by admin | Jan 14, 2025 | Custom Content, Employee Benefits
New to a Health Savings Account (HSA)? Here’s What You Need to Know
As the name suggests, a Health Savings Account(HSA) is a special savings account used to pay for healthcare-related expenses. An HSA has potential financial benefits for now and later. Not only can you save pre-tax dollars in this account to pay for qualified medical expenses (QMEs), but HSAs can also provide valuable retirement benefits.
If you’re new to HSAs, here are some tips to help you get started:
- Understand the Basics:
- Triple Tax Advantage: HSAs offer a unique triple tax advantage: contributions are tax-deductible, earnings grow tax-deferred, and withdrawals for qualified medical expenses are tax-free.
- Eligibility: To be eligible for an HSA, you must be enrolled in a high-deductible health plan (HDHP). A HDHP is an insurance plan with higher deductibles and out-of-pocket costs. However, HDHPs carry lower premiums than traditional insurance plans, and in most cases, the cost savings in premiums alone are significant.
- Contribution Limits: There are annual contribution limits set by the IRS. The HSA contribution limits for 2025 are $4,300 for self-only coverage and $8,550 for family coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution.
2. Maximize Your Contributions:
- Contribute Regularly: Set up automatic contributions to your HSA to make saving consistent and effortless.
- Consider a Catch-Up Contribution: If you’re 55 or older, you can contribute an additional $1,000 as a catch-up contribution.
3. Use Your HSA Strategically:
- Pay for Qualified Medical Expenses: Use your HSA funds to pay for eligible medical expenses, such as doctor visits, prescriptions, and dental care.
- Invest for the Future: Consider investing your HSA funds for long-term growth. This can be a great way to save for other future healthcare needs or even retirement. Once you reach age 65, you can withdraw money from your HSA for any reason without penalty – only ordinary income tax due.
- Unused HSA Funds: HSA funds can be rolled over to the next year. However, if you withdraw funds for non-medical expenses, you’ll pay income tax plus a 20% penalty.
Money that goes in and out of an HSA is tax free as long as payments and reimbursements from the account are used only for Qualified Medical Expenses (QMEs). QMEs are healthcare-related items or services designated by the IRS that you can write off when you do your taxes. There are thousands of medical procedures, services and types of equipment that are considered QMEs, and the IRS frequently updates the list.
It is important to know that your HSA account is yours – not your employers. Unlike healthcare Flexible Spending Accounts (FSAs), which your employer technically owns, your HSA belongs to you. So, when you leave a job, you keep all of the money you’ve saved up in your HSA and can transfer into a new HSA or employer-sponsored HSA at your next job.
The Bottom Line
HSAs are often referred to as triple tax-advantaged and are one of the best savings and investment tools available under the U.S. tax code. As a person ages, medical expenses tend to increase, particularly when reaching retirement age and beyond. Therefore, starting an HSA early and allowing it to accumulate over a long period can contribute greatly to securing your financial future. By understanding the basics of HSAs and following these tips, you can make the most of this valuable financial tool.
by admin | Jan 9, 2025 | Employee Benefits, Health Care Costs
Healthcare costs are projected to rise significantly in 2025. To mitigate these increases, consider these tips:
- Know Your Plan: Take time to review what your health plan covers—and what it doesn’t—to avoid unexpected costs. Understand your health plan’s coverage, including deductibles, co-pays, and out-of-pocket maximums.
- Utilize In-Network Providers: Receiving care from out-of-network providers can dramatically increase costs. Check your plan details to confirm that your provider is in-network before scheduling any appointments.
- Budget Wisely: Plan for potential healthcare expenses throughout the year.
- Ask Questions: Don’t hesitate to ask your doctor questions during visits. If you need care, inquire about alternative treatments or services that are both effective and more affordable.
- Get Annual Check-Ups and Screenings: The best way to ward off many illnesses is to not them sneak up on you.
- Take Care of Your Health: A simple way to save money on healthcare is to stay healthy. By staying at a healthy weight, exercising regularly, and not smoking lowers your risk for health problems.
- Consider using a Health Savings Account (HSA) or a Flexible Spending Account (FSA): Many employers offer an HSA or FSA. These are savings accounts that allow you to set aside pre-tax dollars for healthcare expenses. This can help save you several hundred dollars per year.
- Telehealth: Utilize telehealth services when appropriate to reduce urgent care or doctor’s visits costs.
Staying informed about your health care benefits—including the fine print—can help you save money. By taking these steps, you can help to manage your healthcare costs and protect your financial well-being.
by admin | Dec 12, 2024 | Employee Benefits
Many employee benefits are subject to annual dollar limits that are adjusted for inflation. For 2025, most of these limits have increased. However, some limits, such as those for dependent care Flexible Spending Accounts (FSAs) and Health Savings Account (HSA) catch-up contributions, remain unchanged.
Key Benefit Limits for 2025:
Health Savings Account (HSA) Contributions
- Single Coverage: $4,300 (up $150 from 2024)
- Family Coverage: $8,550 (up $250 from 2024)
- Catch-up Contributions: $1,000
Important Considerations for Employers
Employers should ensure that their payroll systems are updated to reflect the new 2025 benefit limits. Additionally, it’s crucial to communicate these changes to employees to help them make informed decisions about their benefits.
By staying informed about the latest benefit limits, employers can help employees maximize their benefits and plan for their financial future.
by admin | Nov 11, 2024 | Employee Benefits
Employee benefits can be a complex landscape, filled with acronyms and unfamiliar terms. In fact, more than 50% of American adults report that they don’t have a clear understanding of their health insurance. Many people are confused because they reach adulthood without ever learning the basics of health insurance terminology. Illiteracy about health insurance is costly to employees and employers alike. Educating employees on common benefits lingo can help them make informed decisions and maximize their benefits.
We have created a list of the most common terms to help your employees understand and better utilize their health benefits:
- Ancillary (or Voluntary) Benefits: Supplemental benefits not included in most traditional group health insurance plans.
- Co-payment: An amount you pay as your share of the cost for a medical service or item, like a doctor’s visit. Co-pays are most common for emergency room, urgent care and prescription drugs. In some cases, you may be responsible for paying a co‐pay as well as a percentage of the remaining charges.
- Co-insurance: Your share of the cost for a covered health care service, usually calculated as a percentage (like 20%) of the allowed amount for the service. For example, if your plan has a 30% co-insurance rate, the carrier will pay 70% of the allowed amount while you pay the balance.
- Deductible: The amount you owe for covered health care services before your health insurance or plan begins to pay. For example, many plans require an individual to pay $1,000 in cumulative deductibles before they begin paying out.
- Dependent Coverage: Health insurance coverage extended to the spouse and unmarried children up to age 26 who are totally or substantially reliant on their parents for support, thereby defined as “dependent children”.
- Explanation of Benefits (EOB): Every time you use your health insurance, your health plan sends you a record called an “explanation of benefits” (EOB) or “member health statement” that explains how much you owe. The EOB also shows the total cost of care, how much your plan paid and the amount an in-¬network doctor or other healthcare professional is allowed to charge a plan member (called the “allowed amount”).
- Formulary: A list of prescription drugs covered by a health plan that often has different tiers based on the type of covered medication. Prescription medicines listed in one tier may cost you more than those in another tier.
- In-Network Provider: A provider who has a contract with your health insurer or plan to provide services to you at a discount. In-Network providers have contracted with the insurance carrier to accept reduced fees for services provided to plan members. Using in-network providers will cost you less money.
- Open Enrollment: A period during which a health insurance company is required to accept applicants without regard to health history.
- Out-of-Network Provider: A provider who doesn’t have a contract with your health insurer or plan to provide services to you at a pre-negotiated discount. You’ll pay more to see an out-of-network provider.
- Out-of-Pocket Maximum: The limit or most you’ll pay out of your own pocket for services during your insurance plan period (usually one year).
- Premium: The amount you pay for your health insurance or plan each month.
- Qualifying Life Event (QLE): A change in your life that allows you to make changes to your benefits’ coverage outside of the annual open enrollment period. These changes include a change in marital status (marriage, divorce, death of spouse), a change in the number of eligible children (birth, adoption, death, aging-out), and a change in a family member’s benefits eligibility under another plan (losing a job, Medicare or Medicaid eligibility, etc.)
Understanding the terms and acronyms can feel like learning a new language, so it’s helpful to educate your employees. With a good understanding of what some healthcare “benefits lingo” means, it will be easier to find a plan that meets the needs and budget of your company and employees!
by admin | Oct 15, 2024 | Employee Benefits, Flexible Spending Accounts
When it comes to health insurance, there is a lot of jargon and plenty of acronyms. Many people have heard of FSAs, but may not actually know — what is a flexible spending account, exactly?
If you have an employer-sponsored health plan, a flexible spending account (FSA) is often available as part of the benefits package. There are two types of FSAs: one for health and medical expenses and another for dependent care/childcare costs. Both are designed to help you set aside money during the year for out-of-pocket expenses while enjoying tax benefits.
When you contribute to an FSA, the money is taken from your paycheck before taxes are removed and is never taxed. The Federal FSA Program estimates that those with an FSA save 30 percent on healthcare expenses on average.
How Does an FSA Work?
- Contributions: You contribute a portion of your pre-tax salary to your FSA. You set a contribution amount to be deducted from each paycheck, up to the federal limit, which for 2024 is $3,200.
- Rollovers, etc.: Employers have the option of allowing employees to roll over up to $640 in 2024 or they can provide a 2 ½ month grace period during which employees can spend their remaining contributions, but they can’t offer both.
- Reimbursement: Use your FSA funds to pay for qualified medical expenses. You typically submit receipts for reimbursement.
- Tax Benefits: Contributions are made with pre-tax dollars, reducing your taxable income.
What Can You Spend Your FSA Money On?
- Medical expenses: Doctor’s visits, prescriptions, dental care, vision care, and mental health services
- Over-the-counter medications: Many OTC medications, like pain relievers and allergy medications
- Medical equipment: Items such as crutches, wheelchairs, and diabetic supplies
- Dependent care expenses: Childcare or elder care costs, which can include before and after school care, preschool, and adult day care. In 2024, employees may contribute up to $5,000 if filing jointly or $2,500 if filing taxes separately.
Key Points to Remember:
- Use-It-or-Lose-It: Generally, any unused FSA funds at the end of the year are forfeited. However, some plans offer a grace period or carryover options.
- Contribution Limits: There are annual contribution limits for FSAs, set by the IRS.
- Dependent Care Expenses: If you have dependent care expenses, you can use your FSA to pay for them up to a certain limit.
Is an FSA Right for You?
Opening an FSA is a great way to save money on taxes and prepare for healthcare costs. As with other types of savings accounts, it allows you to contribute and stash away money, but in this case, that money is taken out of your paychecks in a set amount and is nontaxable. Check to see if your employer matches contributions as well.
Understanding the rules, benefits, and limitations of these accounts will allow you to maximize their value and ensure you’re making the most of this valuable employee benefit.
by admin | Sep 16, 2024 | Employee Benefits
Get ready for a new wave of talent! Gen Z (born between 1997 and 2012), or Zoomers, is the youngest generation entering the workforce, and they’re bringing fresh perspectives and priorities. Unlike previous generations, Gen Z isn’t just punching a clock. They crave opportunities for personal and professional growth, a workplace that prioritizes mental well-being, and financial security for the future.
Gen Z Wants Traditional Benefits….with a Twist
Even though Gen Z are digital wizards who love technology and new and innovative ways of doing things, they do still want and need more traditional employee health benefits as well. It’s important to provide traditional benefits such as extended health, dental, vision, and disability, but make sure to tweak them so they are more relevant to Gen Z.
For example, including a virtual pharmacy into your prescription drug coverage is likely to resonate with Gen Z. They’re accustomed to having products and services delivered straight to their door, so receiving prescription medications by mail just makes sense to them. Additionally, it’s important to adjust the coverage provided in conventional extended health plans. For example, offering access to a broader array of paramedical practitioners beyond what’s typically included in a traditional plan is essential. Gen Z prefers seeing Chiropractors, Acupuncturists, and Dieticians.
Gen Z Wants Purpose, Not Just a Paycheck: Build a Thriving Workplace
Gen Z isn’t interested in just showing up and collecting a paycheck. They crave a purpose-driven work environment that fosters their growth, well-being, and love of collaboration. So, how do you attract and retain this talented generation?
Create a Culture of Learning and Growth: Offer a mix of benefits that cater to their desire for continuous learning and skill development. Think mentorship programs, skill-building workshops, and opportunities for career advancement. This keeps them engaged and constantly evolving, while also ensuring you have a future-proof workforce.
Align Work with Values: Gen Z wants to feel like their work makes a difference. Provide volunteer opportunities that resonate with their social and environmental concerns.
Gen Z: Work-Life Harmony + Tech-Powered Teams
For Gen Z, work isn’t just about the job, it’s about fitting seamlessly into their lives. That’s why flexible work arrangements are key – think adaptable hours and remote work options. This allows them to maintain a healthy work-life balance and pursue their passions outside of work.
Gen Z also thrives in collaboration. Foster a work environment that encourages open communication, teamwork, and a sense of community.
Financial Fitness for Gen Z
Financial stress is a major burden for Gen Z, with nearly half (48%) reporting it heavily impacts their mental well-being. To attract and retain this talented generation, employers can offer financial wellness programs that go beyond a paycheck.
Imagine offering tools for budgeting, debt management, and long-term financial planning. Add to that benefits like student loan repayment assistance, financial planning education, and accessible advice on saving and investing.
Gen Z and Mental Wellness: It Matters
Mental health is a top priority for Gen Z. Studies show that Gen Z workers have more mental health needs when compared to older generations, with over 75% saying they struggle with anxiety or depression. It’s clear: a healthy work environment is just as important as a paycheck for this generation.
Employers can meet these expectations by offering comprehensive mental health coverage, free counseling sessions, virtual and in-person counseling options, and grief support.
Gen Z Values Telehealth
Zoomers, the digital natives, have grown up in a world where convenience and efficiency are paramount. This translates directly into their expectations for healthcare. Telehealth benefits have become a must-have for employers looking to attract and retain this tech-savvy generation.
The Future of the Workplace
The key to engaging Gen Z lies in understanding their unique values, expectations, and preferences. It’s not just about incentives. Instead, the real task lies in shaping an employee value proposition that recognizes Gen Z’s individual aspirations, progressiveness, and the shifting employment landscape.
