Small Businesses

If you run a small business without offering a health savings account (HSA) option to your employees, here is a popular and relatively inexpensive benefit that you can provide. HAS is a type of savings account that lets you and your employees set aside money on a pre-tax basis to pay for qualified medical expenses.  You, the employer, set up the plan with your health benefits provider, and your employees then elect to contribute pre-tax amounts directly into their own accounts.

Because the accounts are set up with pre-tax funds, any contributions your employees make will lower federal taxable income, and you, the employer, also get a deduction for your contribution if you choose to make one. Amounts are then invested and the earnings from those investments are tax-free.

Employees can use their savings for co-pays and other qualified medical expenses such as copays, X-ray fees, physical therapy, and, potentially, braces, teeth cleaning, and contact lenses depending on your company’s health plan. But they cannot pay their insurance premiums with their HSA savings.

However, there are limitations. Health Savings Account is allowed only if you have an existing high deductible health-care plan. This plan comes with lower premiums but more amounts that will need to be paid out of pocket before coverage kicks in. The IRS defines a high-deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family for 2021.

Individuals and Families

HAS lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in an HSA, you may be able to lower your overall health care costs. Generally, you cannot use HSA funds to pay premiums.

You can use the funds in an HSA at any time to pay for qualified medical expenses. However, you may contribute only if you have a High Deductible Health Plan (HDHP). This plan only covers preventive services before you reach the deductible.

For year 2021, Covered California has 4 insurance carriers with this plan option: Oscar, Kaiser, Health Net and Blue Shield.

Self-employed people can open up their own plans as long as they have a qualified high-deductible health insurance plan.

For plan year 2021, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family. When you view plans in the Marketplace, you can see if they’re “HSA-eligible.”

For 2021, you can contribute up to $3,600 for self-only coverage and up to $7,200 for family coverage.  HSA funds roll over year to year if you do not spend them. An HSA may earn interest or other earnings, which are not taxable.

If you want to know more about Health Savings Account, Skyline Benefit is an official Covered California storefront and certified agency with the expertise in HSAs. You can click here for an instant quote or contact us at (714) 888-5116