BASE^® Blog

On Saturday, October 15th, it is HSA Day!  This “holiday” is targeted at raising more awareness on how important it is to have, and about all the benefits of, the Health Savings Account. 

The Health Savings Account (HSA) is a personal savings account designed to help individuals save and pay for qualified health care expenses.  The employee uses the HSA funds to pay for thousands of eligible items such as copays, over-the-counter medications, dental, vision, and more with tax-free dollars making it an excellent tax benefit to help make the most of every health care dollar. 

The BASE® HSA not only allows employees to pay for their health care expenses; but allows for the opportunity to save for the future, invest funds to build wealth, and create a powerful tool for a retirement portfolio. 

As if you need any excuse to celebrate saving money and offsetting the high cost of health care, BASE® is here to get you in the spirit!  So put on your party hats, hang the streamers, and let’s talk about the HSA!   

Beat inflation with benefits. Beat inflation with an HSA.

Inflation and a declining financial market have resulted in nearly half of Americans unable to cover a $400 emergency medical expense, according to Nasdaq. Compound that with 50% of employees leaving jobs for mental health reasons many HR professionals are facing a perfect employee wellness storm. As employees turn to their employers for financial, physical, and mental support, HSAs are a great benefit addition during Open Enrollment time.

HSAs can relieve burden.

According to a recent study done by Kaiser Family Foundation (KFF), 67% of Americans worry about paying for an unexpected health care bill.  With that, 33% of Americans WILL experience an unexpected health care bill in the next two years.  But there is peace of mind knowing there is money set aside in the HSA to help pay for the bill. 

HSAs are self-care.

Many do not have the means to pay for doctor appointments and prescriptions and because of that, doctor appointments are postponed, and prescriptions not filled.  Preventative care is self-care, it’s crucial to staying healthy, and HSA funds can help pay for these expenses. 

Everyone benefits from HSAs.

Not only does the employer save on taxes when their employees elect to put money in the HSA, they also see employees performing better.  When employees are stressed about things outside of work their work performance suffers.  By having the HSA in place, it can alleviate stress and help keep the employee productive in the workplace.

Save, save, & save.

HSAs are a triple-advantage tax tool.  Employee contributions lower the employee’s taxable income, investments within the HSA makes the account grow, and qualified withdrawals are all tax-free.  When employees set aside money in the HSA, it can help save up to 30% on health care expenses. 

HSAs go with the flow. 

Other tax-deferred accounts are a bit stricter than an HSA.  HSAs can be used for current day health care expenses, or for those future expenses, and when participants reach a certain age, funds can be pulled from the HSA account for retirement.  Employees can change their contribution amounts throughout the year, take the account with them if they change jobs, set beneficiaries, etc. 

Don’t use it.  Don’t lose it. 

Unlike 125 Cafeteria Plans, the employee’s HSA balance will stay in the account as long as it is in there.  There is no deadline for using the funds.  Employees can build up the funds for a rainy-day health care bill well into retirement.  There is even the option to invest the funds to help the HSA funds grow. 

All kinds of uses.

HSA funds can be used for health, dental, and vision expenses. 

Good, better, best.

There is no right or wrong way to use the HSA when it comes to health care.  It’s GOOD to save and cover the typical annual health care expenses, BETTER to save and cover the deductible that comes with health insurance and the out-of-pocket expenses, and it’s BEST to contribute the maximum limit to build a cushion for emergencies, unexpected costs, and health care expenses during retirement. 

Let BASE® help you celebrate HSA Day by providing more information regarding HSAs as many employers are finding themselves re-examining their strategy when it comes to both pay and the overall employee experience.  HSA Day is an opportunity to educate and influence so that we can beat the storm.  BASE® can provide a benefit that helps to care for employees’ wellness needs, including the assistance of the My HSA Planner tool.

For more information on the BASE® Health Savings Account, contact BASE® at 888.386.9680 or visit www.BASEonline.com.

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When it comes to offering health benefits to employees, performing Non-Discrimination Testing (NDT) of those health benefits is very important.  Employers proving that their health benefits are compliant is not just something the IRS suggests but requires.

Non-Discrimination Testing was set in place by the IRS to ensure that certain health and welfare benefit plans do not discriminate in favor of highly compensated or key employees in respect to plan eligibility, pre-tax contributions, and benefits. 

The BASE® NDT is a test that employers can run that will demonstrate whether or not the health benefits that are provided to their employees are being provided fairly, ensuring that all employees will receive fair and equal health benefits.   

What is required by the IRS?

The IRS requires NDT for employers who provide health benefits, such as a Health Reimbursement Arrangement (HRA) or Section 125 Plans such as Flexible Spending Account (FSA). 

Why does testing matter?

The IRS wants to ensure that there is not any discrimination between highly compensated employees (HCEs)/key employees and other employees at the same business.  The test is meant to demonstrate fairness when it comes to providing health benefits among all levels of employees.  If a business is found to have failed to comply, the employer is at risk to pay taxes on the benefits and IRS penalties as well. 

When to test?

The test should be performed before the last day of the current plan year and include all employees that were employed on any given day during that plan year.  It is also highly recommended that an employer tests once early in the year or in the middle of the year, in case additional steps are required to ensure compliance, they will have time to do so. 

How to make testing easier?

To make the tests easier on businesses, employers look to a third-party administration, like BASE®, to help.  Many third-party administrations of health benefits do NOT offer this, but BASE® does. 

What happens if failure occurs?

If the report comes back of a failed result, the recommendation will be to follow the necessary steps to bring the plan into passing status. 

Here at BASE®, we know that testing can be confusing and challenging, but BASE® is here to help employers ensure their compliance on their Section 125 Plans and HRAs and maintain their tax-favored status. 

For more information on the BASE® Non-Discrimination Testing, contact BASE® at 888.386.9680 or visit www.BASEonline.com

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