What Is the HSA 1750 Plan, and Is It Right for a Small California Business?

What is the HSA 1750 plan?

The HSA 1750 is a level-funded plan on the Cigna network, designed to pair with a health savings account. The underwriting guidelines are simple: a five-question employer health statement and at least five enrolled employees. There's no payroll verification. Employees get the minimum deductible the IRS allows for an HSA-qualified plan, plus an account they own and keep.

How low is the deductible on the HSA 1750 plan?

The plan has a $1,750 single / $3,500 family deductible, the minimum deductible the IRS allows for an HSA-qualified plan. The IRS sets these limits every year, so the figures for next year need to be checked against the new IRS guidance before you plan around them. Your quote will show the current numbers.

How does the HSA deposit and payroll contribution work?

The plan includes a $25-a-month deposit into each enrolled employee's HSA. The deposit is built into the premium the employer pays. Once the employer pays the premium, the money is transferred to Lively for the employee's HSA. The $25 doesn't go into the employee's account until the employer pays the billing, and there's no separate step to fund it. That deposit counts toward the employee's annual federal HSA limit. Employees can add their own money pre-tax through payroll with a Section 125 plan, and the account is held with Lively, the plan's HSA administrator, so the money belongs to the employee.

What can employees pay for with the HSA debit card?

The HSA debit card pays for IRS-qualified medical expenses, including many the plan doesn't cover, like dental, vision, and your deductible. Employees swipe the card the same way they would any debit card, and the money comes out of their own HSA balance. Spending on qualified expenses stays federal tax-free.

What happens to unused HSA money at the end of the year?

Unlike an FSA, there's no use-it-or-lose-it. The money rolls over every year and stays with the employee if they change jobs. That makes the HSA a long-term account, not a yearly spending bucket. Over time, the balance can build into a cushion for future medical bills or for retirement.

Can employees invest their HSA money?

Yes. Employees don't have to leave their whole HSA balance sitting in cash. Through Lively, employees can invest part of their HSA, including through a Charles Schwab brokerage account. Using Schwab costs $25 a year while the balance is under $3,000, and that fee goes away once the balance is over $3,000. On this plan, $500 stays in cash, and the amount above $500 can be invested. The money stays inside the HSA when it's invested. Investment growth is federal tax-free when it's used for qualified medical expenses, but California taxes it on the state return. Investment fees may apply. Investments can lose value, and this isn't investment advice, so employees should pick options that fit their own situation.

Here's a simple example. An employee who puts in $150 a month, plus the $25 plan deposit, could have about $2,100 saved in a year (before any earnings). That's enough to cover most of the $1,750 deductible, and unused money keeps growing for future medical bills or retirement. Results depend on what each employee contributes and spends.

What are the HSA rules at 65 or older?

At 65 or older, employees can use HSA money for anything; non-medical withdrawals are taxed as income but have no penalty. Before 65, non-medical withdrawals are taxed plus a 20% penalty. Money spent on qualified medical expenses is federal tax-free at any age. That makes the HSA useful well into retirement for employees who save steadily.

Are HSA contributions tax-free in California?

Not on the state return. The tax breaks for HSAs are federal. California doesn't follow the federal HSA tax break, so contributions and growth are taxable on your California return. Employees still get the federal benefit, but they should know the state treatment is different before they decide how much to put in. The $25 plan deposit is also taxable wages on the California return. A CPA can confirm the details.

Who is eligible to contribute to an HSA?

To contribute, an employee must be on an HSA-qualified plan and have no other health coverage that isn't HSA-qualified (including a general-purpose FSA, even through a spouse; dental and vision are fine), not be enrolled in Medicare, and not be claimed as someone else's dependent. The IRS sets contribution limits every year, so check the current figures before setting payroll amounts. For 2026, the federal limit is $4,400 for individual coverage and $8,750 for family coverage, and the $25 monthly deposit counts toward that total. For 2027, the limit is $4,500 for individual coverage and $9,000 for family coverage. Employees 55 or older can add a $1,000 catch-up contribution each year, in both 2026 and 2027.

What does the HSA 1750 plan cost per month?

Pricing for a level-funded plan depends on your group's census and underwriting, so every group's quote is different. The figures below are sample monthly rates only, not a quote and not a promise of what your group will pay. Ask us for a quote based on your own group to see your actual numbers.

Sample monthly rates (depend on your group's census and underwriting):

To get a starting estimate for your group, try the XGB calculator. It takes a couple of minutes, no employer information needed.

Why should employers explain the HSA to employees?

Many employers set up an HSA plan and never explain it to employees. When it's explained well, employees tend to appreciate it, and watching the account grow is a reminder of the benefit of working there. A short walkthrough at enrollment covers the deposit, the debit card, and the rollover.

What if an HSA plan isn't a fit for my group?

If an HSA plan isn't a fit, two non-HSA options can be offered alongside it: a traditional PPO or a deductible plan. Some crews prefer predictable copays over a higher deductible, and that's a fair choice. We'll look at your census, your budget, and how your employees use care, then lay out the options side by side so you can decide.

Who can help a small California business set up the HSA 1750 plan?

We can. I've spent about 30 years helping employers in California choose and explain group benefits. We'll quote the plan for your group, help set up the Section 125 payroll piece, and give your employees a plain explanation of how the HSA works so they actually use it.

Call me at 888-954-8999, or start with the XGB calculator. It takes a couple of minutes, no employer information needed.

Related: Why are California employer health plans so expensive? | All posts

This is for informational purposes only and is not legal or tax advice. Please review with your own attorney or CPA before acting on it.

NP Benefit Services, Norco, California | 888-954-8999 | CA License #0C10932