Why offer a Health Savings Account?

A Health Savings Account, or HSA, is a unique, tax-advantaged account that your employees can use to pay for current or future healthcare expenses.

When you offer an HSA, you’re really offering tax savings, investment opportunities, and a retirement savings option. HSA accountholders can use their funds now on qualified healthcare expenses or save for their future through self-directed investment options. Plus, funds in an HSA roll over from year to year and earns interest tax-free*. 

As an employer, you’re always looking for ways to increase recruitment and retention. With an HSA, you are demonstrating the value you place on your employees’ health and future.

*Earnings are exempt from federal taxes. Most states do not tax HSA earnings. However, state tax treatment varies. Please consult with a tax advisor or the state department of revenue for more information.

Triple tax advantage

Health savings accounts offer a three-pronged tax benefit:

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Tax-free contributions

Contributions made via payroll deduction are tax-free which effectively lowers taxable income.

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Investment growth

HSA funds are eligible for investment and enjoy tax-free growth potential.

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When HSA funds are used for qualified, eligible healthcare expenses, taxes don’t apply.

FICA tax savings

With an HSA, employers enjoy tax savings, too.

HSAs are widely known for the tax advantages leveraged by the employee but what’s in it for the employer? The answer: more tax savings! While employees are happily enjoying the tax advantage hat trick, employers will see lower payroll taxes and substantial FICA savings.

Employers don’t pay FICA taxes on employees’ HSA pre-tax payroll contributions resulting in a 7.65% savings. And for every pre-tax dollar contributed to an HSA, that tax savings grows. Some employers may consider making contributions to their employees’ HSAs. Employer HSA contributions are also tax-deductible as a business expense, so you benefit on the frontend and on the backend.

Simply put, the more employees who have HSAs and make HSA contributions, the lower your payroll taxes and the greater your income and FICA tax savings.

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Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) are similar in a lot of ways.  But the HSA stands out from the crowd with its unique ability to provide triple tax savings as well as tax advantages for the employer.

Let’s take a closer look at how an HSA is different from a FSA.   

Paired exclusively with a high deductible health plan (HDHP)Can be paired with any health insurance plan
Account funds can be contributed by both the employer and the employee (up to the limit set by the IRS). Bonus: Funds contributed via payroll deduction provide tax savings for you as the employer! Funds are contributed by the employee only
Owned by the employee – the account travels with the employee even if through retirement or a change in employment Owned by the employer – this account is employer-sponsored meaning enrollment is contingent upon employment
Funds roll over year to year and belong to the accountholder no matter whatFSA funds are subject to the “use it or lose it” rule and participation in the account is terminated upon a change in employment status
Funds are available for use as they are contributedTotal annual contribution is available for use on day 1 of the plan year
HSA funds are used for qualified, eligible healthcare expenses. Bonus: distributions used on eligible expenses are not subject to tax!No opportunity for investments
Funds can be invested (an ROI for the participant). Bonus: investment growth is tax free!Tax advantages – contributions and distributions for eligible expenses are tax free

HSA Bank is your partner dedicated to account services and solutions.

As one of the first and largest HSA providers in the country, we are passionate about HSAs. We have built our reputation of world-class service and expertise through our focus on Health Savings Accounts.

HSA Bank has been a leader in health accounts for over two decades offering employees, employers, partners, and advisors innovative products and resources that drive down healthcare costs, encourage engagement, and assist with decision-making.  We are committed to helping accountholders spend smartly on their healthcare now and save for the future.

HSA Bank takes privacy and protection seriously. We work hard to keep your data safe and secure with fraud monitoring and in compliance with privacy rules. We effectively partner with brokers, administrators, and payroll vendors taking that item off your to do list and enhancing the employee experience. Your employees will have access to 24/7 support from hundreds of representatives available via phone, email, and mobile app as well as a library of resources and tools helping them manage their account any time, any place.    

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Years of experience

Our track record speaks for itself. We’ve been a trusted leader in the industry for over 20 years.

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One-vendor approach

We are the bank, custodian, and administrator of the account streamlining the implementation and administration for employers and employees.

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Employer Resource Center

Dedicated site offering you the tools and materials that support your plan and your employees.

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The HSA Bank Health Benefits Debit Card, a special-purpose Visa© card, can be used to pay for medical-related expenses across all accounts - Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), and Flexible Spending Accounts (FSAs).

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Dedicated account team

Your dedicated HSA Bank team is available to answer questions, help you choose the right plan, and set you up for success by offering training and enrollment meetings, lunch 'n learns, or hosting webinars.