The HSA Option for Small Business Health Care

Health Insurance For Small Business

Health care premiums are facing continued growth while many small business owners prepare this year’s budget. A new approach enacted by Congress last year called HSA or health savings accounts, provides new avenues for reducing current healthcare costs. Learn how an HSA can benefit your small business.

What is a HSA?

An HSA is a new form of consumer directed health coverage pairing a high-deductible health plan with tax-free savings account for medical expenses. They are designed to reduce healthcare insurance costs for employers and employees.

Health Care Crisis for Small BusinessWith the cost of employee benefits rising, small businesses are being squeezed to find new ways of reducing their healthcare contributions. An HSA offers a new viable alternative.

According to The Wall Street Journal, big companies on average spend more than $6,000 per year on health insurance for each employee. Employer health care costs have risen an average of 15% each year over five years to an average of about $700 per month per employee, according to surveys by The Kaiser Family Institute and The National Association of Health Underwriters. Small wonder that 47% of America's small business owners provide no health care coverage at all.

Health premiums costs have outpaced both the 2.2 percent growth in wages and 2.3 percent growth in inflation by five times as reported by the Kaiser survey. The average premium for single coverage rose 9.2 percent to $3,383 annually. Can an HSA offer a fix?

The percentage that employees paid toward the premiums remained steady with singles picking up 16 percent of the tab, the same as in 2003. Employees paid 28 percent of the family premium, up from 27 percent last year. However, singles' out of pocket costs for the premium rose 9.8 percent to $558 annually while a worker's cost for family premium rose 10.3 percent to $2,661.

Kaiser reported that the increase was lower because health plans were paying less for hospital care, doctors and some drugs. Cost shifting has moderated somewhat because employers wanted to give their workers a break after years of demanding they pay more for their care.

The average deductible for a preferred provider organization rose 4.3 percent to $387 for a family of four. But in 2003 the deductible rose 9.5 percent, after a 43 percent surge in 2002.

Benefits of an HSA

-used in combination with a high-deductible health plan.
-contributions are not includible in gross income – they are tax-free.
-help employees become better health care consumers.
-payouts for qualified medical expenses are tax-free.
-savings are owned by the individual and can move from employer to employer.
-can "roll over" year-to-year to create a sizable retirement nest egg.
-accumulated interest and dividends are tax-free or tax-deferred.
-contributions by employers are exempt from payroll taxes.
-"the better rainy day fund" health care savings plan.

An HSA is particularly well situated to help small firms without medical plans to offer them to their employees. An HSA is a form of tax-deferred retirement accounts that can be more easily drawn upon for emergencies than their IRA counterparts.

HSAfinder is a publication of Information Strategies, Inc. who's president, JoAnn Laing has just authored, "The Small Business Guide To HSAs." To obtain a copy at a special price go to www.hsafinder.com

Health Insurance For Small Business

The HSA Option for Small Business Health Care

Health Insurance For Small Business

Health care premiums are facing continued growth while many small business owners prepare this year’s budget. A new approach enacted by Congress last year called HSA or health savings accounts, provides new avenues for reducing current healthcare costs. Learn how an HSA can benefit your small business.

What is a HSA?

An HSA is a new form of consumer directed health coverage pairing a high-deductible health plan with tax-free savings account for medical expenses. They are designed to reduce healthcare insurance costs for employers and employees.

Health Care Crisis for Small Business

With the cost of employee benefits rising, small businesses are being squeezed to find new ways of reducing their healthcare contributions. An HSA offers a new viable alternative.

According to The Wall Street Journal, big companies on average spend more than $6,000 per year on health insurance for each employee. Employer health care costs have risen an average of 15% each year over five years to an average of about $700 per month per employee, according to surveys by The Kaiser Family Institute and The National Association of Health Underwriters. Small wonder that 47% of America's small business owners provide no health care coverage at all.

Health premiums costs have outpaced both the 2.2 percent growth in wages and 2.3 percent growth in inflation by five times as reported by the Kaiser survey. The average premium for single coverage rose 9.2 percent to $3,383 annually. Can an HSA offer a fix?

The percentage that employees paid toward the premiums remained steady with singles picking up 16 percent of the tab, the same as in 2003. Employees paid 28 percent of the family premium, up from 27 percent last year. However, singles' out of pocket costs for the premium rose 9.8 percent to $558 annually while a worker's cost for family premium rose 10.3 percent to $2,661.

Kaiser reported that the increase was lower because health plans were paying less for hospital care, doctors and some drugs. Cost shifting has moderated somewhat because employers wanted to give their workers a break after years of demanding they pay more for their care.

The average deductible for a preferred provider organization rose 4.3 percent to $387 for a family of four. But in 2003 the deductible rose 9.5 percent, after a 43 percent surge in 2002.

Benefits of an HSA

used in combination with a high-deductible health plan.

contributions are not includible in gross income – they are tax-free.

help employees become better health care consumers.

payouts for qualified medical expenses are tax-free.

savings are owned by the individual and can move from employer to employer.

can "roll over" year-to-year to create a sizable retirement nest egg.

accumulated interest and dividends are tax-free or tax-deferred.

contributions by employers are exempt from payroll taxes.

"the better rainy day fund" health care savings plan.

An HSA is particularly well situated to help small firms without medical plans to offer them to their employees. An HSA is a form of tax-deferred retirement accounts that can be more easily drawn upon for emergencies than their IRA counterparts.

HSAfinder is a publication of Information Strategies, Inc. who's president, JoAnn Laing has just authored, "The Small Business Guide To HSAs." To obtain a copy at a special price go to www.hsafinder.com

Health Insurance For Small Business

5 Ways to Reduce Health Insurance For Small Business Costs

Health Insurance For Small Business

Health insurance is a major cost of doing business, especially for small companies and mom-and-pop firms. With premiums soaring, many small business owners are asking their employees to shoulder more of the financial burden or cutting benefits entirely.

The New York-based Commonwealth Fund, an advocacy group for health care reform, says health insurance for small business costs average 18 percent more than those of larger businesses. In California, health insurance for small business costs increased 10 percent in 2006 alone, according to the California Employer Health Benefits Survey.

Those costs have proven too high for many small businesses. According to the U.S. Chamber of Commerce, more than 45 million Americans are uninsured, and approximately 60 percent of the uninsured are employed by small businesses.

In 2006, the average monthly cost health insurance for small business plans, which are largely used by small businesses, was $311 per month, according to a survey by America's Health Insurance Plans, a trade group representing health insurance companies. The average premium for a family of four was $814 per month, the association reported.

Health insurance for small business may take a huge chunk out of your revenue, but benefits often attract better employees and help retain existing workers. Satisfied, healthy employees are more likely to help your business grow. If you're struggling to provide health insurance, here are some tips that could reduce your health insurance for small business costs.

1. Keep employees healthy. Motorola Inc., for example, has instituted a comprehensive wellness program that includes disease management for afflictions such as asthma and diabetes, as well as offering flu shots, cancer screenings, smoking-cessation sessions and a round-the-clock phone line staffed by nurses. The company found that for every dollar it invested, it saved $3.93, according to a 2003 report by the U.S. Department of Health and Human Services report, “Prevention Makes Common Cents.” Likewise, heavy machinery manufacturer Caterpillar estimates that its wellness program will save the company $700 million by 2015.

Such wellness programs don’t just keep company accountants happy. They’re also popular with workers. Pharmaceutical giant Pfizer Inc. found that 85 percent of its employees in its New York offices participated in at least one wellness program, and that 80 percent used on-site facilities such as fitness centers or physical therapy, according to the HHS report.

2. Reduce coverage. Cutting coverage or asking your employees to contribute more to the plan is a logical step to reducing health insurance for small business costs. The downside of this strategy is that it will likely prove unpopular with workers.

It's fairly common for businesses to exclude dental and vision insurance, but talk to your employees to see what they want covered. They might opt for having dental and vision insurance and a health savings account, for example.

3. Consider health savings accounts. Health savings accounts are an increasingly popular option for owners of small businesses. These tax-exempt accounts, which are used to pay for certain medical expenses, could reduce your health insurance for small business costs while giving your employees tax breaks.

You must have a high-deductible health insurance plan to establish a health savings account. For example, in 2007 the minimum deduction for individuals is $1,100; for families, it is $2,200. That means that you or your employees would have to pay $1,100 out of your own pockets for health care expenses such as doctors' visits or prescriptions before you are reimbursed by the insurance company.

But there are benefits: In 2007, employers, workers, and their families can contribute tax-free up to $2,850 for individual health savings accounts or $5,650 for family accounts.

These funds can only be used to cover health care costs, and employees can take their accounts with them if they leave. The funds generally do not expire.

Contributions and withdrawals are both tax-free, and individuals can claim tax deductions on their 1040 forms – meaning employees don't need to itemize to get the tax break. Employer contributions are also tax-deductible for business owners but are not required. Individuals can also set up health savings accounts.

To establish or participate in a health savings account, your only comprehensive health insurance can be the high-deductible health insurance plan and they must be offered to all employees.

Health savings accounts benefit healthy employees who do not regularly see doctors. You or your employees can, however, have health insurance that specifically covers ailments, including certain diseases or illnesses, accidents, dental and vision care.

4. Join a group. Small group health insurance plans cover between two and 50 employees, although there are "group of one" insurance plans for the self-employed that offer similar benefits.

The larger your group, the lower your premiums will be. According to the America's Health Insurance Plans 2006 survey, 80 percent of small groups polled had 10 or fewer employees in their health insurance plans, and the average monthly premiums for individuals was $330. Firms with between 26 and 50 employees paid $287 a month for single premiums.

If your business has fewer than 10 employees, you can still partner with other businesses or individuals and expand your group plan. Note that health care laws are governed by the states, so you'll want to partner with people in your state.

5. Shop around. Health insurance is a huge business, so shopping around for different providers could reduce your health insurance for small business costs. Start by searching the Internet and also ask other owners of small businesses what they pay for health insurance. Insurance agents will charge fees, but you'll save time and they can investigate health insurance plans for you. The National Federation of Independent Businesses partnered with eHealthInsurance, a national health insurance agency that gives you several quotes online.

Tiare Rath is a freelance journalist and a former personal finance columnist for MarketWatch.com

Health Insurance For Small Business

Health Insurance For Small Business Plans - How to Get a Cheap Rate

If you are a small business owner, you want to offer your employees the best health insurance for small business plan available. However, because health insurance can be among the most expensive items in your budget, you also want to get a cheap rate.

Decide What Kind of Health Insurance For Small Business You Want to Offer

Three types of health insurance for small business plans are available:

* Fee for Service plans are the most costly health insurance for small business plans. Your employees can choose any doctor or hospital. They receive a fixed reimbursement for medical costs, usually around 80%.

* PPOs (Preferred Provider Organizations) provide comprehensive health services but employees must choose a doctor and hospital that is part of the PPO's network.

* HMOs (Health Maintenance Organizations) are similar to PPOs in that employees must choose a doctor and hospital that is in the network. However, HMOs usually offer fewer choices than PPOs and may require approval before an employee can visit a specialist. HMOs offer the cheapest rate of health insurance for small business plans.

Gather Information the Insurance Company Will Need to Develop A Quote

The rates of health insurance for small business plans are based on such factors as * The general age and health of your employees, including tobacco use. * The hazards of the job. * The location of the business.

You need to collect this information before you shop of health insurance for small business.

Get Quotes from Multiple Companies

Now you are ready to compare the rates and benefits of health insurance for small business plans. The Internet makes this task easy. You can fill out a form online and receive quotes from multiple health insurance for small business companies.

At some insurance sites, you can even chat online with insurance professionals, getting complete and accurate answers to all your insurance questions (see link below). Then you can choose which health insurance for small business plan offers the cheapest rate for you and your employees, while offering the best benefits for your money.

Visit http://www.LowerRateQuotes.com/health-insurance.html or click on the following link to get small business health insurance plan quotes and see how much you can save. You can get more insurance tips in their Articles section.

About the Author

The authors, Brian Stevens and Stacey Schifferdecker, have spent 30 years in the insurance and finance industries, and have written a number of articles on health insurance for small business plans.

Health Insurance For Small Business