• Congress Passes Expansion Of Health Savings Accounts
• Kerry Outlines Small Business Agenda
• Small Business Grew In 2005

Congress Passes Expansion Of Health Savings Accounts

Just before the close of the 109th session, Congress passed a measure to expand health savings accounts (HSAs). HSAs allow tax-free contributions to a savings account, which are used to pay for medical bills and other health-related needs in conjunction with a high deductible health plan. The changes that Congress made allow easier access to and use of the savings accounts, which could help micro-businesses and the self-employed gain access to health insurance. One of the provisions of the HSA measure was to repeal the deductible limitation on contributions to health savings accounts. Currently, contributions may be no larger than the policy holder’s deductible and cannot exceed $2,700 for individuals and $5,450 for families. The new legislation will allow contributions to be set at a maximum of $2,850 and $5,650, respectively, no matter what the health plan deductible. It also calls for earlier announcement of cost of living adjustments, from August to March of each year. These cost-of-living adjustments help determine HSA contribution and deductible amounts. “As inflation goes up, the amount of money people spend on medical costs goes up too,” said Kristie Darien, executive director for the NASE legislative office. “The NASE commends Congress on being able to pass this legislation as the 109th session closes because it represents an important step for the health care community. For one, it lessens the likelihood that people will get stuck with medical bills they can’t cover.” The HSA measure was part of a tax relief package that passed late last week before Congress adjourned. Other HSA changes include measures to allow a one-time rollover of IRAs into an HSA without the issuance of early distribution penalties. It also allows rollovers from health reimbursement arrangements and health flexible spending accounts for a limited time. It permits those who create an HSA midway through the year to be eligible for the full contribution instead of a partial amount. In addition, it allows non-highly compensated employees to receive higher contributions from employers. To learn more about HSAs, and other tips on reducing health costs, visit the NASE-sponsored information Web site http://www.MicroBusinessHealth.com. Kerry Outlines Small Business Agenda With elections for new party leadership behind them, small-business groups are making plans for the 110th session beginning in January. The Senate Committee on Small Business and Entrepreneurship recently tapped Sen. John Kerry, D-Mass., to serve as Chairman after working with the committee for 21 years. In addition to making health care affordable for small businesses, the committee also plans to tackle reducing the amount of paperwork and other regulatory burdens small businesses face, as well as promoting tax incentives to encourage growth. “Twenty seven million Americans without health insurance work for small businesses that can’t afford to cover them,” said Sen. Kerry. “Service disabled veteran owned businesses only received a mere 0.6 percent of federal contracts in 2005. And, while 80 percent of America’s businesses are small firms, they aren’t even getting the 23 percent of federal contracts they’re entitled to under the law.” Kerry says they also plan to make the tax code more equal for small businesses, increase opportunities for minority and women entrepreneurs and promote tax incentives to encourage growth and development. The committee will back legislation that provides short-term relief for struggling businesses after a disaster and help disaster victims receive assistance more quickly. Kerry seeks to preserve SBA programs, including the 7(a) lending program, the Microloan program and Microloan technical assistance program, Women’s Business Centers, and Small Business Development Centers. Small Business Grew In 2005 Despite the hardships of Hurricanes Katrina and Rita, small businesses in the U.S. continued to grow in 2005, according to a new report issued by the Office of Advocacy of the U.S. Small Business Administration (SBA). The Small Business Economy for Data Year 2005 examines the economic conditions for and contributions of small businesses during 2005. The SBA examined areas including the economy, small-business financing, federal procurement, women in business, and education as it relates to entrepreneurship to put together the report. Businesses in hurricane-affected areas struggled, but the SBA points to overall growth to illustrate that the economy as a whole recovered. Data showed business openings totaling 671,800, above closures at 544,800, contributing to a new high in employer firms of 5.99 million. Financial conditions in 2005 were favorable for economic growth in spite of hurricanes and energy price increases. According to the report, real gross domestic product grew at a rate of 3.1 percent. The SBA also claims that small firms were awarded $79.6 billion in contracts. For full details on the report, visit http://www.sba.gov/advo/research/sb_econ2006.pdf.