The nation’s focus on health and well-being during the COVID-19 pandemic has inspired many individuals to reevaluate their healthcare plans and options. Whether you’re a business leader looking to provide strong healthcare options to your employees, or you’re taking a good, hard look at your own health insurance plan, you’ve likely considered high-deductible health plans (HDHPs) in addition to traditional plan options.

HDHPs have become popular because they offer lower premiums than traditional plans. These lower premiums are offset by higher deductibles, which means employees pay for more of their healthcare expenses before the insurance plan pays. (Per the IRS, an HDHP, in 2020, is any plan with a deductible of at least $1,400 for an individual or $2,800 for a family.) However, the money employees save due to lower premiums can be put into a health savings account (HSA) to pay for medical expenses before the deductible is met. Additionally, funds saved in an HSA can be used to pay for current or future medical expenses tax-free.

“The lower premiums associated with HDHPs enable employers to offer health plan benefits to employees at a more manageable cost,” says Monica Malinowski, product manager, PNC Consumer Driven Healthcare. “In fact, many smaller businesses that couldn’t otherwise afford to provide employee healthcare benefits can do so by offering a high-deductible plan.”

How HSAs Help

Employees who choose the HDHP option may offset their out-of-pocket expenses by opening an HSA, a type of account that offers HDHP enrollees a triple tax advantage: They can contribute with pre-tax payroll dollars, accumulate tax-free interest and investment earnings and pay for qualified medical expenses tax-free. HSA balances roll over from year to year and are available regardless of employment status. HSAs can also be used as an additional retirement savings vehicle. Individuals 65 and older can continue to use their account for tax-free or out-of-pocket qualified medical expenses, or to pay for other nonmedical expenses. If used for nonqualified expenses, the amount withdrawn will be taxable as income but not subject to any other penalties.     

HSAs offer employers benefits, too. “Employers save on payroll taxes for the contributions employees make to their HSA accounts. They also have the opportunity to make tax-deductible contributions to their employees’ HSAs, which can be a great way for them to increase employee satisfaction,” explains Malinowski.    

Education and Tools

Laura Moyer, senior product manager, PNC Consumer Driven Healthcare, recommends that employers seeking an HDHP with HSA program for their employees look for one that offers exceptional service, educational tools and ease of use.

“The biggest hurdle in gaining widespread engagement in a high-deductible program is helping employees understand it, so choosing a provider with education options is critical,” Moyer shares. “Having mobile and online access for employees is important, too. The PNC BeneFit Plus HSA solution, for example, includes an education hub with videos, webinars and brochures, plus a mobile app that enables employees to manage their accounts, make mobile payments and shop for healthcare needs.”

Malinowski concludes, “Offering a well-supported HDHP with HSA program drives deeper employee engagement and satisfaction. It empowers employees to make informed healthcare decisions and build a culture of financial well-being and responsibility.”

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