HSAs: A growing alternative for businesses large and small

The rising cost of quality health care continues to be a problem for both employers and working families. And today, the need to resolve this problem is changing the health care industry.

According to reports, only 59 percent of companies with fewer than 200 workers are offering health benefits, and the number continues to fall. This means that two out of every five of these workers must find health care coverage for themselves.

As more employers and individuals search for affordable health care options they are increasingly being drawn to Health Savings Accounts. According to Treasury Department forecasts, 25-30 million Americans will be covered by HSAs by 2010.

How it works
With an HSA as part of a HDHP (high-deductible health insurance policy), your money is placed into a tax-deferred health account. This money can be withdrawn without any tax penalty so long as it is used for qualified medical expenses. This flexibility enables you to customize your health care benefits by directing dollars to the area(s) most important to you, not just those areas dictated by your health plan.

As the money in the HSA grows, you're building financial resources that you can use for routine or future medical care. Any money left in the account at the end of the year rolls over to the next year. HSAs also provide complete portability by enabling the account owner to transition the account from job to job or health plan to health plan

A smart choice
Proponents of HSAs believe they can help reduce the growth of health care costs and increase the efficiency of the health care system.

For consumers, HSAs encourage saving for future health care needs and provide needed care without a gate keeper to determine what benefits are allowed. With HSAs and high-deductible plans, consumers have the opportunity to play a more active role in their health care choices.

HSAs enable businesses to provide health coverage when it has been dropped or is in jeopardy of being dropped. And now, driven by both consumer and employer interest, even large corporations are offering them. In fact, the share of all companies offering HSA plans has grown to 40 percent.

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