VITAL ATTRACTION:

Why health saving accounts are growing popular (KAREN KERRIGAN, April 28, 2007, Chicago Sun-Times)

There are two things a small business or self-employed person dreads the most: taxes and health-care costs. However, the small business and self-employed sectors have been increasingly turning to a solution that provides a much-needed break: health savings accounts.

These accounts help control costs and provide attractive tax advantages, both for people who purchase their own insurance (self-employed) and for small business owners. The market is headed in this direction as the U.S. Treasury estimates the number of Americans with health savings accounts will grow to 25 million to 30 million by 2010. Many insurance companies are seeing the growth in their popularity and are marketing a variety of products.

United Healthcare's Golden Rule Insurance Co., based in Indianapolis, pioneered the health savings account concept about 15 years ago, and now 40 percent of its customer base has the accounts. Other companies including Aetna, Cigna and Blue Cross Blue Shield continue to enter the health savings account market in large part because of its attractiveness to small-business and self-employed individuals.

That attraction is being driven in part by prohibitive costs. According to the Kaiser Family Foundation Employer Health Benefits 2006 Survey, health insurance premiums have ''increased more than twice as fast as workers' wages and overall inflation.'' Premiums have actually increased by 87 percent over the past six years.

The same report noted that the self-employed pay an average of $11,480 for family health coverage. This is where health savings accounts become an increasingly attractive solution.