The pros and cons of health savings accounts
SEARCH Pick Newspaper
Enter Keyword(s)
FIND A BUSINESS
Enter Category
More | Subscribe | 14-Day Archives (Free) | Long-Term Archives (Paid)
The pros and cons of health savings accounts
Sunday, October 31, 2004
INSIDE
Business
» American Biz Daily » Market Updates » Columnists » NewsFlash » Español » WebFlash » Newspapers
Site Tools
Small-business owners are always in search of affordable health-care insurance. Of the estimated 45 million Americans lacking health insurance, 60 percent either own or work for a small business, according to the National Federation of Independent Business. Health savings accounts are the latest health-care coverage plan touted as a cost-effective alternative for small business.
From Our Advertiser
» Cool contests & giveaways! » Shopping: Stores & Yellow Pages » Fun Guide: Things to do in NJ » Autos: Free price quote on new vehicles
E-mail This Print This Search Site Newsletters
Speak Up!
• Talk About Business • Log On to
The accounts are tax-free savings vehicles funded by individuals. If they choose, employers can contribute to them, too. They are coupled with basic health insurance plans with high deductibles, expected to be at least $1,000 for an individual and $2,000 for a family. Thus, the insured employee is covered for big-ticket illness, but must pay for routine visits and checkups from the tax-advantaged accounts. As is the case with many health- care plan options, they aren't a universal remedy. Created by the federal government, the accounts aren't available in New Jersey, but may be available next year. Here are some considerations for small-business owners and employees:
●
ChatXtra!
BUSINESS LINKS
Resources • Top NJ Employers • Biz-to-Biz Directory • New Jersey Chamber of Commerce Upcoming Events • Star-Ledger Road to Personal Wealth • Ask the Experts:
Health savings accounts belong to employees to pay health- care expenses and to take with them if they change jobs.
http://www.nj.com/business/ledger/index.ssf?/base/columns-0/1099198381218010.xml (1 of 3)11/22/2004 1:49:24 PM
The pros and cons of health savings accounts
●
Many small businesses may like the plans as a way to reduce their own outlays for employee health insurance. Some employers will channel some of the savings from their lower insurance premiums into contributions to workers' savings plans. Employees should ask if their employer is going to contribute to the accounts. Employers need to weigh whether they want to do that if the accounts leave with the employees. Legislation must be passed to allow the accounts to be offered in New Jersey beginning in January. Assemblyman Neil Cohen (D- Union) introduced legislation last week to change a state law that requires certain nonpreventive care or treatment under health insurance policies be provided without applying a deductible. The federal government requires the law be changed so health care savings accounts can be continuously offered in the state. Not all larger companies plan to offer the accounts. An employer survey by the Kaiser Family Foundation and the Health Research and Educational Trust found 6 percent of companies said they were very likely to offer some type of high-deductible plan linked to a savings account in the next two years. Onefifth said they were somewhat likely to offer them. The accounts work best primarily for healthy individuals, especially since the accounts accumulate year to year. They are less beneficial to chronically ill workers and cash-strapped individuals who would have a hard time paying the deductible, let alone set aside salary funds for a savings account. "High-deductible health insurance would redistribute the overall financial burden of health care in society from the chronically healthy, who normally would not have to spend the whole deductible, to the chronically ill, who probably would have to spend out of pocket the whole deductible, year after year," says Uwe Reinhardt, a Princeton University economist who studies health policy. Whether health savings accounts are a good answer for small businesses depends on several variables, including whether the employer already offers health coverage and whether employers would contribute some of the savings realized says Anne Gauthier, vice president of Academy Health, a Washington, D.C.-based nonprofit health services research organization. But for small businesses that haven't been able to afford any health coverage, the accounts are worth a close look. "It's another option, and that's what ... our members like about it," says John Holub, New Jersey director of the National Federation of Independent Business. "It's a tax-free account controlled by the individual -- one of the things that makes it so attractive." Dory Devlin writes about small business. She can be reached at ddevlin@starledger.com or in care of The Star-Ledger, 1 Star-Ledger Plaza, Newark, N.J. 07102.
Tax & Estate Planning, Wealth Management
An Advertising Section
●
●
●
STAR-LEDGER
» Get Home Delivery » Carriers Wanted » Newspapers in Education » Get Electronic Delivery » Star Ledger Ads » Shop, Click, & Save with The StarLedger Money Book! » Place Classifieds » Active Adult Communities » Commercial Industrial Real Estate » Spotlight on the Stage: Broadway Listings from The Star-Ledger » Contact Us
FEATURED LENDERS
Print This MORE BUSINESS • N.J. health-care spending continues to rise • Investors seem to think two wrongs make right • Warped CD prevents some people's access to photos
• More Stories
E-mail This
» NewJerseyRates.com » Independence Community Bank » EMR Data Services - NJRefinance. com » Christopher Rosato / Joseph Maurio
http://www.nj.com/business/ledger/index.ssf?/base/columns-0/1099198381218010.xml (2 of 3)11/22/2004 1:49:24 PM