HSA to the rescue.

• Author: Phillips, John
• Position: Health Insurance

You have seen the headlines: "Health Insurance for Workers Now Most Expensive Benefit for Employers, Study Finds," "New Way to Curb Medical Costs: Make Employees Feel the Sting," or "Health Insurance Costs Increase for Smaller Firms, Says Study."

The message is clear: providing health insurance has become a major cost for employers.

CBS Marketwatch recently reported that medical benefits account for 23 percent of non-wage compensation, or an average of $7,900 per year for each employee. Moreover, the report said benefit costs increased 51 percent between 1998 and 2003, and more than 12 percent last year.

So, what can be done to help mitigate rising health insurance costs for small and medium-sized firms?

THE GROUP INSURANCE TRUST

The Group Insurance Trust of the California Society of Certified Public Accountants is one of five Multiple Employer Welfare Arrangements, or MEWAs, operating in California.

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The MEWA allows CalCPA to offer group medical plans to members who practice in small and medium-sized firms. The MEWA structure spreads the cost of catastrophic medical claims across a large population, and by contracting with the Blue Cross network of hospitals, doctors and other health-care providers, the GIT is able to hold premium costs at competitive levels. Few other professional associations can provide this level of health-care coverage to their members.

POSSIBLE SOLUTIONS

But, since even competitive premiums are climbing, you'll need to consider additional options to help maintain health-care costs:

* Require partial employee payment for dependent coverage. When employers pay the entire cost of spousal or partner coverage, they bear a cost that could be borne by the spouse's or partner's employer. When there is no cost to an employee to cover an employed dependent, there is no incentive to decline coverage.

* Increase the employee's premium share. Many employers pay 100 percent of the cost to cover single employees. Because ProtectPlus requires only that firms pay at least 50 percent of a single employee's premium, up to 50 percent of that premium may be shifted to the covered employee. Another strategy is to tie employee premium contributions to compensation--with more highly paid employees paying a higher share of the premiums for health care coverage.

* Purchase less expensive coverage. GIT offers five plans with a wide range of premiums. The impact of a less expensive plan is that actual costs rise only for...