Health savings accounts: pros and cons: HSAs are growing in popularity, but they are not good for those with ongoing illness or those in need or regulat prescription drug benefits.

• Author: Myers, Deborah

Health insurance premiums account for a sizeable bite into any small organization's budget. As the rates increase, the budget gets tighter. Lowering coverage and employer contribution and raising deductibles may save money, but it also provides less protection and/or higher cost for employees. It's not so hard to just keep costs down; offering good benefits with low cost "is the clincher," said Nalani Clement, vice president of Hagan Insurance in Anchorage. "(If employees) have the same plan and pay more, they won't see that as a good benefit. A lot of small employers are struggling to keep benefits to keep their employees."

The other option, simply eating the premium hikes, significantly saps the small company's budget. It seems as though there's no answer to the Catch22, but small businesses are not at an impasse. A new crop of consumer-driven plans is changing the face of health care insurance. Average premiums increased 3.4 percent for these kinds of plans, compared with 9.6 percent overall, according to a survey by United Benefit Advisors (http://benefits.com), an Indianapolis, Ind.-based national benefit advisory firm. The survey represented 12,176 health plans sponsored by more than 8,700 employers nationwide.

Considering Alaska's premiums ran 25 percent higher than the national average, anything that could reduce those numbers and provide good coverage is worth exploring, despite the hassle of changing from your current health insurance plan. Since December 2003, the Health Savings Account (HSA) has represented one of the biggest positive changes in the health care scene, offers one means of giving good coverage for most employees.

Jim Dunlap of the Dunlap Agency, said that his company's insurance premiums increased by 27 percent two years ago, but by changing from a standard insurance plan to a HSA, "we have managed to maintain the cost from the year before," he said. These savings can become reality for your company, too.

THE ADVANTAGES of a HSA are plentiful for both you and your employees. "I haven't had anyone take the HSA and then jump back off it, so I think they're reaping the benefits," Clement said.

The basic fact of its overall popularity with employees makes it a boon for employers. It is a plan meant for the young, healthy employee.

Still, the plans put the power of their health care decisions back into the employees' hands instead of the insurance company. Instead of hoping the insurance company will pay for procedures...