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Health Savings Accounts for Colorado Businesses

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A Health Savings Account (HSA) can be an important option for employee health care coverage through your business, particularly if you are a small business. The following are examples of how your business and employees can benefit from choosing a Health Savings Account:
  • HSA earnings are not taxable while the money stays in the account. Money not spent stays in the account and earns interest, giving employees [in good health] funds for later expenses.
  • HSAs allows for both employers and employees to make contributions, unlike earlier health savings vehicles.
  • HSAs share the cost of healthcare benefits with employees in a way that benefits you and them.
  • HSAs avoid the administrative costs; employees self-administer their HSA so there are minimal administrative costs for your company.
  • You have the option to contribute in a lump sum, or any frequency you choose, to your employee's HSA; also, no minimum contributions are required.
  • HSA funds are an asset that employees own, so they can use it to supplement their retirement income and build personal wealth.
  • If you're self-employed, you may qualify to deduct the premium for your HSA eligible plan even if you don't itemize. (Contact your tax professional for more information).
(Source: U.S. Small Business Administration)

Features of Business Health Savings Accounts
  • No monthly balance service fee with a minimum daily balance of $1,000.00
  • $3.00 monthly balance service fee if minimum daily balance falls below $1,000.00
  • Tiered interest rates on daily balances beginning at $100.00 and greater.
  • Personal debit card with no annual fee

More Tax Advantages from Health Savings Accounts?
HSAs can provide significant tax benefits to eligible individuals.  Not only can HSAs provide tax benefits related to paying qualified medical expenses, they may also provide benefits similar to many tax-favored retirement plans.  A summary of HSA tax advantages is shown below.

  • HSA contributions - by employer or employee - are excluded from income.
  • HSA earnings are tax deferred.
  • If used for qualified medical expenses, HSA assets are never taxed.
  • Unused HSA assets may be used for retirement; however, they will be subject to a 10 percent penalty until the HSA account beneficiary turns age 65.  If not used for medical expenses, they will be subject to income taxes.

Upon death, HSA assets become the property of a named death beneficiary, or of the HSA account beneficiary's estate.  A spouse may treat the assets as his or her own HSA, while nonspouse death beneficiaries must treat such assets as ordinary taxable income.