A self- employed person’s journey to success is not an easy one for he has to encounter several constraints right at the outset. Tax worries and health insurance problems are perhaps the most important aspects of a small business that leaves the owner shaken. Along with rising health costs, cost of insurance has shot up dramatically and this has only made things more difficult for people who want to start out alone. In recent times though, the self employment health insurance scenario has undergone considerable change with Health Savings Accounts coming into the picture.
The year was 2003 when the Federal Government of the United States decided and finalized on a concept that is now known as the Health Savings Account (HSA) program. This was considered to be a shrewd step in ensuring more freedom to plan members. To activate an HSA account, you first need to enroll under a High Deductible Health Plan (HDHP). Since the deductible is high on these plans you can expect your out- of- pocket expenses to reduce considerably. Also getting a high deductible plan means you can enjoy as many benefits, if not more, as a group health plan by paying much less.
So what exactly has lead to popularity of HSA amongst self- employed professionals? The very first thing is the kind of control it allows its users. The next significant point is the fact that HSA’s and tax advantages are synonymous. All that one needs to do is make deposits (that get automatically deducted from your salary), pay up for your medical costs till the time you reach your deductible and withdraw the deposited amount tax- free during medical emergencies. At the end of the year if there is any unused amount in your account, that gets credited forward to meet eligible medical expenses in the next year.
Various national health carriers across the United States too feel the importance of the Health Savings Account program. No wonder companies like Aetna, Blue Cross Blue Shield and Cigna are encouraging self- employed persons to sign up for high deductible plans so that they can avail the HSA advantage. The popularity of HSA’s is catching up so fast that the number of Americans with such accounts will not be anywhere less than 25 million in the next two years’ time (as stated by the US Treasury).
Despite the fact that people have to pay high deductibles on plans that support the HSA program, money isn’t an issue to them anymore. In fact, as far as regular coverage goes, self- employed persons are finding it increasingly difficult to pay up premiums. According to a report, premiums have risen at a rate not less than 87% in the last few years and what self- employed people have to pay for regular family coverage is about $11, 500. On an HSA plan, though, you wouldn’t need to shell out so much as premium.