Contributing to California
Small Group Health Savings
Accounts
Now that you’ve decided to move
forward with offering your
employees a
Health Savings Account
benefit, contribution then
becomes the next challenge.
Contribute too little and you’re
walking a fine line of
disaster. Here’s some useful
tips to make sure you’re
successful and you’re employees
are happy.
-Consider an Employer
Contribution of 50% of
deductible Your employees
are now subject to a large
deductible which they may or may
not be accustomed. Make sure
the percentage contribution paid
to each Employee Health Savings
Accounts is the same for each
employee. Not only is it the
right thing to do..it is the
law!
-Establish a consistent
practice of contributing funds Make
sure you deposit funds to the
employee owned accounts
routinely and on a set
schedule. Remember, the
employees you count on are
depending on these dollars for
medical care. If they don’t
have access to the dollars for
health expense, even if the
money is forthcoming, the Health
Savings Account strategy is at
risk because the employees feel
left out in the cold. The
deposit can be automated by the
Health Savings Account
Administrator so you don’t even
have to think about it.
-Employee side contributions
Promote the availability of
employee side contributions to
the accounts. Remember, both
employer and employee can
contribute funds to the account
in the same year as long as the
annual contribution limit is not
exceeded. The Health Savings
Account Administrator will
usually offer an auto debit
system and integrated payroll
deductions can be arranged to
keep it as simple and efficient
as possible.
-Educate your employees on
roll-over opportunities There
are new opportunities now for
Health Savings Account
subscribers to ‘roll-over’ or
transfer funds one time from
IRA, Flex 125 plans, and unused
funds in Health Reimbursement
Accounts (HRA’s). A bulk
deposit from a previously funded
account is a great way to
jump-start the health benefits.
-Usage outside the health
plan Employees are also
allowed to spend tax free funds
for qualified medical expenses
both inside and outside the
qualified health insurance
plan. Visit our section listing
qualified health expenses
for specifics, but the list is
actually quite extensive and
expenses such as dental, medical
equipment and vision care can
qualify. When spending on funds
outside the health plan it is
absolutely critical to maintain
receipts and records of the
transactions for tax purposes.
-Employees approaching
Medicare For your
employees approaching Medicare a
heavy HSA contribution strategy
may be beneficial, particularly
if the member has little current
health expenses, because the
employee can use the funds
accruing tax free to pay for
Medicare premiums and expenses.
This is allowed even after the
employee has enrolled in
Medicare and a supplement. The
employee would no longer be
allowed to make contributions
after enrolling in Medicare.
Mainly the most important thing
you can do is create a fair &
responsible HSA benefit package
which is clearly and concisely
delivered. The program will be
successful provided you’ve
educated well and contributed
enough to cover routine
expenses.
Other
important
resources:
California
Small Group
health quote
California
Small Group
online
doctor
listing
California
Group
Enrollment
and
Eligibility
Center
