The Internal Revenue Service (IRS) recently announced updated HSA annual contribution limits. An important part of consumer-directed healthcare, HSAs offer participants enrolled in HSA-qualified (HDHP) health plans a way to save on taxes while setting aside money for out-of-pocket healthcare expenses for themselves and their families.
Since 2004, HSAs have skyrocketed in popularity. They are now the second most popular tax-advantaged account next to Flexible Spending Accounts (FSAs). As HSA-qualified high deductible health plans continue to grow, third party administrators have plenty of opportunity to jump into the market.
Unlike an FSA or an HRA, both of which are owned by the employer, HSAs are owned by the individual. This means that the account owner funds the HSA, spends the money (within IRS regulations), earns interest, and chooses whether or not to invest the money. Most importantly, the individual keeps the account (HSA portability) should their employment status change due to job loss, changing company, or retirement. Employers may also choose to contribute to the HSA, but the account owner keeps the funds.
Since they were enacted in 2003, Health Savings Accounts (HSAs) have become an integral part of the consumer directed healthcare landscape for those with a high deductible health plan. One of the chief benefits of having an HSA is that account holders can use that money to pay for a wide range of eligible medical expenses for themselves, their spouses, and their tax dependents.
HSAs have been around for almost two decades and continue to exhibit long-term adoption growth. However, many TPAs have been cautious about adding this account to their services menu. How can TPAs capitalize on this expanding opportunity and enter this consistently growing market?
Some TPAs have been hesitant to enter the HSA market because they either do not want to compete with banks or believe that HSAs require a lot of additional work. However, there is still plenty of opportunity ahead. Those who have not yet capitalized on this still growing market can leverage their knowledge, skills, and business acumen to capture new revenue.
Health Savings Accounts (HSAs) can be a great investment in one’s personal healthcare and financial future. Their versatility, and the fact that these accounts can be kept for life, mean that HSA owners need to adopt strategies for building and using the accounts to their full potential.
Do you know the difference between a HRA vs HSA? The key difference between the two is that an HRA is employer-owned whereas an HSA is employee-owned. With an HSA, the employee keeps the account and can transfer it when he or she changes jobs. Account holders may also invest their HSA funds.
Offering HSAs paired with a High Deductible Health Plan are an important part of many employer-sponsored benefit plans. To improve plan and account adoption, employers, brokers, and third party administrators need to understand employees’ concerns and how an HSA with HDHP can address them.
With the recent expiration of the Families First Coronavirus Response Act (FFCRA), the Biden Administration is implementing a new plan called the “Path Out of the Pandemic.” This includes a number of proposed initiatives to help move the country along a path toward recovery. Some of the action items that will apply to employers and employees are discussed here. COVID-19 Updates For Employers While many Americans are fully vaccinated against COVID-19 (approximately 58% as of