Health Savings Accounts Emerge as Top Tool for Controlling Healthcare Costs

Business Benefits Insurance's Edholm Says Innovative Plan Design Is the Key, but Massachusetts Employers Lag

ANDOVER, MA--(Marketwire - February 2, 2009) - The best emerging way for employers to control healthcare costs is the health savings account (HSA), says Jim Edholm, president of Business Benefits Insurance in Andover, Mass.

An HSA, which is offered in combination with a high-deductible health plan, lets employees set aside tax-free savings to pay out-of-pocket medical expenses.

An HSA helps control costs two ways, he says. First, it lowers premiums because of the higher deductible.

An employer can save up to 40 percent versus a standard plan, but that would mean scaling back coverage drastically. However, the employer can choose a smaller deductible and save a more modest amount -- a rarity today, Edholm says -- and share the savings and incentives for a healthier lifestyle with employees.

Second, the HSA lowers long-term costs because it strengthens the employees' involvement with healthcare costs and lets them share in the savings resulting from smarter healthcare shopping.

Employees who are used to first-dollar coverage may at look askance at an HSA, but there are ways to sweeten the deal, he says, by reimbursing their out-of-pocket costs.

For instance, the employer can offer a dual (high/low) plan and base the employer's share on the lower-benefit plan.

"This lets employees choose," Edholm says. "They can pay more for the richer plan or to reduce their premium by choosing the higher deductible HSA plan."

Edholm says there are good HSA alternatives in almost every industry, from professional services to manufacturing, for employers of all sizes.

Mass. Employer Lag

Bay State employers should consider HSAs, which are little used here, Edholm says. Only 5.9% of Massachusetts employees have a deductible of $500 or more. In Maine, 15.8% have such a deductible, and in New Hampshire it's 41.1%.

His firm has helped several Bay State law firms cut their healthcare costs and also created a plan for a chemical coatings company that's saving them 17% while improving their employee benefits.

Business Benefits Insurance ( is an employee benefits planning firm. Edholm's benefits blog can be read at

Contact Information: Contact: Henry Stimpson Stimpson Communications 508-647-0705 Jim Edholm Business Benefits Insurance 978-474-4730