HR: HSA's- Managing the Rising Costs of Healthcare
Health care reform continues to be a hot topic of discussion in the US today. It is predicted that in 2010 employers can expect to see as much as a 9% increase in their health care costs. So how do businesses manage the rising costs of health care while still providing quality employee benefits?
One option that is becoming increasingly popular, especially for small businesses, is Health Savings Accounts. (HSA's) Although they have been slow to take root, today more than 3 million Americans have opted for this insurance alternative.
You may be asking yourself, what is a HSA? In simple terms, a HSA combines a high deductible health plan and a tax-free savings account. HSA's allow employees and their employers to deposit pretax funds into an employee-owned bank or investment account. It is a non-taxable benefit for the employee and a 100% business deduction for the company. The money can be used at any time by the employee to pay for eligible medical expenses. Additionally, if employees change jobs or don't use the money their HSA grows, as it accrues interest, in their tax free account.
Health Spending Accounts have been criticized for transferring the burden of health care to individuals and requiring employees to pay for more of the out-of-pocket expenses. While this might be true, it also allows participating employees to take greater responsibility for their health care. It requires individuals to become smart health care consumers- purchasing what they need, in the same way they purchase other services.
For small businesses, HSA's are a unique alternative to expensive health insurance programs. During these challenging economic times, they can provide businesses with a level of flexibility and affordability, while giving individuals and families the option to lower health care bills and save for future health care costs.