HSAs and FSAs what you need to know
Small businesses are up against a lot of big challenges. From staying compliant with federal regulations to increasing cash flow and growing the company, it’s no wonder small business owners are stretched to the max. When you throw in competition from larger corporations, those challenges are elevated.
But what makes a small business able to break through those barriers? Great employees. And one easy way to beat the competition for that great talent is to offer flexible health benefits. The problem is that a lot of consumers and employers alike are not well-informed on their plan options.
Think about a typical shopping experience, say, at a grocery store. You likely bring a coupon or two and maybe opt for the generic brand of a certain item over its expensive counterpart. But why don’t you take that same time and consideration when it comes to health care? For business owners, consumer driven health care is a great budget-friendly option that allows you to offer that flexibility.
Two of the most common plans that fall under consumer driven health care are health savings accounts (HSAs) and flexible spending accounts (FSAs). Both of these pre-tax benefits function similarly, but they do have distinct differences on factors such as contribution limits, fund availability and rollover limits.
FSAs were established in 1978 and are owned by the employer and funded by the employee or employer. HSAs were established in 2003 and are owned by the account holder and can be funded by anyone.
And guess what – your employees could potentially have both. In some cases when an individual has medical expenses but also many dental and vision expenses, an appropriate election might be to enroll and contribute to an HSA but also make an annual election for a limited-purpose FSA that is designed to cover only the dental and vision expenses. This is a popular option when an individual has some considerable, expected expenses in the coming year.
The following infographic from PrimePay and the FSA Store explains all of these details. Once you become educated on these types of plans, you will become poised to put together a great benefits package and reign in those great employees.