New options are designed to make health insurance more affordable for small businesses
?Health Savings Accounts
A recent health insurance option for small businesses is the health savings account, or HSA. The idea of the program is to combine a high-deductible health insurance policy with an account to save for qualified medical
expenses, including doctor visits, emergency room charges, prescription drugs and other health-related costs.
The program was created as part of the 2003 Medicare Prescription Drug Improvement and Modernization Act. In 2004, Gov. Jeb Bush signed legislation requiring all insurance companies in Florida to offer the new type of health plan.
Benefits for small businesses and their employees include:
- Reduced premiums. Because HSAs require a minimum policy deductible of $1,050 per individual, premiums may be lower than a plan with a $250 or $500 deductible.
- Individuals (or their employers) can make annual contributions to an HSA of up to the amount of the policy deductible, with a maximum of $2,700 for an individual or $5,450 per family (adjusted for inflation each year). Those over 55 can make $700 in extra contributions in 2006. Employer contributions are not included in taxable income.
- Tax savings. HSA contributions and any earnings in federally qualified programs grow tax-deferred and can roll over from year to year. The amount deposited can be deducted from gross income on the employee's tax return. The employee does not have to itemize to take the HSA deduction. Distributions are not taxable as long as they're for qualified medical expenses. Non-qualified distributions incur a 10% penalty. After age 65, withdrawals can be for any reason, but they are taxable.
- Portability. HSAs belong to the employee, so as jobs change, the account moves with the employee.
- Federal Legislation: Small-Business Health Plans
Legislation making its way through the U.S. Congress in 2006 would allow small businesses to band together through trade, industry, professional, chamber of commerce or similar business associations to purchase affordable healthcare.
The Congressional Budget Office has estimated that small businesses obtaining insurance through small-business health plans - previously known as association health plans - will enjoy premium reductions of 13% on average.
- Florida Legislation: Rebates to Small Employers
In Florida, legislation introduced by Rep. Dorothy Hukill (R-New Smyrna Beach) and Sen. Mike Fasano (R-New Port Richey) would set up a pilot program to give companies with more than one and fewer than six employees a one-time rebate of $1,000 per employee covered. Action was incomplete as of April 2006.
?Health Flex Plan
Health Flex is a pilot program for delivering basic healthcare to low-income, uninsured Florida residents. To maintain affordability, insurers can offer limited services and are not subject to state-mandated benefits requirements. As of December 2005, a total of four plans statewide, three in Miami-Dade County and one in Duval, had enrolled 1,268 individuals. The pilot program will continue until July 2008.
- U.S. Department of Labor
- U.S. Department of Labor, Wage and Hour Division
- U.S. Equal Employment Opportunity Commission
- U.S. Department of Justice: Americans with Disabilities Act
- U.S. Dept. of Labor Occupational Safety and Health Administration
- Florida Bar Lawyer Referral Service