Employee health savings accounts (HSA) are more than a benefit for employees — they’re a benefit for employers, too. Employers who think beyond the traditional mix of health, dental, and vision benefits can enhance cost savings and boost workforce health by incorporating HSA-eligible plans and HSAs into their offerings.
An Anthem survey found that 58% of surveyed employees reported financial stress as a significant life issue. With the total U.S. household debt reaching $17.29 trillion at the end of 2023, this stress is not a surprise: almost all adult age groups reported financial concerns in a recent American Psychological Association survey. In 2023, more employers became aware of the impact of inflation on employees and began offering additional financial wellness benefits like an HSA.
In addition to taking care of employee needs and expectations, HSAs provide positive impacts for employers as well. Let’s take a closer look at a few key benefits of an HSA spending account:
1. Lower Monthly Premiums
HSAs are only available to employees in an HSA-eligible plan, also called a high-deductible health plan (HDHP). One of the benefits of an HDHP is that monthly premiums are lower than traditional health plans, and the savings is typically realized for both employees and employers.
For example, in 2023, employers paid an average of $7,399 in premiums per employee on a single PPO plan. In contrast, they paid $6,561 in premiums per employee on a single HDHP with a savings option like an HSA. The money saved in premiums can be used to offset the expected 7% rise in healthcare costs, used elsewhere in a company’s budget, or added to employees’ HSA contributions to enhance their overall compensation package.
2. Reduced Tax Obligations
HSAs have a well-known triple tax benefit:
- When employers contribute to their employees’ HSAs, what they contribute is tax deductible. Likewise, employee contributions can be taken out as a pre-tax payroll deduction, thus, deducted from their tax returns. This is an attractive perk to employees, especially as part of a robust total rewards package aimed at attracting and retaining top talent.
- Employees won’t pay tax on account growth from HSA interest and investments.
- Qualified items are exempt from sales tax when employees use their HSA funds to purchase them.
Additionally, the amount an organization contributes to an employee HSA is not subject to the Federal Insurance Contribution Act (FICA) or Federal Unemployment Tax Act (FUTA) — equaling a 7.65% savings per employee salary.
3. Long-Term Investment Strategies
In addition to lower premiums and payroll tax deductions, employees can invest their HSA dollars to improve their ability to cover medical costs during retirement.
HSAs are also a popular choice for younger, forward-thinking employees, such as Millennials and Gen Zers, who make up 60% of national HSA investments. These groups are seizing the opportunity to save and invest, as many of them do not have major health conditions and see a chance to grow their money for the future. Given that almost half of today’s workforce is made up of adults ages 18-43, it is essential for employers to take their employee benefits beyond the traditional medical benefits. This involves incorporating an HSA-eligible HDHP option to attract the right talent and foster your organization's growth.
Bringing Benefits Together
HSAs can significantly contribute to helping employees lead financially healthy lives, enabling them to come to work focused and fully present. Companies also realize tax savings returns, top talent retention, and increased productivity. Employers who engage with trusted health partners like Anthem can pull physical and financial well-being benefits together under one roof, thereby streamlining employee experiences and increasing value for both businesses and their workforce.