Thanks to a local insurance broker/agent, I've recently been turned onto a really ingenious way to offer better health benefits (without the government's direct involvement) to employees. Its a combination of a higher deductible health insurance policy and the use of a Health Savings Account, (HSA). Seems like I've just stated a contradiction, doesn't it?

Well, here's the basics: Rather than accepting a traditional Blue Cross Blue Shield or other major carrier, we locate a State provider with solid coverages at much lower premiums. Employees contributions get split into two categories: first, because the premiums are generally much less, the employee's portion of the insurance premium withheld for a typical BC/BS plan will cover the entire premium of the new coverage with some left over. This may not always be the case, but it's generally true. Second, we divide the annual deductible into twelve payments and make those payments into an HSA for the employee. The employer can choice to make those and its a 100% business deductible expense. When an employee needs to pay the deductible, they simply use a debit card which is tied to their HSA account. If they have no claims, viola, they have money accruing tax deferred.

Its a clever way of using an IRA style tax deferred account to accumulate savings while providing health benefits. We have more information available if you're interested.