Rising health insurance costs is the topic of many discussions in businesses both large and small these days. Relief has now arrived with the new Health Savings Act recently passed by Congress in the form of the Health Savings Account, or HSA. It's an option for getting control of health insurance costs that comes with a very nice tax advantage.

The HSA is actually the much-improved replacement of the Medical Savings Account or MSA. Like its predecessor, the HSA is a private tax-free account that can be used to pay for qualified medical expenses, which include more than what typical health insurance covers, for example, laser eye surgery, eyeglasses, and dental visits.

You will still need health insurance, but instead of a traditional style insurance plan, HSA's must be accompanied by a high deductible health plan. (You cannot combine an HSA with a lower deductible plan.) For a family in 2004, the deductible for such a high deductible plan must be at least $2,000. That may seem like a lot of out-of-pocket costs before the insurance coverage kicks in. However, it's usually offset by dramatically lower premiums, usually less than half.

Depending upon your family's health and financial situation, it may make more sense to select the high deductible plan with an HSA versus a traditional health plan, and even some group health plans. You could contribute the difference between the two insurance premiums to your HSA, so your total monthly cost would be about the same as your current health premiums. The best part -- the money in the HSA belongs to you instead of the insurance company.

The account has been designed to function as a savings account, for medical and retirement savings. The balance in the account carries forward each year (even if you don't spend it all) and grows tax-free. Not only can you use money from your HSA on many expenses not normally covered by insurance, but upon reaching retirement age, you have the option of withdrawing money out of your account to spend on anything you wish, just like an IRA. These withdrawals are subject to normal income taxes; that is of course unless they are used to pay for qualified medical expenses.