Health Savings Accounts And Small Businesses

The costs of health care in America are shooting out of control. Health care cover is essential if one is to have a future free of health and financial problems. Health insurance policies are absolutely necessary but are generally unaffordable for the single person. Over 98% of us who hold health insurance policies get them through our employers. However, the rising costs of health insurance premiums are putting added pressure on businesses and other employers.

Large businesses pay out an average of 6000 dollars per year, per employee in health care expenses. To make matters worse, the costs keep rising. Over the last 5 years health care costs have risen over 15% percent creating an average monthly expenditure of 700$ a month per employee. This increase far exceeds inflation and the cost of living increases. It is also the reason why nearly half of all small businesses offer their employees no health cover at all.

Health savings accounts are a way to offset some of these expenses. They benefit the small business holder as well as the account holder. To qualify, one has to have a high deductible insurance policy. The higher deductible means that lower insurance premiums will be given. This makes providing health polices slightly more manageable for smaller businesses. The funds in the health savings account can then be used to pay for medical expenses that are not covered on the standard health policy. The deductible can be paid using these funds as well as drugs or any other medical costs.

The Health savings accounts offer other advantages to the small business owner. The money placed in the account is tax sheltered until it is used. There are addition tax benefits for setting up these accounts for employees.

With the rising cost of health care premiums in America today, it is little wonder that the small business owner finds it increasingly hard to fund health insurance for their employees. Less than 50% of small business owners today provide health cover and if current trends continue, the number will keep dropping. A health savings account is one way to help offset the costs. With lower monthly premiums, the policies will become more affordable. The higher deductible can be covered by the funds in the Health Savings account. This means that the employer gains some valuable advantages as well.