If anyone understands the trials and tribulations of running a business, the team at SCORE of Kalamazoo and Southwest Michigan certainly does. The retired executives who populate that team work daily to help small businesses to succeed. In their latest newsletter, SCORE says that employee health care remains in reach of small businesses.
They acknowledge that while health care was once almost a routine employee perk, costs have spiraled over the years, forcing businesses of all sizes to cut back on their coverage or to increase the employee's contribution. Some have eliminated the benefit altogether.
SCORE reports that according to the U.S. Department of Health & Human Services, less than half of U.S. businesses with fewer than 10 employees offer health insurance. Only 15-percent of companies with 25 to 100 workers do so. However, as the competition for talented employees intensifies in the coming years, small businesses will have to find ways to lure good workers, and keep the ones they already have. Health coverage may well be an important bargaining chip.
One solution is to take advantage of high-deductible health insurance plans with a health savings account. Less costly than conventional plans, high-deductible plans cover major health and medical expenses for those who can afford some up-front medical costs. Participants have the option to open and make pre-tax contributions to a health savings account. Withdrawals are tax-free when spent on qualified medical expenses. Unspent funds carry over, so the accounts have the potential to accumulate significant balances over time.
What's more, employer contributions to a tax-favored HSA are exempt from payroll taxes, though the employee retains full control over the account. As a result, premiums can be 40-percent lower in a high-deductible HSA-qualified health insurance plan than those in a conventional co-pay plan.
More than 13.5-million already utilize HSAs, which are largely unaffected by the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Tax Credits Reconciliation Act. Expenses incurred for over-the-counter medications without a prescription are no longer eligible for payment or reimbursement from an HSA, and the penalty on account withdrawals to use for qualified medical expenses has increased from 10-percent to 20-percent.
However the Act will change rules for high-deductible plans in the coming years, and employers should monitor sites such as Health & Human Services HealthCare.gov for news and detailed information.
The National Association of Health Underwriters has a helpful HSA section on its website at www.nahu.org, with basic information on how HSAs work, insurance firms offering such plans and assistance with finding an agent. Firms also have the option of setting up their own plans, and arranging for employee HSAs.
If you'd like to learn more about how the team at SCORE is helping small businesses around Michigan's Great Southwest, you can attend a free learning opportunity at Watermark Brewing Company in downtown Stevensville on Thursday, October 20th from 5:30pm until 7:30pm. There is no charge for that session.
