Employee Benefits

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 $2,850 for an individual or $5,650 per family (adjusted for inflation each year). Those over 55 can make $800 in extra contributions in 2007. Employee deductions reduce taxable income; employer contributions are not
  included in the employee’s 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.

Self-Employed Guaranteed Issue

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. Guaranteed issue means that insurers, which includes HMOs and health savings accounts, must offer coverage without regard to health status.

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. A list of insurance companies offering coverage is posted on the Florida Department of Financial Services website. Go to fldfs.com/Consumers/ and look for the link to Small Group Market Carriers on the left side of the page.

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. The pilot, which will continue until July 2008, is available in Miami-Dade, Duval and Palm Beach counties. For more details, go to the Florida Agency for Health Care Administration website at http://ahca.myflorida.com/

Tags: Florida Small Business, Business Services