Happy employees are efficient employees, and it’s your job as an employer to ensure that your team is in tiptop shape. You want them to be as motivated, efficient, and diligent as possible—all the while believing in the core values of the company itself. One such facet of your employees’ productivity is the benefits you offer them. From a 401k, medical and dental insurance, to a Roth IRA, any piece of infrastructure that says ‘job stability’ and provides value to their life is going to help your team improve and feel valued.
Yet, outside of the typical benefits gamut, there are a few options that employers rarely offer. Ever heard of an HSA (health savings account)? Better yet, why should you offer one?
An HSA is Tax Free
In the name of keeping things simple, the health savings account you offer is tax free. Any bit contributed to it isn’t taxed, the funds grow without tax, and any time your employee needs to withdraw from the account (for medical reasons) it will, as you guessed it, not be taxed. To this end, your employees will be happy to know they have an alternative fund that will remain untaxed.
A Health Savings Account Can Be Invested
You heard that right. The fund that’s established specifically for medical needs can, indeed, be invested. When paired with its tax-free nature, it becomes an incredibly appetizing option for employees. You may want to encourage them to seek investment advice, or to try and perhaps find their own voice within this realm (many employees decide to allocate their 401k on their own). The more you encourage your employees to prepare for their future, the more involved they will become with the process.
Portability
The HSA, unlike other accounts, can roll over to other jobs. This means your employees can take it with them! No matter where they go, if they stay or transfer to a new employer, the funds in their health savings account will remain within their possession—and never become inaccessible. This is extremely appealing to employees who have a 401k account tied up in multiple jobs (it’s evermore apparent now, too, being that millennials are constantly skipping around positions in the job universe).
It’s Not Taxed for You
Typically, employers (like yourself) make contributions through payroll deposits with pre-tax dollars. When you make a contribution to your employee’s health savings account, it’s exempt from federal and state taxes—which is beneficial for both parties. Ensure that your employee is familiar with the ins and outs of an HSA, however, and keep them up-to-date with the HSA tax form, as they might even find it beneficial to roll over other benefit-related accounts and streamline them into their new health savings account. You can also make contributions for them that, again, won’t be taxed.
Reimbursements, They’re Valuable
Make sure that your employees know how valuable it is to keep track of their medical receipts. If they pay out-of-pocket for literally any medical expense, these are subject to a reimbursement later in the future. Measuring every bit of liquidity that focuses on an employee’s medical needs is a practice that goes hand-in-hand with maximizing the potential of using a health savings account. As long as they have the receipts to prove they spent the money on actual medical expenses, they can then use the money in their account to reimburse themselves. And, if you’re wondering, this too is tax free.
It Helps More Than Just Them
Believe it or not, your employee can use their HSA funds to pay for their family members—if and only they claim them as dependents. Still, this is usually a no-brainer, seeing as spouses work together to support each other and their children. Having a fund that services the entire family and one that’s tax free can be a vital tool for survival if the future holds unforeseen medical surprises.
What’s one of the biggest sources of debt in America? Medical expenses. Establishing a tax-free account for future medical problems is the same thing as investing in retirement. This type of benefit is a great way to attract quality talent and distinguish your company as a cut above the rest.
