HSA / HRA
 What is the Problem?
Double digit increases in healthcare have forced many employers to scale back medical coverage for their employees.
Employers currently ask their employees to share rising costs by increasing employee contribution and reducing benefits.
What is the Solution?
Health Savings Accounts (HSA), a special tax free savings account where money is deposited by either the employee or the employer combined with a qualified High Deductible Health Plan. The money is deposited by an employee and optionally shared with the employer similar to a 401K. The account is funded on a tax deferred basis and accumulates tax free. It can also be withdrawn for qualified medical expenses tax free and the remaining funds can be rolled over into the next year.
Why Does This Work?
Under the current plan design employees are shielded from the true cost of healthcare by the very system that delivers it. The employer as a third party payer has allowed the employee with first dollar coverage, to make medically based financial decisions with out any “skin in the game.”
How does it work?
High Deductible Health Insurance in conjunction with a Health Savings Account does not offer first dollar coverage
Except for qualified preventive care.
The employee elects a High Deductible Health Plan and opens a savings account, either with the carrier or any other qualified financial institution. Withdrawls are made from this account by either a debit card or check until the requisite deductible is met. At that time, when the deductible is satisfied the health is responsible for any additional covered medical expense. If the employee does not use the full deductible the unused amount is rolls over and accumulates along with any interest or investment income produced by the funds in the account.
What are the advantages for the employer?
Lower Premium: High Deductible Premiums are considerably less than those for a traditional plans, as a result the cost of funding the plan is reduced.
Lower Payroll Taxes: HSA contributions are pretax and reduce FICA cost.
Liability Shifts to the Employee: The employee owns the account so record keeping and responsibility is no longer the venue of the employer.
What are the Advantages for the Employee?
Medical Decision Making: The decision as to how to spend their health plan dollars is in their control.
Contributions are Tax Deductible: HSA deductions are above the line and qualified withdrawals are tax free.
Benefits are more liberal: Qualified medical expenses include services not usually covered by a medical plan (Sec 213d) IRS code and High Deductible Health Plans cover a wide variety of preventive care services.
Portability: funds belong to the employee and can go from employer to employer, fund COBRA and early retirement.
Flexibility: HSA funds can be invested in any IRS approved investment, plus interest and earnings accumulate tax free.
Retirement: The funds that remain in the HSA can carry forward to retirement and fund medical expenses including Medicare part A and B or Long Term Care. They may also be withdrawn for purposes other than medical purposes and are taxed at the individual rate.
Why The Medical Link?
Our experience will help you determine if H S As are right for your organization. In addition, employer and employee education are critical to the success of this program. We will measure the risk and reward for each individual employer so that you are confident that you have made the right decisions.
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