Health Spending Accounts (HSAs) work like bank accounts, but without cash. The employer deposits a set amount as a “credit” in your account and you use that to pay for approved medical and dental expenses.

Employers are promoting HSAs as a supplement to existing plans, to pay for costs currently not covered. However, this is a slippery slope.

Where HSAs have been introduced, we see employers seeking to cut back on insured benefits and increase dependence on the HSAs. Employers like the predictable costs of HSAs, plus employer contributions are tax deductible.

Employers often try to sell HSAs to workers by claiming they are “tax free dollars”.

What should you know about HSAs? Download the fact sheet.