NEW YORK, Oct. 22, 2018 /PRNewswire/ -- HSA administration company, Clarity Benefit Solutions, explains how to help workers invest in their HSAs.
Health Savings Accounts (HSAs) are a wonderful tool for employees—allowing those with a High Deductible Health Plan (HDHP) to set aside pre-taxed funds to pay for an array of health expenses. A little-known advantage of HSAs is that the money can be reserved for medical expenses incurred in retirement. Employers need to provide their employees with all the tools they need to truly invest in their HSAs.
While many employees most likely have an HDHP, they may not know about HSAs. When an employee enrolls in an HSA and contributes to the account, the contribution is tax-free, or tax deductible if it is contributed after tax. Traditional 401(k) plan contributions are simply tax-deferred. This money can be used for a host of medical expenses, such as vision and dental expenses. Plus, those employees looking at their health long-term can set aside money for medical expenses that happen in retirement. Studies show that couples may need upward of $350,000 to pay for medical expenses during their Golden Years—a daunting number that may look less frightening if there are funds reserved to parlay those expenses.
Employers should ensure the employees thoroughly understand that HSA contributions grow, compound, and are an investment just like with a retirement account—as long as the employee pays medical expenses out of pocket and does not dip into the HSA account. This should not pose too much of a challenge to younger generation employees that are generally in good health. The funds do rollover year after year.
Additionally, employers should emphasize that employees can take the account with them if they happen to leave the company—and also contribute to the account up to the age of 65. After the age of the 65, the funds can be withdrawn for any use without proof of medical expenses. However, before that age, if the money is withdrawn for another purpose it will be taxed at standard income rates.
About Clarity Benefit Solutions: Clarity Benefit Solutions provides technology that makes the health insurance plan selection process fast, easy, and straightforward. For over two decades, we have provided clients with industry-leading technology, compliance, and exceptional customer service. Our offering is designed to save time and lower the costs of managing benefits while also promoting employee self-service and automated ACA compliance.
SOURCE Clarity Benefit Solutions