Health Savings Account

A health savings account, or HSA, from Blue Cross Blue Shield of Michigan is a win-win for employers and employees. This type of account not only helps save on health care but it also offers tax savings and investment options.

The value of an HSA

1.
HSA-compatible plans usually have lower premiums.
2.
Funds, including withdrawals for qualified expenses, are tax free.
3.
Employees can invest their money after a certain balance.
4.
Funds can be used for anyone covered by the health plan.

How an HSA works

Like all consumer-directed health spending accounts, an HSA helps your employee budget for health care expenses. HSAs have a few unique pieces to consider though.

Unlike other options, an HSA is more like a 401(k). Your employee owns the account funds, which roll over, and they get to choose how to spend their money. Employees can use it all on medical expenses, or they can build up a retirement investment account. HSAs can be funded by employers, employees or both.

Because your employees can see how their funds are used, an HSA often translates to more responsible health care spending.

Offering an HSA is a good choice for those who want to spend less time managing employee health care. As a cost-sharing plan, it can also help lower company expenses. Employees will benefit, too, because HSAs offer a lot of tax savings and investment choices.

You can learn more about how an HSA stacks up to other account types with our Consumer-Directed Health Comparision Guide (PDF).

HSA-compatible plans

These plans usually have lower monthly premiums and offer a wide range of benefits, including everything from office visits and maternity care to inpatient hospital and preventive care.

Want to see plan details? We offer an HSA-compatible plan for each group size.

If you have 1,000 employees or more, connect with us for a customized solution.

How employers contribute funds

Although HSAs are employee owned, employers can contribute as well. In fact, employer contributions are the best way to motivate employees to participate in an HSA. 

A 2019 Employee Benefit Research Institute® study showed that when employers contributed to HSAs, total contributions were nearly $400 higher.

Not only that, when employers make payroll contributions to their employees' HSAs, they reduce their own tax burden. They also lessen their requirements for paying into things like worker's compensation and state and federal unemployment. Contributions also get treated as a deductible business expense.

Employers can contribute funds one of three ways:

  1. One lump sum at the beginning of the plan year
  2. Equal contributions per pay period
  3. Lump-sum contribution and equal contributions per pay period

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