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Do tax advantages outweigh the cons of an HSA?

Do you remember when you implemented the HSA plan for your employees? Tax advantages, lower costs...maybe even some money in their account you funded.

It all sounded great but is it working the way you intended? Hopefully, but for many employers like you it's not because the disadvantages outweighed any positives.

If you have or are considering implementing an HSA plan make sure you understand the disadvantages as well. Learn more about the pros and cons of an HSA in the video above.

Today's topic: The pros and cons of an HSA plan. Let's start with the pros number one tax advantages. You can contribute to an HSA using pre-tax dollars, which means your over allowing your taxable income. You can also use these pre-tax dollars to pay for your medical expenses on top of that any growth in your HSA is tax deferred income. Number two. You can use an HSA as a retirement vehicle. So you can keep your HSA until you retire and use the funds in there to pay for your Healthcare expenses at that time. In addition. If you're over the age of65, you can use the funds in your HSA to pay for non-healthcare expenses as well. Number three. Typically HSA plans have lower payroll contributions. Although that's a tricky one and number four an employer can contribute to an HSA on your behalf. Now the cons HSA plans have higher deductibles. From a minimum IRS-required deductible of 1,500 to a maximum of 7,500that is a ton of exposure to a high-cost event and can become a real barrier to Care. Number two prescription drug expenses also apply towards that deductible now because more people take prescription drugs. This is a higher frequency high-cost event. This can be a barrier to taking a medication number three hsas can be problematic for some Cost Containment Solutions. There are many cost-containment solutions that incentive members to make good Healthcare Decisions by offering something for free, but because you must meet an IRS required minimum deductible of 1500 dollars a layer of administrative complexity is required in order to stay compliant with IRS regulations. So now that I've outlined the pros and cons of To say plan tune in next week to learn how your HSA plan might be a ticking time Mom. You didn't even know you had more importantly, I'll teach you how to defuse it.

About the Author

Mike Kroupa, Self-Funding Insurance Expert

I grew up in a house that was constantly under construction and the experience helped me uncover one of my passions, remodeling. After running a successful remodeling business with my brother during college, I decided I wanted to keep this as a hobby. Instead, I took my advisor’s recommendation and started down the actuarial path, which ultimately led me to insurance.
Since then, I have focused my career teaching employers how to better manage their health insurance plans. I found myself frustrated year after year of doing the same thing because it didn’t feel like I was making an impact. Healthcare costs were continuing to increase, and it felt like the only options employers were left with was increasing deductibles, increasing contributions, and switching carriers.

There was a turning point for me in 2020 as I found Health Rosetta, an ecosystem for scaling adoption of practical fixes to our health care system. As my clients started adopting these fixes, I found myself getting passionate about what I was doing for the first time. Then I realized my hobby of remodeling was driving the passion because I was remodeling health plans. Even better, I was having an impact because patients (employees, spouses and children) were getting the best care they ever have and saving a lot of money in the process.

Get in contact with Mike: 

Phone: 630.738.1835     Email: mkroupa@gocgo.com     LinkedIn: Mike Kroupa

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