HEALTH SAVINGS ACCOUNTS SOMETHING TO BANK ON?

Here's some hot news: According to a recent Wells Fargo/Gallup survey, 75 percent of small-business owners are with the U.S. health care system. Another shocker: The big issue is skyrocketing costs. As a result, more than 50 percent of all small-business owners who responded to the survey said that they do not offer health insurance for their employees. Even more alarming, 22 percent of those owners

Here's some hot news: According to a recent Wells Fargo/Gallup survey, 75 percent of small-business owners are “dissatisfied” with the U.S. health care system. Another shocker: The big issue is skyrocketing costs. As a result, more than 50 percent of all small-business owners who responded to the survey said that they do not offer health insurance for their employees. Even more alarming, 22 percent of those owners don't even have their own health insurance.

The inflation in health insurance for small businesses is well documented. According to a study by The Kaiser Family Institute, companies pay an average of about $6,000 a year per employee on health insurance. Over the past five years, premiums for small businesses have risen 15 percent annually, compared with 2.2 percent for wages, while overall inflation has been about 2.3 percent per year over that span.

While there's not much chance of holding down costs under the current system — even General Motors and Ford have trouble with that — small businesses may get a little breathing room with Health Savings Accounts (HSAs). These vehicles, like 401(k)s, allow workers to set aside pretax money in accounts that are used to pay for health care premiums and out-of-pocket medical expenses. Unused contributions can be rolled over and invested tax-free. According to trade organization America's Health Insurance Plans, 438,000 HSA products have been sold as of September 2004.

103.7 — The Optimism Index in February 2005, reported by the National Federation of Independent Businesses.

The recent high in the index, which is based on 10 survey indicators from monthly polls of business owners, was 107.7 in November 2004. The low was 96.1 in February 2003.

Source: NFIB Research Foundation

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