The IAA One Minute Blog

The number of people with health savings accounts (HSAs) has ballooned over the past few years. HSAs can be a great supplement to certain health plans.

The Growth of HSAs

HSAs allow consumers to save and pay for medical care free of federal income taxes. Balances are carried from year to year, and consumers can often invest money for tax free growth. Contributions are deducted from pre-tax income, and any contributions employees make from personal funds are tax-deductible.

The number of HSAs has been growing by about one million a year, reaching more than 6.5 million in 2012 according to research published in the journal, “Health Affairs”.

Adoption of HSAs by workers at the biggest employers, while still relatively limited, nearly tripled in eight years, researchers found.

These accounts are not available to everyone; they must be used with a specific type of health insurance plan with a high deductible. Typically, the health plans linked to these accounts offer lower premiums because employees pay more out of their own pocket before meeting the deductible.

Higher income families are much more likely to fund the accounts the analysis found.

Planning for Medical Expenses

Other accounts that can help consumers plan for medical expenses are health reimbursement accounts (HRAs) and flexible spending accounts (FSAs).

A HRA is a medical spending account that allows employers to offer tax exempt funding for employee medical expenses. Using a HRA provides substantial tax advantages for both employers and employees. Because the employer funds the plan, any reimbursement distribution requested by participating employees is considered tax deductible for the company. Similarly, reimbursement dollars received by the employee are tax free so they don’t affect vital income levels.

By offsetting upfront healthcare costs and providing a non-taxable resource for employers and employees alike, HRAs benefit both the company at large, as well as each participating individual.

Insurance Administrator of America offers enhanced HRAs. With an enhanced HRA you can:

• Direct claims payments to the plan provider
• Integrate pre-tax payroll contributions with Section 125 reimbursement
• Pay as you go or set up a pre-funded IAA account
• Pre-empt state health benefit requirements
• Share plan costs between employer and employee

FSAs provide employees with pre-tax reimbursements for healthcare expenses. When combined with a high deductible healthcare plan, FSAs are a great way to reduce the costs of traditional health insurance while providing benefits and coverage specifically tailored to the needs of each employee.

IAA has partnered with MySource to provide our clients with an easy to use FSA debit card. The MySource FSA debit card is an easy and convenient way for employees to take advantage of FSA benefits without the hassle of lengthy claims forms and receipt collection.

How IAA can Help

IAA can help improve the life of your business by helping to create a healthcare plan that works with a FSA, HRA or HSA. IAA can also help you add an account to an already existing plan. These types of supplemental accounts are great for employers and employees alike.  Contact IAA today to learn more about how these accounts can help your business grow.

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