Business Owners and HSAs

Who is eligible for an HSA?

Any individual, including those who are self-employed, enrolled in a qualified health plan is eligible. Your company’s insurance broker or advisor can help you determine if your insurance plans qualify for an HSA. Qualified health plans are called High Deductible Health Plans, or HDHPs, and have the following characteristics:

These amounts are adjusted by the IRS for cost-of-living increases.
If a participant has other health insurance, is on Medicare, or is a dependent on someone else’s tax return they are not eligible.

* Some insurers do not include preventive health care in the deductible.
** The limit for maximum out-of-pocket expenses includes deductibles, co-payments, and certain other items, but not premiums.

How does an HSA benefit my employees and me?

There are many benefits including significant tax advantages and income for retirement for your employees. Also, HDHP premiums are usually lower than traditional premiums, so employers have great reasons to consider offering an HDHP and an accompanying Simsbury Bank HSA.

Let a Simsbury Bank advisor explain all of the benefits, but some are:

• Employee contributions to their HSAs are tax deductible
• Employer contributions are not counted as income to the employee
• Earnings are tax-deferred
• Distributions are tax free if used for qualified medical expenses
• Balances can be carried from one year to the next
• Balances are portable
• Balances can be used as a retirement savings account
• Beneficiaries can be named to the HSA account.

Earn Premium Interest Rates

In addition to Simsbury Bank advisors’ professional advice, we offer your employees premium rates for HSAs. The rates are tiered so that the larger their balance, the more they earn.

Where does an employee use an HSA?

Employees pay for their medical expenses up to your plan’s deductible with the funds in their HSA. These expenses include doctor visits, tests, procedures and prescriptions. They can also use the funds in their HSA for any reason after age 65 (subject to tax). There are a variety of other expenses that qualify – let a Simsbury Bank advisor explain these fully.

How does an employee access the funds in their HSA?

Simsbury Bank offers your employees a multitude of ways to use their HSA for their convenience – by debit card, by check, by SBT Online bill payment and even by withdrawing cash from an ATM.

What kind of account types are there?

Most newly-opened HSAs start as a checking account. As the employees’ balance grows, or as they rollover funds from other HSAs they may have, they can open an HSA CD that offers premium interest rates. Let a Simsbury Bank advisor help your employees choose the most advantageous account types for their situation.

How do the employer and employee deposit money into an HSA?

Most employers can set up a direct deposit for employees to make contributions at each regular payroll. Or, they can make their own lump sum deposits when they wish. They can also roll over funds from another HSA or some IRAs. Employers may choose to make additional contributions. Please talk with a Simsbury Bank advisor for complete information on ways you and your employees can make the most of their HSA account.

How much can be contributed to the HSA?

Contribution limits vary depending on the insurance plan the employee is enrolled in and their age.

If participants reach age 55 in any year they may also contribute additional “catch-up” amounts.

Regular and “catch-up” contributions may come from any source, including payroll deductions, employer contributions, rollovers from other HSA accounts and transfers from other accounts, though certain forms may be required for contributions other than payroll deduction. Plan sponsors may contribute toward this account. Any sponsor contributions are counted toward the maximums allowed.

Some employers make contributions to their employees’ HSA. How do I make these contributions?

Your company’s payroll provider will be able to assist you in setting up a contribution into employees’ HSA accounts electronically. The process can be automated so that the funds are deposited into your employees’ accounts with each payroll run or any other schedule of your choosing. Employers can arrange with their payroll service to make group contributions automatically. As an employer, you can choose where to deposit your company contribution – you don’t have to make contributions to the institution of the each employee’s choosing.

How does the employee access information on their HSA account?

Simsbury Bank will send them a monthly paper statement. They’ll also have access through SBT Online, our Internet banking site, and our 24 hour telephone banking.

What employer reporting requirements are there?

Simsbury Bank provides complete reporting of contributions and distributions to your employees and the IRS.

What are my costs to run a plan that includes an HSA?

There are no fees to the employer.

What does an HSA cost my employees?

There are no fees if the employee’s HSA Checking account balance is $2,500 or more. If it’s below that, there is a low $3.00 per month service charge which is waived for the first year. There is no enrollment fee if you as an employer refer them to Simsbury Bank.

We also offer an HSA CD so that as your employees’ balances grow, or they roll over funds from another HSA plan, they can benefit form premium longer term interest rates. If someone is no longer eligible to make contributions to an HSA, they can open an HSA CD only for a low annual fee of $20.

How do I get more information and start my employees’ enrollment?

Simsbury Bank’s highly trained advisors can help you with any questions you have about HSAs. We can open an HSA for your employees in any of our branches. And, for your added convenience, we can work with you to arrange for a Simsbury Bank advisor to make on-site visits for maximum convenience to your employees.

Call Simsbury Bank today to learn how you can offer your employees this exciting account with premium interest rates and tax advantaged savings for their retirement!