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What Every Small Group Employer in Tennessee Should Know About Health Savings Accounts (HSA)

They require very little if any regular maintenance by your employees.

The only thing an employee really needs to be aware of during the year is how much is in the account. Because if he wants to pay a medical bill, there needs to be enough money to cover the charge. At the end of the year, the bank administering the account will send a statement telling them how much they can deduct on their income taxes. That’s it. No ongoing paperwork.

You should open the accounts for your employees.

In my experience, when an employer offers an HSA qualified plan and then tells their employees that they can open their own HSA, most of the time, the employee never opens the account. You can do it for them, without putting money in. This will help the employee to get started and also help ensure the future success of the plan and satisfaction of your employee.

An HSA can effectively lower your deductible.

If you have a deductible of say $5000, and you pay this deductible with pre-tax dollars, you will lower your tax bill. If an employee’s total marginal tax rate is 25%, a $5000 deductible becomes an after tax deductible of $3750. The higher your tax rate, the bigger the tax deduction.

You never lose the money you deposit if you don’t spend it this year.

Whatever amount of money that is deposited and not spent, rolls over to the next year. You never lose the money even if you quit, are fired or retire.

You should contribute to your employees’ HSA.

If you, as an employer, contribute something to the HSA, you will jumpstart your employees on their way to using and understanding the benefits of the tax free account. This will contribute greatly in the long run to the success of the plan.

Health Savings Accounts with a HDHP (High Deductible Health Plan) can save a small business money.

Since premiums are usually lower with an HSA, your contribution to the plan, if it’s a percentage of premium, will be less. This can add up to thousands of dollars over time.

At, we have been helping small employers in Tennessee for 20 years craft their insurance plans so that they are as efficient as possible. Call us at 615-376-8899 and we will offer a no obligation consultation on your small group’s health insurance plan

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