Treasury and SBA Launch Web Site to Help Small Businesses Decide Whether to Offer HSAs

The Department of Treasury and Small Business Administration (SBA) have announced the launch of a new website to help small business employers determine whether to offer Health Savings Accounts (HSAs) to their workers. The new website (www.hsa.gov) compares HSAs to other health care coverage options and provides general education information to help employers and individuals determine whether to enroll in HSA-eligible coverage.

As small businesses approach open enrollment season for their employees to choose health care plans, the administration decided this would be an opportune time to provide more information about HSAs, advised Julie Goon, Special Assistant to the President for Economic Affairs. Goon noted that small businesses are the fastest-growing segment of HSAs. As of January 2008, 1.8 million small business employees and their dependents have enrolled in HSAs, a 72 percent increase over the previous year. Overall enrollment increased to 6.1 million people in 2008, a 35 percent increase since 2007.

A White House release cited several tax advantages to HSAs: policyholders receive a tax deduction when they make contributions to their account; investment earnings in HSAs and withdrawals from the accounts for qualified medical expenses are tax-free; and contributions are excluded from income and wages for employers. In addition, unused account funds at end of the year carry forward to the next year. HSA-qualified insurance plans that accompany the health savings accounts have high-deductibles, but savings from their lower premiums can be used to fund the account.

Critics of HSAs contend that the tax benefits from HSAs are not sufficient to make the health care plans affordable for many modest-income workers and that they disproportionately benefit affluent households. A recent report by Edwin Park, a Senior Fellow at the Center on Budget and Policy Priorities, found that HSAs are primarily used by high-income families and are “used extensively as tax shelters.” Park based his analysis on a Government Accountability Office report released on April 1, 2008.

Reprinted with permission. © CCH

Treasury and SBA Launch Web Site to Help Small Businesses Decide Whether to Offer HSAs The Department of Treasury and Small Business Administration (SBA) have announced the launch of a new website to help small business employers determine whether to offer