Question

What are some advantages of the implementing the HSA option? 10-4. What are some potential disadvantages of the HSA option? 10-5. What do you recommend? Why?

Answer 1

answer-

What are some advantages of the implementing the HSA option?

The advantages of implementing the HSA option are that Employer able to reduce the cost of high deductible health insurance plans. These accounts are not subject to income tax and earnings are tax free. For employees, HSA option helps in rolling over the money for future expenses related to health. In HSA, Contributions made by your employer may be excluded from gross income. Employees can withdraw their balance when they leave the company and it is portable in nature when you transfer from one employer to another.In HSA, anyone can contribute to your account like you, employer, relative etc.Employees will not be subject to taxes if they withdraw from money for qualified health expenses

What are some potential disadvantages of the HSA option?

There is limitation on the amount of contribution annually and amount can be held in HSA. second, If you withdraw funds for non-qualified expenses before you turn 65, you'll owe taxes on the money plus a 20% penalty. third, you have to manage record and reciept for tax purposes. Fourth you have to manage monthly maintenace fees.

What do you recommend? Why?

I would recommend the use of HSA because it is beneficial to both employer and employee to save money and make sure healthcare is provided to employees. employees when they find that employer provide HSA for health security of thier employees then they contribute more to company. It helps in reducing cost, employee turnover and increase employee satisfaction, retention and motivation to work for the employer for longer period of time.