Here’s a top ten list of reasons why employers and employees should establish health savings accounts (HSAs).
1. HSAs’ indexed figures are released earlier than any other benefits.’ The chart below displays the 2012 HSA limits.
2. Anyone can contribute to an individual’s HSA during the year—the employer and the employee.
3. HSAs roll over from year to year. There is no use-it-or-lose-it requirement like cafeteria plans have.
4. The maximum annual contribution may be deposited into an HSA even if it is established mid-year.
5. There is no dollar limit to the amount that may accumulate in an HSA.
6. Disbursements for qualified medical expenses are not taxable.
7. HSA growth through interest and dividends is not taxable.
8. HSA contributions are not taxable.
9. HSAs belong to the account holder and are retained by the participant when changing jobs.
10. HSA-eligible high-deductible health plans can save premiums for both employers and employees.
Health Savings Account (HSA) 2011 2012
Minimum Deductible Amounts for Qualifying High-Deductible Health Plans (HDHP)
Individual Coverage $1,200 $1,200
Family Coverage 2,400 2,400
Maximum Contribution Levels
Individual Coverage 3,050 3,100
Family Coverage 6,150 6,250
Catch Up Contribution for Those 55 and Over 1,000 1,000
Maximum for HDHP Out-of-Pocket Expenses
Individual Coverage 5,950 6,050
Family Coverage 11,900 12,100
Congress mandates that cost-of-living adjustments for HSAs must be released by June 1 of every year. The early release of HSA minimums and maximums each calendar year ensures that plan sponsors and their employees have ample time to review plan design options and prepare brochures and educational materials ahead of open enrollment.
The addition of an HSA to your clients’ benefits programs drives savings in two important ways: First, because HSA-empowered consumers lower total health care costs, insurance carriers can pass along lower premiums. And secondly, like FSAs, employer contributions to HSAs help reduce payroll tax expense.
The information contained in this article is not intended to be legal, accounting, or other professional advice. We assume no liability whatsoever in connection with its use, nor are these comments directed to specific situations.
