Undoubtedly, businesses benefit from offering HSA programs to their employees. While there are negative consequences in terms of employee distrust, employers still have many positive reasons to avoid tradition health insurance plans in favor of alternative health care plans such as HSAs (Heath Savings Accounts). Following is a brief list of the pros and cons of business HSA. Sadly, many companies will not consider the cons, as they are not interested in anything other than their bottom line when providing benefits to employees. As a result, one must conclude that it is a good idea for one's business to offer an HSA program.
Pros:
- Business HSA will always be a good idea for businesses if they provide employee health care, as High Deductible Health Plans are so much cheaper than regular health insurance. Various industry analysts claim that an employer can save as much as twenty percent on health care costs. Because the deductibles are so high, the monthly premiums are so low.
- Establishing HSAs shifts the cost of health care from employer to employee. Since the employees must use their own accounts, employers feel that they will not use as many services that would otherwise be available. In addition, the insurance companies prefer the employees to use their own cash, as it considerably reduces their risks as well.
- Contributions made on behalf of the employees are tax-deductible to the employer.
- FICA (Federal Insurance Contributions Act) liabilities may be reduced in some situations.
- Many business owners feel that by providing employer-sponsored HSAs, their staff will be receptive to the idea because they can better control or manage their health care. It is assumed that the employee can make his/her own choices without insurance company intervention.
- Small business owners feel that they can compete with larger companies in attracting employees if they offer HSA.
- Companies that have employees earning huge salaries will find the program advantageous, as it is a legitimate tax shelter.
- Contributions do not have to be on a regular timely schedule. For example, monthly deposits in a consistent amount are not required. This helps businesses through poorer months of the year especially when business is seasonal.
- In addition to the immediate cost savings for employers, there are reduced labor costs, as a staff member is not required to administer the plan. Employees manage their own accounts.
- Employers can show employees the real amount that is contributed on their behalf. There is a tangible dollar amount to the program whereas when providing group health insurance, employees do not necessarily know how much the employer has spent nor is the amount directly attributed to the employee.
Cons:
Indeed, the major problem with employer-sponsored HSAs is negative employee perception. Because health care costs are being shifted from the employer to the staff members, many are skeptical of the program, feeling that the benefit is trivial and somehow inferior to companies offering group health insurance. Further, since companies are not required to deposit contributions in consistent amounts or on regular schedules, employees wonder whether they will receive their contributions. Furthermore, many staff members are in low income jobs which means that they will not receive the same benefit from tax sheltered programs. They may not even be able to afford to make any deposits of their own.
Lastly, many employees who already have employer-sponsored HSAs claim that the insurance companies still dictate their medical needs since the company supplying the HDHP is in control and not the employee.
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