The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: solon on March 12, 2018, 02:38:35 PM
-
My company offers employees an HSA plan, but they don't contribute anything to it.
I want to approach the company about employer contributions. Is there any benefit to the employer for contributing to an HSA? Would it be cheaper than an equivalent raise?
-
If it is used to entice people into the high deductible plan... yeah, it can save the company money.
-
My son's employer contributes $1K/year into his HSA; the premium for the high deductible plan (linked to the HSA) is significantly lower than the standard plan, yet they both are PPO using the same network. Yes, it's an incentive to lower both the employer & employee costs.
-
My employer does this too, and yes I assume they’ve done the math and it helps them.
-
What I'm looking for is reasons I can give my company for why they should contribute to their employees' HSA accounts. They already offer HSAs and high deductible health plans, but they don't contribute any to the HSA. I'd like to convince them they should contribute. Would there be any advantage to contributing to the HSA over giving raises? Maybe having to do with payroll taxes or something?
-
A $1000 contribution to the HSA seems like a small price for the company to pay, and if they decide to do that instead of raises, I'm sure it would save them a ton of money.
Does your company still offer a PPO? The HSA contribution is a great way to convince employees to switch to the HDHP, at what I'm assuming is a huge cost savings to the company.
-
What I'm looking for is reasons I can give my company for why they should contribute to their employees' HSA accounts. They already offer HSAs and high deductible health plans, but they don't contribute any to the HSA. I'd like to convince them they should contribute. Would there be any advantage to contributing to the HSA over giving raises? Maybe having to do with payroll taxes or something?
Because that's not how companies think. The C-guys don't sit around thinking "Hey! We've got an extra $1500 per employee! Let's do raises instead of HSA contributions!" Your wages are set almost entirely by supply and demand. Your skill set is worth X amount, and your company is going to pay something close to X in order to attract and retain people with your skill set.
So instead of thinking about convincing your employer to maximize their employment costs, think about how they might minimize them. Namely, if they provide an HSA contribution, it will lower their employment costs and thereby improve their bottom line.
-
What I'm looking for is reasons I can give my company for why they should contribute to their employees' HSA accounts. They already offer HSAs and high deductible health plans, but they don't contribute any to the HSA. I'd like to convince them they should contribute. Would there be any advantage to contributing to the HSA over giving raises? Maybe having to do with payroll taxes or something?
Some companies tend to subsidize their health plans pretty heavily. Suppose the fancy non-HDHP health plan has a true cost of $1,000/month, but you charge the employees only $200. The employer subsidy is then $800. Suppose the HDHP has a true cost of $600. That's a lot less! Even if you don't charge the employees anything to be on that plan, you're still subsidizing them 25% less than if they were on the fancy plan.
An HSA contribution is a way to essentially set the HDHP premium to a negative value, more of an incentive for people to switch off the fancy plan and on to the HDHP. These contributions raise the subsidy for the HDHP, but if it's still lower than the subsidy for the fancy plan it can be a win-win.
I don't think there's much difference tax-wise between a direct employer contribution to the HSA compared to a salary increase that the employee then puts in the HSA. A salary increase that the employee chooses to keep out of a tax shelter would be taxed more.
-
What I'm looking for is reasons I can give my company for why they should contribute to their employees' HSA accounts. They already offer HSAs and high deductible health plans, but they don't contribute any to the HSA. I'd like to convince them they should contribute. Would there be any advantage to contributing to the HSA over giving raises? Maybe having to do with payroll taxes or something?
Because that's not how companies think. The C-guys don't sit around thinking "Hey! We've got an extra $1500 per employee! Let's do raises instead of HSA contributions!" Your wages are set almost entirely by supply and demand. Your skill set is worth X amount, and your company is going to pay something close to X in order to attract and retain people with your skill set.
So instead of thinking about convincing your employer to maximize their employment costs, think about how they might minimize them. Namely, if they provide an HSA contribution, it will lower their employment costs and thereby improve their bottom line.
Well, yeah, that's literally my question. If my employer provides an HSA contribution, will it lower their employment costs and improve the bottom line?
-
What I'm looking for is reasons I can give my company for why they should contribute to their employees' HSA accounts. They already offer HSAs and high deductible health plans, but they don't contribute any to the HSA. I'd like to convince them they should contribute. Would there be any advantage to contributing to the HSA over giving raises? Maybe having to do with payroll taxes or something?
Some companies tend to subsidize their health plans pretty heavily. Suppose the fancy non-HDHP health plan has a true cost of $1,000/month, but you charge the employees only $200. The employer subsidy is then $800. Suppose the HDHP has a true cost of $600. That's a lot less! Even if you don't charge the employees anything to be on that plan, you're still subsidizing them 25% less than if they were on the fancy plan.
An HSA contribution is a way to essentially set the HDHP premium to a negative value, more of an incentive for people to switch off the fancy plan and on to the HDHP. These contributions raise the subsidy for the HDHP, but if it's still lower than the subsidy for the fancy plan it can be a win-win.
I don't think there's much difference tax-wise between a direct employer contribution to the HSA compared to a salary increase that the employee then puts in the HSA. A salary increase that the employee chooses to keep out of a tax shelter would be taxed more.
That's what I was thinking too. There might not be any difference between a raise, which I contribute to the HSA, and a direct contribution from the company.
-
i would assume there is a deduction in what they pay towards FICA for you if they contribute b/c your contributions technically run thru them.