Health Insurance Articles
How To Provide Health Insurance To Employees Of A Small Business
2010-03-05
Finding comprehensive, customized, and most importantly affordable health insurance coverage has been a major feat for many Americans. According to Georgia Trend, studies show that more than 44 million Americans lack health insurance, small business employees representing a large portion of that figure. These companies must develop and implement a creative and cost effective solution to end the health care crisis for their employees. In December 2003, lawmakers constructed an account, which saves small organizations up to 40% and creates coverage for employees and their families. A Health Savings Account (HSA) is a tax-advantaged medical savings account, which individuals may use to pay for medical, dental, and vision expenses.
According to the U.S Treasury Department, the amount an employee or employer may contribute to a Health Savings Account is an annual amount up to $2900 for self-coverage and $5800 for families. If the funds are unused, the balance will continuously roll over year after year. Funds can be used to pay for minor or major medical expenses such as surgeries or prescriptions. The retrieval of funds for non-medical expense purposes will be subject to income tax and a 10% penalty on the amount withdrawn. Moreover, funds may not be transferred to other accounts such as IRAs or 401(k)s. These rules may seem rigid, however, investing in a HSA is a unique and universal way for small companies to provide coverage for their employees.
There are various ways funds may be deposited into a Health Savings Account. Employees may directly deposit an allocated amount into their account per pay period, or may choose to deposit funds when additional means are available. Either way, it is at the discretion of the employee to distribute funds and be knowledgeable of any changes that may occur during the period of their personal Health Savings Account. Once an employee reaches age 65, he/she qualifies for health care administered by the government, Medicare. Any unused monies in the HSA may be used to pay premiums, prescriptions or co-pays.
A downfall of the HSA is the high-deductible health plan (HDHP), which is used in conjunction. Employees typically have a lower deductible, yet higher out of pocket costs for copayments - the amount paid before services are rendered. According to the Small Business Administration (SBA), a typical deductible per individual is $1100, or $2200 for family coverage. Here's the catch, each time an insured employee pays a copay, it goes towards the deductible, and once the deductible is met, the health insurance provider begins to pay for medical expenses. Providing health insurance to employees is a reality for small businesses.
