Offset Business Costs With High Deductible Health Plans And A Health Spending Account

Running a small to mid-size business is getting more and more expensive. Operational costs, product purchases, shipping, gasoline � it seems every aspect of the economy is seeing price increases. Businesses continue to attempt to reinvest for future opportunities with every profit that isn’t being used to keep the business afloat. Paying salaries and purchasing goods are necessary. With employees, business owners provide benefits to employees that cost the business dollars from the budget. From medical to dental to vision coverage, businesses still try to offer their employees benefits and incentives to remain loyal to their organization. Business owners often seek ways to cut expenses and increase revenue by capitalizing on programs that might save them valuable dollars. One product being offered to employers is the implementation of a high deductible health plan with a health spending account. This type of program often lowers premiums both for the employer and the employee, thus maximizing the dollars spent on medical and dental coverage and related costs. These accounts help lower premiums costs for which the employer would be responsible to paying some or all of the associated costs for the employees’ medical and dental costs.

Costs associated with employees are a significant portion of a corporation’s budget. Paying salaries, costs associated with recruiting and training the employee, employee benefits including vacation and sick time are significant drains on a company’s resources. Business owners and managers of companies are always looking for ways to cut costs while maintaining programs and services that employees expect. Because medical costs have continued to increase year after year, businesses are seeking creative options to manage and maintain costs. The introduction of the high deductible health plan with a health spending account seems to be an acceptable option in maintaining excellent benefits while lowering the cost to both the employer and the employee. Because these plans are more cost effective, the insurance carrier offers less expensive premiums.

Why is medical insurance so expensive? One of the most significant reasons is because people use their medical benefits and it is costing more money than ever before. When they use their benefits it costs the insurance carrier. Similarly, going to the doctor is getting more and more expensive. From skyrocketing health care costs and higher patient responsibility for payments, the dollars spent on health care continue to pinch at the pockets of the average person. The insurance carriers are working to combat the premium increases by offering alternatives to help employers manage costs. The high deductible health care plans are an attempt to control the total cost of consumption, helping people become better consumers. It also increases the financial responsibility of a medical consumer. When people are spending more of their hard earned money, they make better choices about going to a doctor and seeking specialty treatment. Also, it helps people plan the cost of their health care and encourages saving by offering a health spending account to accompany the high deductible plan.

Medical consumers are encouraged to save money into a tax-free, portable, personal savings account to pay for premiums, deductibles, copays and coinsurance bills. The health spending account is not managed by the employer, although some employers make contributions on their employee’s behalf or make matching contributions to encourage savings and participation. Not only does the account allow consumers to pay for medical expenditures, but it can be saved from one year to another and is free from taxation if used in retirement. Many consumers see the advantages of saving money today with potential for future use. This practice encourages frugal spending, which lowers the cost of health insurance expenditures for the employer. This product creates a win-win for employers and employees alike.

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