Offering the Idaho Medical Savings Account (MSA) to your employees is going to help them both save money on their healthcare costs and plan for their futures. These two overall goals are attained through the numerous benefits the Idaho MSA offers people of all ages, coverage and health or financial situations.
With no insurance requirements or age restrictions, full employee ownership and portability, and the ability to reduce their taxable income by $10,000 or $20,000 (depending on filing status), this account isn't just simply another benefit to your employees. It could be a life changer.
Look at the benefits an Idaho MSA provides your employees:
MSAs Reduce Their Taxes
The Idaho MSA has what is called a "Triple Tax Advantage". This simply means there are three tax-related ways they'll benefit (save money) by utilizing one:
First, money is tax-free going into the account. This means every dollar either you as the employer, or your employee as the account holder put into their MSA reduces the employee's taxable income to the State of Idaho by the same amount that went in. Reducing their taxable income literally reduces the amount of taxes they have to pay on their income that year.
So if you put $2,000 into their MSA to pay for an upcoming surgery, or to pay their insurance premiums for the year - you just reduced their taxable income by $2,000! That could be the difference between tax brackets, and depending on their situation could either get you them bigger tax refund, or significantly reduce the amount of taxes they owe the State of Idaho!
Second, there is no “use it or lose it” with the MSA (like there is with an FSA, or flexible spending account). This means the money that is put into their account is theirs to keep.
Whatever they don’t spend that year simply rolls over to the next year, growing their balance and increasing their “buffer” for either planned or unplanned medical expenses. It even earns tax-free interest while it sits in there!
Finally, the money they do actually spend out of their MSA on qualified medical expenses goes out of their account, tax-free. Meaning as long as they spend that money on those qualified expenses, they will never pay State income tax on those funds they earned.
It is important to note here, that if they spend MSA dollars on un-qualified medical expenses they're subject to a 10% penalty and they must pay income tax on what was spent. But there's no need to worry about that, because we've got your back! We can easily help you or your employees fix any accidental error on this or any other aspect of their MSA. Maximizing the benefits to your MSA and protecting you from problems is exactly what we're here for!
They can use their MSA money to pay for things like doctor and dental visits, contacts and eyeglasses, band-aids, insurance co-pays and even their health insurance or Medicare premiums! Imagine being able to pay a fixed cost like insurance premiums with tax-free money!
MSAs Are Portable
Another huge benefit to the MSA is that it’s so portable. Your employee's MSA belongs solely to them (not you, the employer) and is totally independent of their job or their insurance policy. So if any of those things ever change, their MSA and all the money in it follows them wherever they go. They can even take it with them into their retirement years to pay Medicare premiums in addition to normal qualified expenses. There are no age restrictions, so they can contribute to their MSA regardless of how old they are. And after age 59.5 they can take the money out as taxable income to be spent on anything they like with no penalty, should they decide to do so.
MSAs Are Flexible
MSAs are flexible and work to fit into each individual employee's situation! We already know the money they don’t spend rolls over each year, and that's certainly a great benefit! But that's more of a long-term saving strategy. What about people who aren't necessarily planning that far in advance, or people who just recently opened one up? With the MSA, your employees don’t need to be so far ahead of the curve and have money piled up in advance to take advantage of all benefits these accounts offer.
Let's use expected medical expenses, like insurance premiums and co-pays as an example. Your employees know they have insurance premiums to pay, or that the upcoming doctor’s visit is going to have a co-pay. They can deposit that money into their MSA first, get the tax break and pay their medical expenses from there! They can take advantage of the tax breaks by paying for all sorts of things out of the account - big or small, planned or unplanned.
Another reason the Idaho MSA is so flexible is because it has no age restrictions, so they can make tax-free contributions at any age. In their retirement years they can pay Medicare premiums out of their account in addition to the qualified expenses they could always spend their tax-free dollars on. But once they reach age 59.5, they can actually pull money out of their MSA as taxable income with no penalty, making the Idaho MSA kind of like a "medical IRA"!
Should they need to, they can even pull the money out prior to age 59.5 for an un-qualified, non-medical reason like a family emergency. They’ll just have to pay taxes on the money they withdraw in addition to a 10% penalty for doing so. Probably not the best idea, but in a pinch that's a great built-in safety feature! Ultimately their MSA money is theirs; it’s never frozen or locked away and they never lose it.
So no matter what the situation may be, the Idaho MSA is flexible and will adapt to fit all of your employee's needs.
MSAs Are Simple (with Idaho Independent Bank!)
Individuals, families and employers alike enjoy the MSA because with Idaho Independent Bank, it’s so simple to have one! This isn't just another bank account, or some "new insurance thing" that has all sorts of complicated rules you don't understand. Your MSA with IIB is your new best friend. We work with you and your employees to understand each individual's situation so we can help you maximize every last benefit of the account, the way it was intended to be!
Your Idaho MSA acts as your tax shelter, your nest egg, your buffer for unexpected medical costs. Our healthcare accounts division at IIB are the experts in your corner to insure your MSA operates like a well-oiled machine.
We accomplish this by being both proactive, and reactive with your MSA! We actively monitor both the State and the IRS regulations to protect your account and catch all sorts of things that can pop up and cause problems. Over-contributions, money withdrawn in error, updates to tax forms or rule changes... If something trips our alarm, we'll alert you and correct the issue before it's a problem.
We also handle all the questions you or your employees may ever have on your accounts, while you simply go about your day. We'll research whatever the question is, or fix whatever the problem may be and simply call you when it's handled. You won't ever find yourself having to research IRS regulations, or needing to call the bank and sit on hold for hours to comb through all the excruciating details relating to whatever question your employees may have on their MSA. Call our office and tell us what you need, and it's taken care of.
MSAs Will Help Them Plan
One of the biggest benefits to the MSA is that it allows your employees to plan for inevitable medical expenses in the future, and rewards them for doing so in the process! Whether they're old or young, sick or healthy, insured or not...they're going to have medical costs at one point or another. Some of them are fixed and expected costs, like their health insurance premiums. But others are unforeseen, and can not only blind side them with the aspect of being ill or injured, but with the high cost of the healthcare services they need to get well! This is where the MSA shines.
Everything they put into the account is tax-free, right? So for those fixed costs that they're expecting (like insurance premiums), they can put the money in first and then pay those bills with tax-free dollars! Your employees should make sure they get the State tax benefit for paying something they're going to have to pay, anyway.
And for those unexpected costs (like when they get sick or get hurt in an accident) having some money put away in their MSA as a "buffer" can make all the difference in the world. They'll be able to just focus on getting healthy, instead of worrying about how they're going to pay for these medical bills that seemed to have come out of nowhere. Especially if your employees don't even have insurance coverage right now. This is a safe and easy way to put aside what money they can afford, so when the time comes they're prepared.
The MSA will also help your employees plan for retirement! We already know the money they deposit in their MSA is tax-free, it earns tax-free interest while it sits, and it's spent out of the MSA tax-free on qualified expenses. But what about pulling the money out for other uses? Once they reach age 59.5, they can pull the money out for whatever they like! You'll have to include it as taxable income that year, but there is no 10% penalty (or any penalty) for doing so. This feature makes the Idaho MSA a great retirement vehicle, and has people referring to it as a sort of "medical IRA".
MSAs Will Save Them Money
Whether you’re an individual, a family or an employer group, almost everyone will benefit from opening a medical savings account through Idaho Independent Bank. The State tax shelter these accounts provide both the individual and the married joint filing families is almost unbelievable (at $10,000 and $20,000). In addition, the account isn't just a one-way street. You're allowed to actually spend that tax-free money on all sorts of qualified MSA expenses, and never pay back a dime of the income taxes you recuprated by placing it in the account.
You can spend the money on more traditional items like doctor's visits, blood tests, X-rays and hospital bills. But what if you're healthy? Think about the possibility of paying those monthly insurance premiums with tax-free dollars, or those office co-pays you know you have coming when you see your doctor. There are so many ways to reduce you and your employee's healthcare budget with the Idaho MSA it is remarkable.
It really is a breath of fresh air in an industry that has done nothing but increase cost to employers, employees, and everyone else under the sun for years.