SMB Case Study: HSA Switch Begins November 1st

Thursday, October 11, 2007
Posted by John Beagle

This is part one in a ten year case study with real data from my company HSA plan.

We are always looking for more ways to make our employee paychecks go further, one such way it a tax advantaged medical savings account called a HSA. It stands for Health Savings Account.  Visit:  HSA Information

Beginning November 1, 2007, I am switching my small business to an HSA or Health Savings Accounts.

During the next ten (10) years, we will be posting comments from employees, advisers, and management regarding HSA. We will also look at other HSA case studies for comparison. All of this information going forward will be posted to the Human Resource Link or use our search feature and search for 'HSA'.

Case Study Data:
Eight Employees, with for a total of 22 covered individuals are used to compare costs and benefits of traditional health insurance vs HSA.

Old Monthly Premium with Medical Mutual: $4929.92. This would have been another 12.62% increase.

New Total Monthly Premium and Contributions: $4439.60 with $1933.30 going to individual employee savings accounts.

We will look at out-of-pocket-costs and net retained HSA savings as the 10 year case study progresses.

Combined, the employees will have $23,199.60 deposited into their accounts annually. That's $23,199.60 for doctor visits, medicine, therapy, dentists, medical aids, misc health care for all 8 employees (22 individuals total).

Based on 22 individuals on the plan, this comes out to $1,054.53 per insured to spend per year.

During the next 10 years, we will track employee medical expenses and HSA withdrawals. Here is the format we will use to report future periods:

Combined HSA Balances of All Employees: $0 November 1, 2007
HSA qualified Expenses: $0 November 1, 2007
Non HSA qualified Expenses: $0 November 1, 2007

Also we will be reviewing the downside to HSAs.

Here are some of our SMB employee and employer concerns we will review:

What are the excluded HSA Expenses?
What are the HSA Contribution Limits?
Is an HSA Taxable to the Employee or Employer?

What are some HSA things I should know?

End of Part 1 in 10 Year Case Study on an SMB switching to an HSA

About my SMB: I started a Computer Rental company in 1987. Today we are the Tech Army Organization, a worldwide computer service sales and marketing organization with over 10,000 members worldwide.

Article continues: SMB Case Study: HSA Switch One Year In