Resource Group Inc.
111 East 85th St. Suite 14C
New York, NY 10028
(212) 779-9300

Resource Group of N.J.
65 Mechanic St. Suite 203
Red Bank, NJ 07701
(732) 842-4800

 

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Insurance

Consumer-Driven Health Plans

You've heard the buzz. You've seen the hype. Consumer-driven health plans may lower costs, change behavior, and save money. The goal is to give consumers “skin in the game” when it comes to allocation of their healthcare dollars. Sounds good but complicated. It might be do-able for a national employer, but could seem out of reach for the small and mid-sized businesses.

Important Note:

These responses are based on preliminary guidance by the Internal Revenue Service, which governs HSA regulations. Additional information is expected from the IRS from time to time. The information set forth herein is not intended as legal advice. You should consult your legal and tax advisers in choosing benefit options that best suit your needs.

Frequently Asked Questions About Health Savings Accounts (HSA)

  1. What is a Health Savings Account (HSA)?
  2. Who is eligible to participate in a Health Savings Account?
  3. What are the advantages to a participant enrolled in a Health Savings Account?
  4. What should employers consider when offering a Health Savings Account?
  5. Where can I find additional resources?

To learn more about how HSAs and may be helpful solutions to business owners and their valued employees, contact Paul Squassi today at (732) 842-4800 ext. 201.

 

 

1. What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a tax-advantaged account participants can use to pay for qualified health expenses they incur while covered under a high deductible medical plan. While HSA dollars may also be used to pay for non-qualified health expenses, such use will be subject to taxation. HSA dollars, contributed by the employer, employee or a qualified family member, accumulate over time with interest or investment earnings, are tax-free, are portable after employment and can be used to pay for qualified health expenses tax-free, or for non-health expenses on a taxable basis.

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2. Who is eligible to participate in a Health Savings Account?

An eligible individual:

  • Is an individual covered by a high-deductible health plan
  • Is not covered by any other medical plan that is not a high-deductible (e.g., on a spouse's plan, except for vision or dental coverage)
  • Is not entitled to benefits under Medicare
  • May not be claimed as a dependent on another person's tax return

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3. What are the advantages to a participant enrolled in a Health Savings Account?

HSAs offer the benefit of tax-advantaged savings and reduced taxable income, which can appeal to a number of different income-level workers. Individuals can set aside income that is tax-free and are able to build an asset that they can use in their retirement years; and/or can reduce the cost of coverage.

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4. What should employers consider when offering a Health Savings Account?

Employers should carefully weigh all consumer plan options and choose one (or more) to best fit their needs. HSAs give individuals the opportunity to plan for future health expenses. They provide options to support retiree benefit strategies and/or the needs of employers interested in portability of coverage. The tax advantages of the accounts are valuable to both employer and employee.

Employers should carefully consider the following about HSAs:

  • The individual immediately owns the money contributed to the account; there is no vesting
  • The HSA funds are portable upon termination of employment
  • Employers do not control how the money is used
  • Qualified health expenses include all services listed under IRS
  • Section 213(d) (except for premiums paid for health coverage), the same section governing FSA coverage
  • Employees can choose to use their funds for non-qualified health expenses; however, the funds are subject to tax, except following disability, Medicare eligibility or death.

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5. Additional Resources

To learn more about how HSAs and may be helpful solutions to business owners and their valued employees, contact Paul Squassi today at (732) 842-4800 ext. 201.

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Resource Group is one of New York and New Jersey's fastest-growing insurance brokerage firms. With over 25 years of experience, we provide a full range of insurance, discount products, and related financial services at competitive rates, and coverages that fit your needs.

We offer a free, no-obligation review of your current insurance portfolio. Please contact us for a free quote request.

At Resource Group, it is our goal to stand behind a promise to provide customer service that is second to none. If you have any questions, please don't hesitate to call or email us.