by WEX Benefits
Demand for health savings accounts (HSAs) has never been higher. The number of HSAs exceeded 30 million in 2020, which was more than double the number of accounts that were open just five years earlier, as more employees are drawn to an HSA’s many tax advantages. But your employees aren’t the only ones who save with an HSA. You save too! As we continue our open enrollment series, we break down how employers save when they offer an HSA.
How employers save with an HSA #1:
HDHPs are more affordable
Your employees are required to participate in high-deductible health plans (HDHPs). HDHPs, as their names suggest, come with higher deductibles for employees (their limits are set by the IRS). However, they’re able to save because these plans come with lower premiums. And employers save on their share of premiums, too.
How employers save with an HSA #2:
Employer contributions are tax-free
To counter the cost of higher deductibles, many employers provide their HSA participants with a standalone contribution or matching any HSA funds that employees contribute. In 2019, the average employer HSA contribution was $880. Your contributions to an HSA, like your employees’ contributions, are tax-free.
Encouraging HSA participation is also a win for the long-term financial wellness of your employees, since HSAs are a savvy long-term retirement-planning tool. And that’s a win for you and your employees, since the cost of financial stress can be high for your business.
How employers save with an HSA #3:
Retention gives you big savings
The cost of employee turnover is not a one-size-fits-all cost. But, no matter the variables at your business, the cost is substantial. That’s why many employers are looking for ways to offer creative and comprehensive employee benefits to their employees to retain talent and also differentiate themselves against their competition.
Today, HSAs are so popular that offering one is more of a norm than a differentiator. However, you can ensure you’re offering an HSA that stands out by providing participants with a contribution, offering innovative technology that makes it easy for employees to spend their funds, and enhancing the investment experience so your employees have more options to grow their funds.
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