Health Savings Account

As its name suggests, a health savings account is a savings account that allows employees to put away money on a tax-free basis to pay for qualified medical expenses. In order to open a health savings account, employees must already be enrolled in High Deductible Health Plan (HDHP), which is typically most healthcare plans that are offered by employers.

Unlike a health reimbursement arrangement, a health savings account is owned by the employee. This means that should the employee move jobs, the health savings account and all of its funds may be transferred with the employee. Health savings accounts also give employees more control; anyone can fund an HSA, meaning that the employee, employer, or both can contribute to the savings. Plus, the IRS sets the guidelines for what can be considered a qualified expense for a health savings account, while the employer dictates what is covered under a health reimbursement arrangement.

 

Benefits for Employees

Aside from giving employees more control of their funds, health savings accounts offer numerous tax benefits for account holders. The contributions to the account are tax-deductible, the interest earned is tax-free, and any withdrawals from the account can be made without a tax penalty.

A major benefit of an HSA for employees is its portability. Moving companies or jobs will not disqualify employees from their HSA or its accrued funds. Plus, should an employee change their insurance plan, the health savings account remains available for any qualified medical expenses in the future.

For more information about health savings accounts, schedule a consultation with one of our expert insurance brokers by calling us at 206-397-8012, or by filling out our online form. At LHUI, we pride ourselves as a leader in the insurance company marketplace here in Seattle, Washington. With over 25 years of experience, we are confident in our ability to tailor a plan perfect for you and your company.