According to the American Health Insurance Providers (AHIP,) the number of individuals enrolled in an HSA-type insurance plan went from 438,000 in 2004 to 3.2 million in 2005...a seven fold increase in one year! And, by the year 2010, the Treasury Department projects 40 to 45 million people will be covered. As an employer or business owner, this means you should have a thorough understanding of the HSA (Health Savings Account) versus other health insurance plans. In these unfortunate times of rapidly rising insurance costs, both you and your employees can benefit from this new trend in health insurance. ----------------------- Dual Option Plans ----------------------- Many carriers now offer Dual Option Plans for those who want the security, affordability, flexibility and control that a traditional high-deductible plan alone might not offer. This allows the employers with ALL levels of employee sophistication to become familiar with the HSA concept without pigeonholing their personnel into a particular plan. Education and exposure to HSA's is essential to Employer/Employee understanding. By offering both a traditional medical plan and a High Deductible Health Plan/HSA combination, employees are permitted to select the plan that best meets their needs. At the same time, the employer (who is required to have two or more employees) can benefit from the premium savings and tax savings available through pre-tax HSA contributions. Most major carriers present a dual option plan, but many require ten or more employees in order to offer it. ----------------------- HSA Employer Participation Facts ----------------------- Employees can contribute on either after-tax or pre-tax basis; however, if they select after-tax, they should count this as an above-the-line deduction on their tax return. This is what makes their contributions tax-free. If they select pre-tax, it can be done through a Section 125 which is also called a salary reduction" or cafeteria plan." Under the IRS Code Section 125, employees can elect to regularly deduct nontaxable health benefit costs that they have agreed to cover, thus reducing their taxable income. This is an advantage to the small-business owners who can't necessarily afford to purchase health coverage. And it gives employees an incentive to seek medical care and purchase prescription drugs and over-the-counter remedies. Employers can contribute as much or as little as they want provided you stay below the legal limit on annual contributions to the account. And you can deposit a lump sum or in any amounts or frequency you desire; however, keep in mind that the funds belong to the employee after they are deposited. Don't let your employees drown in a vast sea of health plans make them aware of the advantages and disadvantages of each plan offered. It is important to educate them of the reasons that many individuals and families are switching to an HSA plan; this includes the fact that it gives you more control of your healthcare decisions and is a great tool for saving additional money; whether to use for medical expenses, or to assist with your financial future. Creative Benefit Resources is an industry leader for HR outsourcing services including human resources, payroll services, employee benefits, worker's compensation, HR training and timekeeping solutions. CBR uses a PEO (Professional Employer Organization) model which means reduction of your administrative headaches and cost, allowing you to spend your time doing what you should be doing...growing your business and enjoying the benefits of ownership. Contact us for more information on we can help your business thrive.
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