HSAs and Voluntary Benefits Go Together Like Peanut Butter & Jelly
High deductible consumer driven health plans are nothing new; in fact, they‘re becoming a regular offering for businesses of all sizes, in all industries.
It’s not uncommon for consumer driven health plans to have deductibles of $2,500 to $5,000. Employees are becoming more comfortable with higher deductibles in exchange for lower premiums. They’re utilizing their health savings accounts (HSAs) to stock away money for future health-related expenses. Employees also understand what it means to be an educated consumer as they search out medical care. However, utilizing HSAs and shopping for the best price of care aren’t the only ways an employee can handle high out of pocket costs associated with consumer driven health plans.
Voluntary benefits such as accident insurance, critical illness and hospital indemnity have premiums that are 100% employee paid and pay out a fixed benefit amount based on a schedule of covered incidents. For example, an accident policy may pay an insured $750 for a broken arm, hospital indemnity may pay $2,000 for a hospital visit and critical illness may pay $10,000 for diagnosis of kidney failure. These payments are made directly to the employee and not to the service provider. This gives the employee the flexibility to either pay for out of pocket medical costs with funds directly from their HSA or the benefits paid to them from their voluntary coverages. This flexibility makes voluntary benefits appealing to both employees who are just starting to build their HSA as well as employees who’ve had time to stash away a significant amount of money into their HSA.
The payout on voluntary benefits also allows those employees who’ve had time to build up a reserve to keep that money in their HSA for future use and allow it to continue growing. Many HSAs allow accounts with a certain dollar amount to be invested in mutual funds. Think of voluntary benefits such as accident insurance, critical illness and hospital indemnity as other means to pay your deductible and cover out of pocket costs. Remember, not all voluntary benefits are structured the same.
Consult with your benefits professional to ensure any voluntary products you offer are HSA compliant. For more HSA-related questions, contact a member of the ‘A’ Team.
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- Assurance Calculator: Total Cost of Employee Benefits
- HSAs: Consumerism at its Finest
- HSA Contribution Limits for Spouses
- The Perfect Match
- But I Really Like My $20 Co-Pay!
- Health Savings Accounts: Your Healthcare 401(k)
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