Health savings account

Employees can contribute tax-free money to the HSA, up to an amount set by the Internal Revenue Service (IRS) each year. As the employer, you may also add money to the account.

If there's not enough money in the account to cover a certain qualified expense, employees can pay out of pocket, then reimburse themselves from the HSA later, as the funds become available.

Employers enjoy savings on premiums a high-deductible health plan offers and can use the money to help fund their employees' HSAs. Employers can also contribute to employee accounts. Employer contributions can boost employee participation, leading to higher balances and improved satisfaction.

Any funds left in the account from year to year are carried over and remain with the employee who owns them. If employees leave the company or change health plans, they will be able to take any remaining funds with them.

Employees will receive a debit card to pay for qualified medical expenses, such as doctor visits and prescriptions. The card provides a single access point to their HSA and any other spending accounts they're enrolled in.

Employees can invest their HSA funds once their HSA balance exceeds $1,000. The interest they earn is tax-free.

New this year, employees have the option to choose a high-yield health savings account so they can earn a higher interest rate on their HSA balance. With this option, funds aren't FDIC-insured, but they're held in an account backed by the highly rated insurance company, Pacific Life.