HEALTH SAVINGS ACCOUNTS (HSA) FOR EMPLOYEES

The increasing cost of health care is becoming a financial burden to employers and employees alike. Health Savings Accounts (HSAs) are a great solution for businesses struggling to keep costs reasonable for both themselves and their employees. An HSA is a flexible, tax-advantaged account that enables your employees to take control of their health and their savings. Adding an HSA-compatible health plan to your companies’ benefits package may be a good solution for your company and employees.

About High Deductible Health Plans (HDHP)

To be eligible for an HSA, an individual must be covered by a High Deductible Health Plan (HDHP). Sometimes referred to as a “catastrophic” health insurance plan, an HDHP is an inexpensive health insurance plan that generally doesn’t pay for the first several thousand dollars of health care expenses (deductible) but will cover medical expenses after the high deductible is met. A health plan is HSA-compatible if it satisfies annual deductible and out-of-pocket expense dollar limits. An HSA is available to help pay for the expenses that an HDHP does not cover. For 2025, Federal law defines an HDHP as having the minimum annual deductible of $1,650 (individual coverage) or $3,300 (family coverage). In addition, the HDHP maximum annual out-of-pocket expenses cannot exceed $8,300 for individual coverage and $16,600 for family coverage.*

What are the Benefits of an HSA?

An HSA is an interest-bearing savings tool, similar to an IRA, that allows your employees to save for future medical expenses. Eligible individuals can make tax-deductible contributions to their HSA, and funds can be withdrawn tax-free when used for qualified medical expenses.

An HSA offers individuals with HDHPs an affordable alternative to the high cost of healthcare. An HSA offers many benefits, including the ability to keep the money and save towards retirement.

By offering your employees a Republic Bank Health Savings Account in conjunction with a compatible HDHP from your health insurance provider, employees and employers both benefit.

Employer Benefits

• Control Premiums – Monthly premiums for an HDHP are significantly lower for both the employer and for the employee. Premiums also increase at a much slower pace when compared to traditional insurance.
• Flexibility – Both employees and the employer have the ability to contribute to their HSA.
• Affordability – Reduce or control your organization’s spending on healthcare benefits.
• Healthier Employees – A major focus of High Deductible Health Plans is prevention. Many plans come with preventive care benefits which encourage people to get their yearly check-up and exams for zero or little charge. An ounce of precaution goes a long way and will lead to healthier employees.
• Less administration – Unlike a Flex Spending Account (FSA), an HSA is an employee’s personal account run solely by them. Since it is not controlled by your company, there is less administrative work for you.
• Participation – Offering a more affordable health plan may result in a higher employee participation rate.
• Tax Savings – Save on Social Security and Medicare taxes by offering pre-tax payroll deductions for employees to contribute to HSAs**

Employee Benefits

• Flexibility – Your employees can use money from their HSA to pay for a variety of healthcare-related expenses, or they can choose to save dollars for future use.
• Ownership & Control – Using an HSA, your employees can decide how much money (up to certain limits) to contribute each year.
• Peace of Mind – Your employees will have the comfort of knowing that the money in their HSA is theirs and will follow them wherever they go. Unlike the FSA, an HSA has no use-it-or-lose-it policy. Unused funds in the account will rollover each year and continue to earn interest.
• Affordability – HDHPs usually have lower premiums than health insurance with lower deductibles, saving your employees money.
• Long-term & Tax Savings – A Republic Bank HSA is an FDIC-insured, interest-bearing deposit account in which contributions and interest that accumulate over the years can be used tax-free for qualified healthcare expenses later in life.**
• Tax Benefits – When coupled with a Health Savings Account, an HDHP can have significant tax benefits. All contributions, including those made by the employer, are tax-free and can be deducted on federal tax returns. Individuals do not pay taxes on withdrawals as long as they are used to pay for qualified healthcare expenses.**