SOURCE: Business Benefits Insurance

April 29, 2008 14:25 ET

Benefits Expert Jim Edholm Re-Thinks Rising Health Care Costs in New Article in Industry Week

ANDOVER, MA--(Marketwire - April 29, 2008) - "Health insurance costs are rising much faster than inflation," writes business benefits expert Jim Edholm in a recent edition of Industry Week Online. "But what can manufacturers do about it?"

In "Manufacturers Can Use FSA, HRA and HSA Plans to Control Health Insurance Premiums" Edholm, President of Business Benefits Insurance, explores the possibility -- and plausibility -- of the idea that employees should take more ownership of their health care plans. Citing the latest figures and statistics, Edholm breaks down the main components of the three major alternate routes to healthcare coverage, weighing in the pros and cons and offering his expertise to employers of all sizes.

Regarding FSA (Flexible Spending Accounts) Edholm writes: "The employee's contribution is tax-deductible, and the withdrawal is income-tax free if used for medical expenses. There are, however, several problems. The FSA is usually offered in addition to the traditional health plan, so it's mostly used for 'fringe' expenses -- eyeglasses, over-the-counter medicines, etc. -- that aren't covered by the health plan. So it has no effect on the cost of the company health plan."

On HRAs (Health Reimbursement Arrangements): "Creatively used, it's an extremely effective tool, particularly for smaller employers. The employer can select a plan with a large deductible, slash premiums, and establish an HRA to help cover the deductible. Overall, an employer-specific plan HRA can be a powerful savings tool, particularly for companies with fewer than 100 employees.

Finally, Edholm discusses Health Savings Accounts (HSA), praising several points. "An HSA is the only triple-blessed tax vehicle: first, money deposited is deductible; second, it grows tax-free in the account; third it can be withdrawn income-tax-free for medical purposes, at any point in life. If they spend intelligently, they can retain it (carrot), but if they spend foolishly, they'll pay the cost (stick).

"So find a broker who is knowledgeable, creative, and able to discuss the rewards and pitfalls of each of the plans," suggests Edholm. "Then move ahead with a plan designed to meet the particular needs of your company."

Jim Edholm is President of Business Benefits Insurance (BBI), an employee benefits planning firm in Andover, MA. Serving employers for more than 25 years, contact Jim by visiting his website or via his PR rep

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