Small businesses are always looking to save money and increase their bottom line. With this current climate of high interest rates and inflation, making sure you get the most for your buck has never been more important. When it comes to health expenses, this has always been a challenge for small businesses. Traditional benefits plans can be difficult to implement, time consuming and expenses. However, an increasingly popular solution to this problem are Healthcare Spending Accounts (HSAs). HSAs allow both small businesses owners to help their team save on health expenses and can provide great tax savings for both the employer and employee. In this post, we’ll explore 3 reasons why HSAs are a smart choice to maximize their team’s health and maximize their savings.

Capped expenses and greater saving potential

HSAs allow employers to provide their team with a capped amount of pre-tax dollars that can be used for eligible medical expenses. These contributions are tax-deductible for employers and tax-free for employees. This means that employers and employees can potentially save thousands of dollars every year on healthcare. Plus, if the employer is also an employee of the company, they can benefit twice over. In comparison, the Medical Expense Tax Credit (METC) is a tax credit that can reimburse individuals who have medical expenses that are not covered by a private health benefits plan. The METC can only be claimed on a tax return and is based on eligible expenses that are:

1. Over 3% of your net annual income
2. Or your medical expenses are more than $2,478

While the tax credit is calculated based on the lower amount, this still leaves you out-of-pocket for a large portion of your medical expenses.

Great Flexibility and control over your spending

With an HSA, employees have more control over how their healthcare dollars are spent. They can use their money to pay for a wide range of health expenses including prescriptions, vision care, dental care and mental health treatments. They even cover extended health benefits including massage therapy, chiropractors and alternative health therapies. This unparalleled flexibility helps employees manage their costs and be their happies, healthiest selves. It can even be used to cover co-pays on another benefits plan. In contrast, METC can only be used on expenses that are not reimbursed by an insurance plan. This means that co-pays are not eligible for reimbursement. Plus, because METC is a tax credit, employees have to pay out-of-pocket and then wait until tax time to claim the credit.

Long-term savings and a healthier team

HSAs can also help your business and team save money in the long run by encouraging your team to be proactive about their health. By using their HSAs, your team members can help catch health issues early on and avoid more costly medical expenses down the road. Not only can you help keep you and your team save in the long run, but it can also help ensure you and your team remain happy, healthy and productive. HSAs are a smart choice for small businesses to maximize their healthcare savings and take care of their team’s health. By providing your team with a fixed cost HSA, small businesses and their employees can potentially save thousands of dollars. HSAs also offer greater flexibility and control over your healthcare spending while also helping to save on future health expenses. If you are interested in offering an HSA to your employees, schedule a call with one of our benefits specialists to learn more!