The Value of Employer Contributions to Employee HSAs
Jake Newby
| 3 min read
Nearly one in four consumers report they would not be able to pay more than $250 for an unexpected bill. When it comes to health care, this could mean people choose not to seek the care they need for fear of the bill they might receive. But employers can help to alleviate this concern – and still see benefits for their business.
A health savings account (HSA) is a great way for employees to set aside money for health care expenses now or in retirement. An HSA is like a personal savings account for qualified medical expenses. HSAs are owned by your employee and can be funded by them and by you.
How employers benefit from employee HSA contributions
If you offer an HSA-compatible health plan, also called a high-deductible health plan (HDHP), you can choose to contribute to your employees’ HSAs. Employer HSA contributions can help boost employees’ health care savings and help them afford the care that they and their families’ need.
Contributing to your employees’ HSAs is a great monetary benefit to add to your employee benefits package. Your company can also benefit in the following ways:
Tax advantages: HSA contributions through payroll reduce employer payroll taxes. They also lower FICA, state and federal unemployment, and worker compensation contributions. Plus, your contributions are treated as a deductible business expense, which helps reduce a company’s tax liability while improving its bottom line.
Employee retention: Employer HSA contributions can help increase employee satisfaction. And your contributions add value to your compensation package, helping to attract and retain talent.
Motivate HDHP enrollment: Your contributions jump-start your employee's willingness to enroll in HDHPs and contribute their own funds as well. Your contributions also make HDHPs more attractive financially, especially if you offer multiple medical coverage options. In fact, a 2023 study from the Kaiser Family Foundation found that employees who participate in HSAs save an average of 16% on health care costs, and employers save an average 2% for each person that enrolls.
How much can I contribute to employees’ HSAs?
Annual HSA contribution limits are set by the Internal Revenue Service. In 2025, the HSA contribution limit is $4,300 for self-only coverage and $8,550 for family coverage. People aged 55 and older can contribute an additional $1,000.
How can employers contribute funds?
Employers can contribute to funds in three ways:
- Equal contributions per pay period
- One lump sum at the beginning of the plan year
- Lump-sum contribution and equal contributions per pay period
Ready to learn more?
View an on-demand recording of our recent Master Class, How Health Savings Accounts Help Lower Costs and Bolster Retirement Savings. In this webinar, we discussed:
- Tax advantages of HSAs for employers and employees
- How HSAs can be an important component of retirement planning for employees
- How employers can communicate effectively with employees across their organization about the advantages HSAs provide and how to make the most of them
Watch the recording by clicking here or visiting bcbsmmasterclass.com.
Photo credit: Getty Images
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