow workers to remit their payments right away without any inconveniences.
Tax-Free Earnings

Any earnings and interests that accumulate are exempt from taxation. That would let the workers gather even more contributions for their healthcare needs.

Disadvantages

High Deductible Requirements

Though the workers at Frontline PR would pay less in premiums monthly, they would be pressured to make a high-deductible contribution which would increase the overall health care cost.
Taxes And Penalties

Implementing this health insurance plan may result in a penalty of about 20% for workers below the age of 65, especially when they withdraw funds to cover non-medical expenses.
Unexpected Health Care Costs

Often, workers at the company may be obliged to contribute higher to the healthcare costs beyond what they had allocated. At times, workers who are underpaid may not be able to meet HSAs charges and expenses.

Alternative Option to HSA Option

Health Saving Accounts is a wise option for the company; however, the company can also incorporate a Flexible Spending Account (FSA) initially provided.

Since FSA allows employees to set aside pretax earnings to pay for the medical expenses, the approach would help them meet HSAs charges and expenses.

Fundamentally, integrating a limited-purpose FSA would allow the employees to cover additional expenses such as dental and vision costs.

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