Business Banking

Health Savings Accounts (HSA)

If you are concerned about the rising cost of traditional health insurance for your business and your employees, consider the benefits of Health Savings Accounts (HSAs) used with a High Deductible Health Plan (HDHP).

Businesses and their employees benefit from this type of plan.

  • Premiums for high deductible health insurance are generally less expensive than those for traditional health plans.
  • Employees can make pre-tax or tax-deductible contributions to their health savings accounts in amounts up to the lesser amount of the policy's deductible or $2,700 for singles and $5,4001 for families.
  • Employers who choose to contribute directly to their employees' health savings accounts as part of their benefits package receive a tax deduction for the amount of their contributions.
What are the benefits to my business? What are the benefits to my employees? How does it work?

Benefits to Businesses

  • Enhance your benefits package: A Health Savings Account (HSA) used with a High Deductible Health Plan (HDHP) makes it more affordable to add a healthcare benefit to your employee benefits package. An improved benefits package may help you attract and retain employees.
  • Manage health benefit costs closely: Using a Health Savings Account (HSA) health plan allows you to make separate decisions about the cost of insurance premiums and HSA account funding. You decide how much - if any - you will contribute to employee accounts and you can change that decision each year.
  • Enjoy tax advantages: Employer contributions (made with pre-tax dollars) to their employees' Health Savings Accounts are exempt from payroll taxes and not subject to federal income tax withholding.
  • Simplify administrative work: Employees own and control their health savings accounts so you have no responsibility or liability for the accounts, and there is no claims administration or adjudication process, and no need to keep records for the IRS on claims.

Benefits to Employees

  • Protection from high or unexpected medical bills: Your employees' Health Savings Accounts (HSAs) will help protect them from the financial drain of high or unexpected medical bills.
  • Payment option for wide range of medical expenses: Health Savings Account (HSA) funds can be used to pay for current qualified medical expenses, including those not covered by insurance.
  • HSA funds earn interest: The Eastwood Bank Health Savings Account (HSA) is an interest-earning account.
  • Employees own and control their own HSAs: Individual employees make their own decisions about how much to deposit, whether to use HSA funds for current medical expenses or save them for future expenses, and which expenses to pay from the account.
  • Triple Tax Savings: A Health Savings Account (HSA) gives your employees three ways to save on taxes:
    • Tax-deductible contributions
    • Tax-free earnings
    • Tax-free withdrawals for qualified medical expenses.
  • Account portability: Health Savings Accounts (HSAs) are "portable" so employees can keep their accounts even if they change jobs or become unemployed, change medical coverage, move, or change their marital status.

How does it work?

Created by Public Law in 2003, Health Savings Accounts (HSAs) offer a more affordable option to millions of people. Here's an overview of how it works:

U.S. Treasury
  • Regulates health savings accounts (eligibility, contributions, qualified medical expenses, etc.).
Employer
  • Chooses High Deductible Health Plan (HDHP) and Health Savings Account (HAS) providers.
  • Determines (annually) how much, if any, to contribute to employees' HSAs.
Health Insurance Provider
  • Provides benefits per the High Deductible Health Plan (HDHP) option selected by the employer.
Eastwood Bank (offering HSA)
  • Minimum balance to open the account: $100
  • Set up fee: $25 per account
  • Monthly service fee: $3 per month if balance falls below $1,000
  • Interest: Tiered rate account; interest compounded and credited monthly
Employee
  • Owns and controls their individual Health Savings Account (HSA).
  • Decides how much to contribute to their HSA.
  • Decides when and how much to withdraw funds for qualified medical expenses.
Tax / Legal Advisor
  • Professional advice on any legal or tax issues for employer and employee.
To learn more about eligibility, contributions, and qualified medical expenses for Health Savings Accounts (HSAs):
  • Visit the U.S. Treasury Web site at www.ustreas.gov/offices/public-affairs/hsa/ for additional details including answers to frequently asked questions.
  • Consult your tax and/or legal advisor.

To open an Eastwood Bank Health Savings Account, contact any Eastwood Bank office.

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