Health Savings Accounts: Healthcare Option for the Small Business

When it comes to employment, one of the highest valued benefits is healthcare. This is true for both the employee and the employer. You see, as an employer, health benefits raise the value of your compensation package enticing quality employees. In addition, a good quality health plan can make a difference in absent workers due to illness, but how do you find an affordable health plan?

First, you need to understand why health plans are so high. You see, when you apply for health coverage individually there are many hoops you have to go through. If you have any health problems you end up paying a fortune or foregoing healthcare altogether. However, when you sign up for a health plan through your employer you have to be accepted. In fact, you will even notice that it may be cheaper. How do they do this? The young workers who would normally get individual coverage for pretty cheap might have a higher price through the company. Essentially, they are spreading the costs making it a little cheaper for the older, unhealthier group and a little more expensive for their younger counterparts.

So, how do you please both groups? As small business owner, you should think about having a Health Savings Account in addition to your health care plan. This account is similar to the medical savings account of yesterday in that it provides employees with a savings account that earns interest and is tax free for medical purposes. These accounts are perfect for the younger employees who are probably not going to need the money right off. This will allow the money to grow. The best aspect for the small business owner is that, unlike the old medical savings accounts, these accounts do not leave with the employee. When the employee’s employee relationship is terminated the money reverts back to the employer.

Together with a traditional health plan, a Health Savings Account could be the answer you are looking for. While the traditional health plan can be beneficial to those employees who can’t find coverage otherwise, the Health Savings Account can be incentive for the younger, healthier employee. It is important to note that the Health Savings Account is exclusively for employees of a small business who are covered under a high deductible plan. More information can be found by visiting the IRS’s website.