Understanding the Basics of a Health Spending Account

There are many situations when traditional forms of health care cost coverage are not adequate to encompass all types of treatments and health issues. A good option for anyone in business to consider is to invest in a health spending account that allows you to provide this type of coverage for your employees. Unlike traditional types of insurance plans these plans have benefits for both the employer and the employee, making them a great option all around.

The key to the cost saving features offered by these accounts is that they are deductable by the employer that is contributing to the account. For the employee, the benefits from the plan are completely non-taxable, reducing any real or perceived burden on either group. The great news is that the employee can access these funds for most of the treatments offered by any licensed medical health provider, which may include the alternative types of treatment that an insurance-based plan would not cover.

The money that builds up in a health spending account can be used to cover the cost of different services, not all just specifically medical. These services include dental procedures, which are often very costly and not covered by typical insurance coverage. Orthodontics, cleanings, surgical procedures and regular check ups can all be paid for directly out of the account, saving the employee money while building in a non-taxable way to pay those necessary bills. In some cases the employer may even offer the program for dependants and families of employees.

Therapies, either required or elective, may also be private pay in many situations. However, if you are fortunate enough to have a health spending account within your workplace you can use these funds to cover the costs. This can include alternative types of therapies such as chiropractic treatments, acupuncture for pain or other issues and massage treatments. These therapies may not be ongoing or required on a regular basis so having the account gives employees the freedom to use them as often or as infrequently as required to maintain their health.

Small businesses with less than 10 employees and medium-sized corporations with hundreds of employees can all take advantage of these accounts. There is no waiting period for the coverage to kick in and you can choose how you want to contribute to the employees’ plans to suit your budget and requirements. Typically businesses contribute either a percentage of employees’ salary or there is a fixed annual amount that can be contributed to the employees’ accounts. There is an annual contribution limit but unused portions of the account can simply roll over to next year's contribution.

One of the main benefits to enrolling your staff in a program that offers these healthcare accounts is the preventative aspect of having the ability to pay for medical issues that may not be covered fully by insurance. Employees that regularly get the medical treatments and therapies they need are more productive, take less days off for medical reasons and value the contribution and care offered by their employer in providing the service.

Even if you have traditional insurance, adding a health spending account to the benefits that you offer your employees really will add up to additional savings. They are fully tax deductable to you and provide a non-taxable medical nest egg for your employees. Look around and see what various companies are offering, you may be surprised at the benefits that you can provide at a very small price.