Year after year health care premiums grow at an outstanding pace.
For America's small business owner this is a frightening reality.
As millions of entrepreneurs prepare their budget for 2008 they are faced with the uncontrollable growth of health care premiums for themselves, their families and even their employees.
In the preverbial darkness of health care a glimmer of light has been cast by congress that is spreading like a California wildfire - Health Savings Accounts or HSAs.
HSAs have sparked much conversation across the country.
The overwhelming consensus is that HSAs can provide a viable option for quality and affordable health care.
So what is a Health Savings Account? In short, an HSA is a tax exempt savings account coupled with a qualifying high-deductible health plan (HDHP).
Covered individuals and families are able to reduce their federal tax bills by making tax-deductible contributions to their HSA.
Many have described this as being similar to making deductible individual retirement account (IRA) contributions.
Unlike IRAs, there are no limitations or "phase out" rules for high earners.
Additionally, HSAs are transferable.
Meaning that if an HSA holder changes jobs for any reason the account goes with them.
This account gains interest over its duration and no penalties are imposed for withdrawal as long as funds are used for qualifying medical expenses.
Once an insured turns 65, they can also use their account to pay for things other than medical expenses.
If used for other expenses, the amount withdrawn will be taxable as income but will not be subject to any other penalties.
The benefits for small business owners appear to be substantial.
Premiums are reduced by offering the High Deductible Health Plan (HDHP), lower fixed costs since premium and account funding can be determined on an individual basis and reviewed annually.
HSAs also create incentives for employees to be involved in their own health care decisions.
Studies show that when premium dollars are re-allocated to individual accounts, people are more apt to get more involved with the process of getting the biggest bang for their health care dollar.
Of course, the tax savings connected with HSAs are one of the greatest benefits for small business owners.
The contributions an employer makes to an employee's HSA are made with pre-tax dollars.
In today's world of increasing health care costs, every business owner is looking for a way to cut costs without cutting benefits.
With an HSA program it seems as though there is an option that can accomplish both goals.
For more detailed information on HSAs, visit www.
gatewayinsurancesolutions.
com/hsa.
htm [http://www.
gatewayinsurancesolutions.
com/hsa.
htm].
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