Your HSA and Qualified Expense Record-Keeping
Health Savings Accounts, aka HSAs, are a popular substitute for traditional health insurance plans. An HSA account allows employees to deposit pre-tax funds into a health savings account. Your employees can then use these funds to pay for medical expenses and a range of holistic and preventive treatments.
If you are considering health insurance for your employees, you have come to the right place. This guide will look at what an HSA exactly is and why it is the perfect choice for small businesses.
What Are HSAs and Why Should Small Businesses Use Them?
As mentioned earlier, an HSA is a tax-favored savings account that is usually combined with health insurance for small businesses. Employees can invest tax-deductible funds into an HSA and then use those funds to cover medical costs.
To qualify for an HSA, you need to have a qualified high-deductible health insurance plan. Money in the savings account can help pay the deductible, and once the deductible is met, the insurance starts paying for expenses.
A Health Savings Account can allow your employees to avoid federal income tax by saving up to 3500 USD (for singles) and 7100 USD (for families) in their HSA health plans account. They can get an income tax deduction for the money deposited, even if they don’t itemize their deductions.
If an employer makes an HSA contribution for an employee, it is omitted from their reported income and is not subjected to any income tax. Either way, this will immediately reduce your employee’s federal income tax for the year.
Funds in HSAs can be withdrawn tax-free to cover virtually any type of medical expense. This could include expenses such as paying a doctor’s fee, purchasing prescription drugs, obtaining alternative care, or paying expenses towards the deductible.
HSA Qualified Expense Record-Keeping
Employees can use their HSA health plans account to cover other costs that a health insurance policy would not usually cover. These include:
- Dental expenses. Individuals can usually purchase dental discount plans or relatively expensive dental policies at certain dentists with health insurance. Coverage for braces is generally minimal. However, if any of these procedures are medically necessary, you can pay for them using your HSA account.
- Charges for preventive medication. Any costs for vaccines, blood tests, metabolism tests, and other lab tests can be covered by HSA funds if not covered by your traditional health insurance for small businesses.
- Special fees to support disabled individuals. HSA funds can also cover wheelchair fees, telephone or TV equipment costs to assist the hard-of-hearing, and special school costs for the disabled.
- Alternative treatments. Treatments such as acupuncture, aromatherapy, homeopathy, nutritional consulting, or even healing services provided by a type of healer can be covered by HSA funds.
- Healthcare-related transportation and lodging expenses. Ambulance charges and hospitalization fees can also be paid for using an HSA.
- Mental and physical therapy. Any fee incurred at the psychiatrist’s, psychologist’s, psychoanalyst’s, or psychotherapist’s office can be paid for by the HSA. This could also include charges for mental therapy such as counseling or physical therapy like hydrotherapy or medical massage therapy.
- Maternity expenses. Any maternity expenses not covered by the traditional health insurance policy can be paid using HSA funds.
It is easy to get carried away and lose track of all the expenses mentioned above that can be paid for from an HSA. For this reason, we recommend using Track HSA, an affordable and secure online qualified expense record-keeping service. This service can help you itemize expenses like doctor visits and prescriptions, document them according to each category, and create HSA expense reports at any time. In addition, this service allows you to instantly see descriptions and classifications of medical expenses that are qualified for HSA funds.
HSA for America, we provide health insurance solutions for self-employed individuals, small business owners, and many others who do not qualify for health insurance subsidies but need affordable healthcare to save money.
If you are looking for health insurance for your small business and need assistance figuring out what’s best for you, get in touch with us today! We would love to answer all of your questions and give you more insight into our recommended qualified expense record-keeping service and what is considered a qualified expense.
Schedule a free consultation on our website or call us at 800-913-0172 for more information.