Healthcare can be clunky and difficult to understand because there are so many options available and regulations are constantly in flux, changing from year to year. Today we’re breaking down the Health Savings Account (HSA) for you!
What is an HSA?
A health savings account, or HSA, is an account used in conjunction with a high-deductible health insurance policy. It allows users to save money, tax-free, against medical expenses. Individuals may decide how much they would like to contribute to an HSA within certain government-mandated limits. An HSA account is employee owned and can be funded by employer dollars. The balance in an HSA can roll over from year-to-year making it portable, so employees can take the account with them from one employer to another. This is a significant value to employees.
Why choose an HSA?
Health savings accounts offer multiple tax advantages: contributions are pre-tax/tax deductible; the money is able to grow tax-free; and the money can be used for benefits tax-free. Additionally, health savings accounts can be invested in mutual funds, stocks, and other investment tools.
Why should an employer offer an HSA?
A healthy 65-year-old male retiree may require $144,000 to cover healthcare expenses throughout retirement. The estimated cost for a 65-year-old female is $156,000.
It’s also true that one-third of Americans report that they have no retirement savings. Of those that do, 23 percent have less than $10,000 saved.
Employers have the opportunity to help their valued employees combat this issue head-on!
HSAs in 2019
The Internal Revenue Service announced that the HSA limit would be increased to account for inflation. These changes are set to go into effect on January 1, 2019.
For the HSA contribution limit, self-only contributions have increased from $3,450 to $3,500; the family limit increased from $6,900 to $7,000.
Due to these changes, employers that sponsor HSA plans may adjust their plan design for 2019. Any plan changes, including the new limits, must also be communicated to employees.