New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

A.O. Smith Employees, Prepare for Enhanced HSA Benefits in 2025

Healthcare Provider Update: Healthcare Provider for A.O. Smith A.O. Smith primarily offers healthcare benefits to its employees through a selection of insurance plans, which include both individual and family coverage options. Specific details on the providers or plans may vary based on location and employee level, but many employees utilize major providers like Blue Cross Blue Shield or Aetna for their healthcare needs. Potential Healthcare Cost Increases in 2026 In 2026, A.O. Smith employees may face significant healthcare cost increases, primarily driven by anticipated hikes in Affordable Care Act (ACA) premiums. Reports indicate that some states are expecting increases of over 60%, affecting the insurance landscape as federal subsidizations expire. As many as 22 million marketplace enrollees-constituting about 92% of policyholders-could see their out-of-pocket premiums rise by more than 75%. This drastic increase in healthcare costs is compounded by rising medical expenses and pressure from major insurers, resulting in a challenging financial environment for employees planning their healthcare budgets. Click here to learn more

For A.O. Smith employees, maximizing contributions to your HSA in 2025 may be a smart way to control costs around healthcare and also grow your long-term savings for retirement, said.

With the increase in HSA contribution limits coming soon, A.O. Smith employees approaching retirement should take advantage of this opportunity to grow their healthcare savings now so they can take a tax-efficient approach to future medical costs, said Sullivan.

In this article, we will discuss:

1. Limits on 2025 IRS health savings account (HSA) contributions.

2. How HSAs give you a triple tax advantage and help you control costs for healthcare.

3. HSAs & retirement planning & Medicare premiums.

The IRS has announced inflation-adjusted increases to the health savings account (HSA) contribution limits for 2025. The contribution cap for those with self-only health coverage will increase from USD 4,150 in 2024 to USD 4,300 in 2025, and for families, the maximum will increase from USD 8,300 to USD 8,550.

HSAs provide a triple tax benefit - contributions are deductible, account assets grow tax-free, and withdrawals for approved medical expenses are tax-free. Such features help HSAs manage healthcare costs.

Your high-deductible health plan must offer an HSA. For the year 2025, the IRS says the plans must carry a USD 1,650 individual deductible and USD 3,300 family deductible.Even with all these benefits, a 2023 survey by the Plan Sponsor Council of America found only 19% of HSA account holders invest—most keep their savings in cash—potentially missing big growth opportunities.

The IRS is also updating the catch-up contribution limit for A.O. Smith employees over age 55 this year—keeping the USD 1,000 catch-up contribution for now.Understand HSAs and how they could benefit your financial strategy—especially with the rise of healthcare costs and retirement planning. Prompt financial decisions such as switching to a Roth IRA or drafting a will are life planning steps as well.

And for A.O. Smith employees approaching retirement age: HSA money can help pay for Medicare premiums when you turn 65. That includes Medicare Advantage plans, as well as Parts B and D premiums, although Medigap premiums are not eligible for HSA expenditure. While not all medical expenses are covered by Medicare, funding these costs through HSAs could optimize your healthcare spending in retirement. A 2022 study by Fidelity Investments estimated medical costs for a retired couple would be around USD 315,000 after taxes.

Consider your health savings account (HSA) an essential tool in your financial toolkit. Like getting a new phone, increasing HSA contribution limits for 2025 gives you more options to manage and invest in your healthcare. You can think of contributing to your HSA as downloading an app that gives you triple tax benefits—deductions on contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. This keeps your health coverage as current and efficient as new technology—making your HSA a critical component of your A.O. Smith retirement planning strategy.

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Sources:

1. Fidelity Investments. 'HSA Contribution Limits 2024 and 2025.' Fidelity.com , 23 Jan. 2025, https://www.fidelity.com/learning-center/smart-money/hsa-contribution-limits . Accessed 5 Mar. 2025.

2. Plan Sponsor Council of America (PSCA). 'Helping Employees Enroll in HSAs.' PSCA.org , 9 Nov. 2023, https://www.psca.org/news/psca-news/2023/11/PR_2023_HSAreprot . Accessed 5 Mar. 2025.

3. Internal Revenue Service (IRS). 'Part III Administrative, Procedural, and Miscellaneous.' IRS.gov , May 2024, https://www.irs.gov/pub/irs-drop/rp-24-25.pdf . Accessed 5 Mar. 2025.

4. Woodruff Sawyer. 'IRS Releases 2025 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits.' Woodruffsawyer.com , 13 May 2024, https://woodruffsawyer.com/insights/2025-hsa-limits-released . Accessed 5 Mar. 2025.

5. Plan Sponsor Council of America (PSCA). 'HSAs: A Growing Retirement Savings Strategy.' 401k Specialist , Nov. 2023, https://401kspecialistmag.com/higher-numbers-of-hsas-positioned-as-retirement-savings-strategy . Accessed 5 Mar. 2025.

What type of retirement savings plan does A.O. Smith offer to its employees?

A.O. Smith offers a 401(k) retirement savings plan to its employees.

How can employees of A.O. Smith enroll in the 401(k) plan?

Employees of A.O. Smith can enroll in the 401(k) plan through the company’s HR portal during the enrollment period or when they first become eligible.

Does A.O. Smith match contributions to the 401(k) plan?

Yes, A.O. Smith provides a matching contribution to the 401(k) plan, helping employees maximize their retirement savings.

What is the maximum contribution percentage that employees can contribute to the A.O. Smith 401(k) plan?

Employees can contribute up to the IRS annual limit, which is adjusted each year. A.O. Smith encourages employees to check the latest limits.

Are there any fees associated with the A.O. Smith 401(k) plan?

Yes, like most 401(k) plans, the A.O. Smith 401(k) plan may have administrative fees, investment fees, and other related costs. Employees should review the plan documents for specific details.

Can employees take loans against their 401(k) savings at A.O. Smith?

Yes, A.O. Smith allows employees to take loans against their 401(k) savings, subject to specific terms and conditions outlined in the plan.

What investment options are available in the A.O. Smith 401(k) plan?

The A.O. Smith 401(k) plan offers a range of investment options, including mutual funds, target-date funds, and other investment vehicles.

When can employees of A.O. Smith start withdrawing from their 401(k) accounts?

Employees can typically start withdrawing from their A.O. Smith 401(k) accounts at age 59½, although there are provisions for hardship withdrawals and loans.

What happens to the 401(k) plan if an employee leaves A.O. Smith?

If an employee leaves A.O. Smith, they can either roll over their 401(k) balance to another qualified plan, cash out, or leave the funds in the A.O. Smith plan if eligible.

Is there a vesting schedule for the A.O. Smith 401(k) plan?

Yes, A.O. Smith has a vesting schedule for employer contributions, which means employees must work for a certain period to fully own those contributions.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

In July 2024, A.O. Smith announced a restructuring plan that includes workforce reductions affecting approximately 5% of its employees globally. This decision follows a period of declining sales and a strategic shift to focus on high-growth markets.

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For more information you can reach the plan administrator for A.O. Smith at 11270 West Park Place, Suite 170 Milwaukee, WI 53224; or by calling them at (414) 359-4000.