Health Insurance

» Health Savings Accounts

One 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, then Gov. Jeb Bush signed legislation requiring all insurance companies in Florida to offer HSAs.
Benefits for small businesses and their employees include:

• Reduced premiums. Because HSAs require a minimum policy deductible of $1,100 for self-only coverage and $2,200 for family coverage, 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 $2,900 for an individual or $5,800 per family (adjusted for inflation each year). Those over 55 can make $900 in extra contributions in 2008. Employee deductions reduce taxable income; employer contributions are not included in the employee’s taxable income.

Resources “HMOs: A Guide for Consumers” “Health Insurance: A Guide for Consumers” Florida Department of Financial Services fldfs.com/consumers/ Publications.htm#-health (800) 342-2762 U.S. Small Business Administration sba.gov/healthcare Hsadecisions.org hsadecisions.org This site includes a database of health savings account (HSA) insurers that can be sorted by state.

• 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.

» Small Group Guaranteed Issue

Businesses with two to 50 eligible employees have access to guaranteed-issue group plans. The plans are available to all small businesses regardless of the health claims experience of the group or the health status of an employee. Insurance companies and HMOs that offer small group coverage to employers with two to 50 employees must offer a basic plan or a standard plan as well as any other small-group health plans that they offer in addition to the basic and standard plans. For more information on small group basic and standard plans, download the Small-Business Owners’ Insurance guide at fldfs.com or call (800) 342-2762.

» Self-Employed

Self-employed Floridians in need of health insurance can obtain it through an open enrollment period during the month of August. Coverage begins on October 1. Small employers (sole proprietors, independent contractors or self-employed individuals) are eligible if they have just one employee who qualifies for coverage and if they did not go into business primarily for the purpose of buying health insurance.

Floridians who apply for coverage must show certain documentation verifying that they are operating an active business, including tax forms, license information and business receipts. For companies offering coverage, go to fldfs.com/consumers/ and look for the link to Small Group Market Carriers on the left side of the page.