Content provided in partnership with

Business Services Industry

HSAs—a growing trend in health benefits for businesses and individuals

Entrepreneur, Dec, 2004

Employers, employees and self-employed individuals facing escalating health-care costs now have a groundbreaking new health savings option that, combined with a high-deductible health plan, has lower premiums than traditional plans and at the same time does much more than just pay claims.

Health Savings Accounts, or HSAs, offer individuals with high-deductible health plans the opportunity to put pretax money aside, spend it tax-free on qualified health expenses, earn interest tax-free, and even save the money for health-care expenses in retirement. The employee, the employer and even family members can contribute money to the account, up to the lesser of the health plan deductible or a government-established maximum.

Most Popular Articles in Business: Research and Markets : Tesco Plc - SWOT Framework Analysis; Do Us a Flavor - Ben & Jerry's Issues a Call for Euphoric New Flavors; eBay made easy: ready to start an eBay business? These 5 simple steps will ...; Katrina's lawsuit surge: a legal battle to force insurers to pay for flood ...; Wal-Mart's newest distribution center opened last month near the southwest ...; More »

"Employers are looking at HSAs as a way to manage their health benefits costs, trading higher deductibles for lower premiums and tax advantages," says Chris Hakim, general manager for small group products for Aetna in the western United States. "They can save upward of 40 percent over traditional plans with lower deductibles. Then they have the option of whether to also contribute funds toward the employee's HSA." For employers with fewer than 50 eligible employees, Aetna allows members to use any HSA administrator, or it can provide a referral to one. For larger employers, Aetna offers an integrated product that includes both the high-deductible health plan and the HSA.

Once money is put into an HSA, it belongs to the individual, whether he or she switches jobs, retires or later chooses a different health plan. The choice of how to spend or save the money is up to the individual--an innovation that encourages people to be more careful health-care consumers. And that, ultimately, would benefit employers and employees alike by holding down health-care expenses.

"HSAs put consumers at the center of the health-care equation by empowering them to control the financial and health-care decisions that impact their lives," Hakim says. "Aetna members also have access to online tools to help them make informed health-care decisions--including Estimate the Cost of Care tools, a hospital comparison tool and more."

The federal government has established requirements to qualify for an HSA. An individual has to be covered under a health plan with a minimum annual deductible of $1,000 for individual coverage and $2,000 for family coverage. An out-of-pocket maximum under the plan can be no more than $5,000 for individual coverage and $10,000 for family coverage. (These are 2004 requirements; the legislation that created HSAs allows for annual adjustments.)

While some insurers are offering limited HSA-compatible plans, or requiring small businesses to offer a single plan to their entire work force, Aetna is committed to giving small business owners and their employees not only simplicity and affordability, but also choice.

This kind of flexibility draws employers' interest. "Our company was looking for an innovative, cost-effective way to provide health benefits to our employees," says Lori Marruffo, administrator of the 32-employee CPA firm Peterson & Co. LLP, in San Diego. "Aetna allowed us to give the HSA as an option without requiring all of our employees to be confined to it." The result? Almost half of their employees chose the HSA-compatible plan, pleased with the flexibility and liquidity that it provides.

"Companies of all types that are interested in offering attractive benefit packages, controlling the inflation on insurance, and empowering their employees are considering the HSA as an option," said Darren B. Todd, a financial consultant with SFG Benefit Insurance Services in San Diego. "Aetna has done a great job in creating a consumer-friendly, HSA-compatible plan design that is easy to explain, understand and use."

More information on HSAs can be found at www.aetna.com and at www.planforyourhealth.com, a new website sponsored by Aetna and the Financial Planning Association, where consumers can learn more about health benefits.

Business Services Industry

HSAs—a growing trend in health benefits for businesses and individuals

Entrepreneur, Dec, 2004

Find Research Guides for:

Find Featured Titles for: Home & Garden

Most Popular Articles in Business

Most Popular Publications in Business