If you work as a freelancer or run a small business at a coworking space, you know that work does not mean just nine to five. We all know that you face a unique set of challenges—including making the best decisions for your business when it comes to healthcare and financial wellness. If you are self-employed or a small business owner looking for good healthcare options, Health Savings Account (HAS) might be a great option for you.
Individual Coworking Members
HAS lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums.
While you can use the funds in an HSA at any time to pay for qualified medical expenses, you may contribute to an HSA only if you have a High Deductible Health Plan (HDHP) — generally a health plan that only covers preventive services before the deductible. For year 2021, Covered California has 4 insurance carriers with this plan option: Oscar, Kaiser, Health Net and Blue Shield.
Self-employed entrepreneurs and even people working in companies that do not have an HSA plan can still open their own plans as long as they have a qualified high-deductible health insurance plan. For plan year 2021, the minimum deductible for an HDHP is $1,400 for an individual and $2,800 for a family. When you view plans in the Marketplace, you can see if they are "HSA-eligible." For 2021, if you have an HDHP, you can contribute up to $3,600 for self-only coverage and up to $7,200 for family coverage into an HSA. HSA funds roll over year to year if you do not spend them. An HSA may earn interest or other earnings, which are not taxable.
Small Business Coworking Members
If you run a small business without offering a health savings account (HSA) option to your employees, here is a popular and relatively inexpensive benefit that you can provide. HAS is a type of savings account that lets you and your employees set aside money on a pre-tax basis to pay for qualified medical expenses. You, the employer, set up the plan with your health benefits provider, and your employees then elect to contribute pre-tax amounts directly into their own accounts.
Because the accounts are set up with pre-tax funds, any contributions your employees make will lower federal taxable income, and you, the employer, also get a deduction for your contribution if you choose to make one. Amounts are then invested and the earnings from those investments are tax-free.
Employees can use their savings for co-pays and other qualified medical expenses such as copays, X-ray fees, physical therapy, and, potentially, braces, teeth cleaning, and contact lenses depending on your company’s health plan. But they cannot pay their insurance premiums with their HSA savings.
However, there are limitations. HAS is allowed only if you have an existing high deductible health-care plan. This plan comes with lower premiums but more amounts that will need to be paid out of pocket before coverage kicks in. The IRS defines a high-deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family for 2021.
If you want to know more about Health Savings Account options, ZworkSpace’s insurance broker, Skyline Benefit, can assist you further. Skyline Benefit is a local independent health insurance agency in Fullerton with the expertise in helping coworking members and small business owners. They can be reached at (714) 888-5112 or click here to schedule a meeting.