“Sick Day” HSAs Would Benefit Workers

Mandating Sick Pay Would Hurt Employees’ Pocketbooks: NCPA

Source: NCPA

Expanding Health Savings Account (HSA) eligibility to all employees would help them more effectively replace income lost due to illness than mandating seven days of paid sick leave, says NCPA Senior Fellow Devon Herrick in a new report.

“Using HSAs for medical care, to reimburse pay lost to illness, or as a way to stash cash for post-retirement medical care is a much better idea than mandating comprehensive coverage and paid sick-leave,” says Herrick. “Mandating sick days could harm employment prospects, decrease wages, and hurt the bottom line of employers and employees alike.”

Much like paid vacation days, “paid” sick days are not free. According to the report, for an employee earning $15 an hour:

Seven days of paid sick leave costs the worker $840 in gross pay;

An employer would have to reduce the worker’s pay by 2.7 percent to compensate for the cost of adding seven days of mandated sick leave to 10 days of paid vacation.

“Workers themselves bear the cost of their own fringe benefits in lieu of cash wages. Why not give them tools to manage the trade-off between wages and income lost to sick days,” suggests Herrick. “Allowing all workers to set aside funds in an HSA to replace income lost to sick days would allow them to reclaim those funds for nonmedical purposes when a sick day isn’t used, or to save for medical bills below their deductibles.

“Sick Day” HSAs: A Better Idea than Mandated Sick Pay: http://www.ncpa.org/pub/ib159

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