Health savings accounts: A way to budget for medical expenses

Health savings accounts (HSAs) can be a way for employees and employers to take some of the sting out of high-deductible health insurance plans. HSAs allow employees to set aside money for qualified health expenses while potentially gaining some tax benefits and building savings along the way. With high-deductible health plans, participants must pay the initial cost of medical care; after a certain dollar amount, the insurance takes care of the rest. For plan year 2016 and 2017, a high-deductible plan must have a minimum deductible of $1,300 for individuals and $2,600 for families.

While the relatively out-of-pocket cost can be a downside of these plans, participants do have the benefit of setting aside money for care, tax-free, in an HSA. In plan year 2017, individuals can set aside $3,400 tax-free in an HSA, with families allowed to set aside $6,750. Money placed in an HSA does not count in an employee’s gross income, which can lead to a lower tax bill. Moreover, companies with widespread HSA participation can attain lower payroll taxes, too.

Individuals can rollover unspent HSA contributions into the next plan year. In short, an HSA is exactly what it’s called: a savings account to be drawn upon when needed. The savings can be invested within the HSA, much like a defined contribution plan such as a 401(k). And some HSAs can later be rolled into other investment vehicles, such as mutual funds.

For more information on Health Savings Accounts, contact an employee benefits client service team member at 847-307-6100 (Deer Park, Ill.), 312-606-4800 (Chicago), 972-770-5010 (Dallas) or 405-840-3033 (Oklahoma City), or contact us via the Web. We’re here to help — and happy to help.