SOURCE: Business Benefits Insurance

January 26, 2010 11:42 ET

Health Savings Account -- Law Firm's Best Friend, Edholm of Business Benefits Insurance Writes

ANDOVER, MA--(Marketwire - January 26, 2010) - Health savings accounts (HSAs) can be "a law firm's best friend, or at least best benefit friend," Jim Edholm of Business Benefits Insurance writes in a column in a recent issue of Massachusetts Lawyers Weekly.

First, the typical law firm employee is intelligent, educated, and better paid than the typical white-collar employee performing similar tasks. He can appreciate the logic of taking dollars otherwise payable to the carrier and putting them into his, the employee's, account.

He understands that if he doesn't use it, he gets to keep it, so he's more likely therefore to maintain his health, consume less care, and keep more of the money.

Second, an equity partner's premium is mistreated by the tax laws. Her premiums are treated as pass-through income. So if the premium is $16,000 and the equity partner's $16,000 is paid by the firm, she has to declare the premium as taxable income. She pays every miscellaneous medical cost with after-tax dollars. That means she has to earn $1.80 to pay $1.00 in medical bills. The HSA solves that problem via deductible deposits.

In Massachusetts, the most common deductible is $1,500 single/$3,000 family, but the allowable deposits in 2010 are $3,050 single/$6,150 family. So the equity partner can deposit and deduct $3,150 more into her family HSA than her plan will let her allowably spend.

With an HSA, a partner's eyeglasses, hearing aids, dental copays, deductibles and coinsurance are all legitimate tax-free withdrawals. If the partner is over 55, she can deposit an additional $1,000 per year.

An HSA offers more flexibility than a flexible spending account. For example, if an employee plans to deposit the $250/month needed to just meet the $3,000 deductible but found he needed eyeglasses midway through the year, he could pay for the eyeglasses by simply depositing additional HSA funds one month and withdrawing them the next.

Business Benefits Insurance ( is an employee benefits planning firm in Andover, Mass. Edholm's benefits blog can be read at More information about HSAs and other plan options is available by contacting Edholm at or calling 978-474-4730.

Contact Information