According to a New York Times article–“Weighing the Risks in a Health Savings Account“, health savings accounts (“HSAs’) are starting “to shake up the group insurance market for small businesses.” The article notes how “[a]lmost half of small businesses with 50 or fewer employees do not offer health insurance to their workers” and that HSAs are providing a way for small businesses to provide at least some insurance for employees, whereas before they were not offering any health insurance. The article provides an interesting example of a small business that has opted for the HSA for its employees:
Currently, the management consulting firm started last year by Rich Phillips, an entrepreneur in Austin, Tex., falls into that group [of a small business without health insurance for employees.] But Mr. Phillips said that he planned to add coverage next year for his five employees and their families, using health savings accounts.Mr. Phillips has purchased an individual H.S.A.-eligible policy for his family, which costs $380 a month and has an annual deductible of $3,250; a traditional policy would have run $900 to $1,100 monthly. For a single person, an H.S.A.-eligible policy can cost as little as $100 a month or less, compared with $400 or $500 for a traditional plan.
The article goes on to quote the business owner as saying that while he couldn’t afford to pay $1,000 a month per employee for coverage, he could afford the $300 or $400 that an HSA plan costs, and that being able to pay 100 percent of the premiums for employees and their families is very attractive to employees and “rare” for small businesses in an era when health insurance costs can be prohibitive for the small business owner.