A Business Owners Guide to HSA & FSA

A small business owner, working in an ice cream shop, wonders about the differences of hsa vs fsa, hsa vs fsa for employers

Regardless of the type of business you're running, one of the most effective ways to both find and retain top talent is to focus on things that go above and beyond salary. Sure, how much someone is getting paid is important - but it's not the only thing people look at when deciding where to work (or how long to stay there).

Case in point: healthcare. Many business owners know that they should focus more on healthcare-related benefits, but things can quickly get confusing. What is an HSA vs FSA for employers and which one is right for your workforce? By keeping a few key things in mind, you can make the right decision regarding the future of your business.

What is a Health Savings Account?

Short for "health savings account," an HSA is a type of account that is intended to work alongside someone's high deductible health insurance plan.

Also called an HDHP, these types of health insurance plans are offered to employees for a number of reasons. Sometimes, employees love the fact that they're paying lower monthly premiums than they otherwise would - even though their annual deductible is likely higher.

That's where a health savings account comes in. This is a tax-advantaged type of savings account that allows contributions to go towards those medical-related expenses, helping employees save money while still enjoying the benefits of their HDHP without quite as much of the financial burden.

What is a Flexible Spending Account?

A "flexible spending account," on the other hand, is another type of tax-advantaged account that is designed to help in a slightly different way.

Again, an HSA is designed to work with a "qualified high deductible plan." An FSA goes one step further and allows those funds to be used with any type of health insurance account someone has.

You don't actually even need insurance to open an FSA account. This can be great if you have certain employees who may be covered by their spouse's plan, for example. They still have health insurance from one place and get to enjoy the benefits of a flexible spending account from you - leading to the type of win-win situation that helps improve company culture and instill loyalty in workers at the same time.

Benefits of an HSA or FSA for Your Business

Overall, the biggest benefit of both HSAs and FSAs is that they allow business owners to A) help reduce the overall costs of the health plan that they're offering to employees and B) reduce tax exposure, all with C) limited involvement and expense on their behalf.

In the case of an HSA, for example, employees take advantage of a high deductible plan that helps them save on healthcare, and they get an efficient way to save money to be used for medical-related expenses. Employers get to take advantage of a tax-free way to help people pay for those medical expenses, which goes a long way towards showing everyone involved what an impact they have made on your organization.

The business owner and her employee stand with their arms crossed over their chests, they're ready to get to work with hsa vs fsa, hsa vs fsa for employers

If you're a business owner who wants to take advantage of this concept but doesn't want to offer a plan with a higher deductible (or have a lot of employees who are satisfied with the health insurance they're getting from their spouse), you always have the flexibility that comes with an FSA. Regardless, it's a great way to help people pay for everything from routine medical expenses to large bills associated with emergencies.

Again, people look at more than just salary when it comes to deciding where to work. Benefits are always a big part of their decision. So offering an HSA or FSA can not only help bring new and talented people into your organization, but it can keep them loyal and help them stay there as well. They'll be happier, more productive, and healthier - a best case scenario.

Which Should You Offer to Your Employees: HSA & FSA

Ultimately, whether you should offer an HSA vs FSA for employers depends on a number of key factors.

If your business is already offering an HDHP, offering a health savings account would almost certainly be the way to go. If you do not offer this type of coverage and have employees that aren't eligible for one in the first place, you are limited in that you can only offer a flexible spending account.
If you and your employees feel like your current health insurance premiums are too high, offering an HSA could help with that. Employees now have motivation to enroll in a cheaper plan, which saves you money as a business owner while also still giving them financial benefits for healthcare.
If yours is a business that sees a lot of employee turnover, you'll likely want to offer an FSA. If an employee leaves your business, they take the money in the HSA with them. The same is not true of an FSA - that comes back to the company. Having said that, an increased focus on benefits like these should also help with employee turnover moving forward.

Every business is unique, so don't assume there is a "one size fits all" answer to this question. Only by looking at your unique organization will you be able to make the right decision regarding whether to offer an HSA vs FSA for your workers.

BIS Benefits, A Benefits Advisor

The small business owner is doing research on the differences between hsa vs fsa, hsa vs fsa for employers

At BIS Benefits, we understand how important your employees are to the ongoing success of your business - which is why we want to do whatever it takes to help offer the types of group benefits that people will appreciate and that will meaningfully impact your organization moving forward. HSAs, FSAs and similar types of healthcare-related benefits are just one example of how we're willing to leverage our experience to your advantage.

To find out more information about the differences between an HSA and an FSA for employers, or to speak to someone about the unique needs of your workforce in a bit more detail, please don't hesitate to contact the team at BIS Benefits today.

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What Employee Benefits Do Georgia Workers Want in 2025?

by Drew Holley • 17 January 2025

Key Insights on Employee Benefits for Small Businesses in Georgia Employee benefits play a pivotal role in attracting and retaining talent, particularly for small businesses striving to compete with larger corporations. BIS Benefits has partnered with Mployer Advisor to bring you an exclusive 2025 Employee Benefits Benchmarking Report, tailored specifically for businesses in the South Atlantic region with 25–49 employees. This blog highlights key findings from the report and how they can help you craft a competitive benefits strategy. Want to dive deeper? Download the full 2025 Employee Benefits Benchmarking Report to gain actionable insights and trends tailored for businesses like yours. Key Findings from the 2025 Employee Benefits Benchmarking Report 1. Medical Benefits: Affordability and Trends 76% of employers in the South Atlantic region offer medical benefits, with 63% of employees enrolling. On average, small businesses contribute $580 per month for single coverage and $707 for family coverage —in line with regional benchmarks. High-deductible health plans (HDHPs) with health savings accounts (HSAs) are gaining traction as cost-saving options. What this means for your business: Offering at least one affordable plan option with employer contributions around regional averages helps you stay competitive in the labor market. 2. Supplemental Benefits: A Strategic Edge Dental and vision benefits are offered by over 80% of employers in this cohort, with high employee enrollment rates of 98% and 93%, respectively. Life insurance payouts are commonly structured as multiples of earnings, with the majority of plans offering 1–2x salary coverage. Voluntary benefits such as critical illness and accident insurance are being increasingly adopted to attract talent without significant cost increases. Takeaway: Supplemental benefits can enhance your overall offering without breaking your budget. Highlight these options to potential hires to differentiate your package. 3. Retirement and Financial Benefits: Securing the Future 91% of employers offer defined contribution retirement plans (e.g., 401(k)), with 74% of employees participating. Employer matching contributions average between 4%–6% , a vital component in employee retention. Auto-enrollment and auto-escalation features are becoming standard, simplifying the process for employees and increasing participation. Action Step: Ensure your retirement plan includes competitive matching and user-friendly features like auto-enrollment to boost engagement. 4. Leave and Flexibility: Meeting Modern Expectations Consolidated leave programs (combining sick, vacation, and personal days) are offered by 69% of employers , reflecting a trend toward greater flexibility. Remote work options and flexible schedules are growing in popularity, with 40% of businesses offering work-from-home arrangements . How to stand out: Consider adding or expanding remote work policies and flexible scheduling to meet employee expectations in 2025. Why Download the 2025 Employee Benefits Benchmarking Report? This comprehensive report provides: Regional and national comparisons to help you understand how your benefits stack up. Detailed insights into cost-sharing, plan designs, and employee preferences. Actionable data on emerging trends like HDHPs, flexible leave policies, and wellness programs. The report equips Georgia small businesses with the knowledge needed to craft a competitive benefits package that aligns with employee needs and business goals. Download the Report Today Don’t miss out on the opportunity to gain insights that can transform your benefits strategy in 2025. Download the full report here by entering your email address and receive actionable data to help your business attract and retain top talent.

HDHPs: How High Deductible Health Plans Can Save Money for Employers and Employees

by Drew Holley • 6 January 2025

High Deductible Health Plans (HDHPs) are transforming how employers and employees manage healthcare costs. By offering lower premiums and pairing seamlessly with Health Savings Accounts (HSAs) , HDHPs provide a strategic way to save money while maintaining access to quality healthcare. In this article, we’ll explore how HDHPs work, their benefits for employers and employees, and how to maximize their potential. To learn more about the benefits of HDHPs and related options, visit our Group Benefits page . What Are HDHPs? HDHPs are health insurance plans characterized by higher deductibles and lower monthly premiums. These plans encourage smarter healthcare spending, as individuals must pay for medical expenses out-of-pocket until their deductible is met. A significant advantage of HDHPs is their compatibility with HSAs. HSAs allow employees to save pre-tax dollars for qualified medical expenses, reducing taxable income and providing a long-term financial safety net. Unlike Flexible Spending Accounts (FSAs), HSA funds roll over year after year, making them an ideal savings tool. To better understand the differences between HSAs and FSAs, check out our detailed guides on Health Savings Accounts and Flexible Spending Accounts . The Employer Advantage: Cost Savings and Competitive Benefits Employers benefit significantly from HDHPs because they reduce overall premium costs while providing employees with greater flexibility. These plans can be part of a larger strategy to attract and retain top talent, especially when paired with proper education about HSAs. Offering HDHPs demonstrates a commitment to cost-effective, forward-thinking benefits management. Businesses can tailor these plans to align with workforce needs, ensuring employees feel supported while keeping costs under control. For help designing a comprehensive benefits package, visit our Group Benefits page for insights on tailoring solutions for your team. The Employee Advantage: Affordable and Flexible Coverage For employees, the main draw of HDHPs is their affordability. With lower premiums, employees can save on monthly healthcare costs while taking advantage of HSAs to manage out-of-pocket expenses. HSAs offer employees tax savings, flexibility, and long-term benefits, making them an excellent choice for those planning for future healthcare needs. This is especially valuable for individuals and families who don’t anticipate frequent medical expenses but want to ensure coverage for unexpected costs. Learn how to maximize your savings with our guide to Health Savings Accounts , a vital companion to any HDHP. Key Differences: HSAs vs. FSAs While both HSAs and FSAs offer tax advantages, they differ significantly in how funds are managed. HSAs allow for funds to roll over indefinitely and are owned by the employee, even if they change jobs. FSAs, on the other hand, are subject to the "use it or lose it" rule, meaning unspent funds may be forfeited at the end of the year. Employees using FSAs should familiarize themselves with rollover and grace period options to avoid losing money. To better understand how these accounts compare, check out our Flexible Spending Accounts overview . Industry Trends: HDHPs Are Gaining Momentum HDHPs are increasingly popular across various industries, from technology to manufacturing. Businesses see these plans as a way to manage rising healthcare costs while still offering competitive benefits. As employers look for cost-effective solutions, HDHPs stand out as a forward-thinking option that balances affordability with quality. Pairing HDHPs with educational resources ensures employees feel confident in navigating their healthcare choices. Key Takeaways For Employers: HDHPs lower premium costs while providing flexibility for employees. For Employees: When paired with HSAs, HDHPs offer significant tax advantages and long-term savings opportunities. For Everyone: Understanding the differences between HSAs and FSAs is essential for making informed benefits decisions. Whether you’re an employer or employee, HDHPs can be a game-changer for managing healthcare costs. To explore how these plans fit into your benefits strategy, visit our pages on Group Benefits , Health Savings Accounts , and Flexible Spending Accounts .

Drew Holley and Jessie Couch Discussing HSA and FSA

FSA vs HSA | Which One is Best for your Georgia Employees?

by Drew Holley • 12 December 2024

Use It or Lose It? Demystifying FSAs and HSAs Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are popular options for managing healthcare expenses while enjoying some tax benefits. However, these two accounts differ significantly in how unused funds are handled at the end of the year. This difference can impact your financial planning and overall healthcare strategy. In this article, we'll delve into the "use it or lose it" concept, explore how it applies to FSAs, and compare it with HSAs, highlighting why it's important to understand these rules when making your benefits choices. For more information on HSAs and FSAs, watch the full episode of the BIS Podcast here or below. FSAs and the "Use It or Lose It" Rule FSAs have traditionally been governed by a "use it or lose it" rule. This means that any unspent funds in your account at the end of the year would be forfeited. This requirement made it crucial for employees to accurately estimate their healthcare costs and spend all allocated FSA funds before the year ended. However, since the introduction of the Affordable Care Act (ACA), things have changed. Today, many employers offer more flexibility with FSAs. Thanks to the ACA, employers may now allow employees to carry over a limited amount of unspent funds from one year to the next—originally $500, now adjusted for inflation to about $650. Alternatively, some employers may offer a grace period of up to two and a half months after the end of the plan year to use any remaining funds. It’s important to know what rules apply to your FSA so that you don’t leave any money on the table. To learn more about maximizing your benefits options, check out our guide on employee benefits strategy . HSAs: A Different Story Unlike FSAs, HSAs do not follow the "use it or lose it" rule. Funds contributed to an HSA remain in the account year after year, regardless of whether or not you use them. This is one of the key benefits of an HSA—you can build up savings over time to cover future medical expenses. Plus, the funds in an HSA are portable, meaning you take them with you if you change jobs or retire. This makes HSAs a valuable tool for long-term healthcare planning. If you're considering switching to a High Deductible Health Plan (HDHP) to become eligible for an HSA, it’s important to weigh the pros and cons. For more information about HDHPs and their compatibility with HSAs, check out our Health Savings Account service page . Making the Most of FSAs and HSAs Whether you choose an FSA or an HSA, it’s important to understand how to make the most of these accounts. For FSAs, knowing your employer's specific rules about rollover and grace periods can help you avoid losing funds. For HSAs, the focus should be on maximizing contributions, as the funds will continue to grow tax-free, providing a cushion for future medical needs. Both FSAs and HSAs can be used for a wide range of eligible expenses, including medical, dental, and vision care. If you want a comprehensive overview of your coverage options, our group health insurance page is a great resource. Additionally, if you work in a specialized industry like construction or technology, it's beneficial to explore options that are tailored to your needs. Industries like construction and technology have unique challenges that may impact the type of coverage you choose, including how you use tax-advantaged accounts like FSAs and HSAs. Key Takeaways About FSAs, HSAs, and the "Use It Or Lose It" Rule: FSAs : Historically governed by a "use it or lose it" rule, thanks to the ACA, employers may now allow employees to carry over a limited amount of unspent funds from one year to the next—originally $500, now adjusted for inflation to about $650. Be sure to understand your employer's policies. HSAs : Funds roll over year after year and are portable. HSAs offer significant long-term savings opportunities, particularly for those on HDHPs. Plan Carefully : Knowing how these accounts work can save you money and help you better prepare for healthcare costs now and in the future. To get more insights into how you can make the most of your employee benefits, visit our resources page and discover helpful tools to make informed decisions for yourself and your family.