HSAs on the Obamacare Exchange Chopping Block
Obamacare just gets better and better
Non-profit Obamacare exchanges are a bit fat failure, premiums and deductible continue to soar while benefits diminish, and now, Health Savings Accounts may get the ax.
For health insurance consumers with high deductibles, HSAs are a lifesaver. Contributing pre-tax cash to the HSA helps offset out-of-pocket costs.
Thanks to final Affordable Care Act (Obamacare) regulations published by Health and Human Services, individuals purchasing health insurance from the exchanges will no longer be able to utilize a HSA.
Grace-Marie Turner writes at Forbes:
Now, however, the Obama administration has published final regulations that “will make it impossible to offer HSA-qualified plans in the future” in the ACA exchanges, according to HSA expert Roy Ramthun.
The Department of Health and Human Services published final regulations last month that will make it virtually impossible for plans offered in the exchanges to comply with both HSA and ACA rules.
The new rule governs the “standard benefit designs” for Bronze, Silver and Gold plans in the exchanges. According to Ramthun’s analysis, the new rules mean that 1) the specified deductibles for the plans and out-of-pocket limits to be offered in the exchanges will be outside the requirements for HSA-qualifying plans, and 2) plans will have to cover services below the deductible which are not allowed under the legal definition of HSAs.
Ramthun believes it is unlikely any HSA plans will be offered in the exchanges in 2017 as a result.
HSA benefits extend beyond having cash set aside. As Turner points out, HSA enrollees are more likely to enroll in wellness programs, obtain the care they need, and save employers and medical providers money.
In 2014, the average monthly premium for HSA-qualifying insurance was $486 for single coverage and $1,142 for families, according to America’s Health Insurance Plans. States with the highest enrollment were Texas, Illinois, Pennsylvania, Ohio and Minnesota.
The average account balance at the end of 2014 was $1,933. Average account balances increased with the age of the owner of the account. Account balances averaged $655 for owners under age 25 and $5,016 for owners ages 65 and older.
A number of studies have shown that people with HSAs received higher levels of recommended care, were more likely to engage in wellness programs, reduced total medical costs, and were more savvy healthcare consumers.
One company found that consumer-directed plans saved employers $208 per member per year and that employees in these plans spent less on healthcare, while increasing their preventative care visits. This kind of innovation gives consumers the power to transform the health sector to offer higher quality and lower costs.
Meanwhile…
Enrollees in the Obamacare exchanges often pay $500 or more a month for premiums for policies with deductibles of $3,000-$6,000. That can mean spending $12,000 a year before insurance kicks in. Most might as well be uninsured.
The longer Obamacare remains in place, the few options health insurance consumers have.
UnitedHealth, the country’s largest health insurance provider, recently announced plans to withdraw from many Obamacare exchanges, leaving some 12 million consumers who purchase insurance from the exchange with one less choice.
But as we’ve discussed at length, few options, higher costs — they’re a feature, not a bug.
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Comments
Again the middle class worker gets screwed. HSA’s are great and with the insane deductibles they help prevent economic catastrophe. Before the ACA I had a high deductible HSA policy and it helped me greatly. One example, I needed a CPAP unit, through BCBS their cost was 1600 and my co-pay was 320. I bought the same unit directly with my HSA account, paid 400 for it and was reimbursed 320. That is how you cut medical costs.
I agree. HSA’s are great idea. But, the fact that you may contribute funds on a tax-free basis into the HSA account and see those funds grow and control your health care costs is anathema to the Ruling Class.
HSAs not only help the individual to control costs, but would have a decided overall effect if they were in widespread usage. It’s the simplest economic principle: when a 3rd party is paying the bill, consumers demand gilded care. When savings go into their own pocket, they are careful consumers again.
To control costs, the intelligent move would be to drastically expand HSAs, so of course Democrats oppose it ferociously.
I’ll hand it to HHS bureaucrats: just when you thought they’d hit bottom with Obamacare, they manage to f*** it up even more.
I am sorry, you all didn’t know this? Haven’t you all figured out yet that the ACA is not about health care at all. It always has been and always will be nothing more than a huge tax expansion.
One thing that would help the consumer a great deal would be the ability to have a *standalone* Health Savings Account that would be treated as an actual asset, where if you put pre-tax $2k into it this year and didn’t spend it, the money would still be there next year in case you need it. Carry it from job to job, or state to state, without being tied to a particular insurance policy. A frugal and healthy individual would have an account which would grow every year into their retirement and possibly be passed on to their children’s HSA if they die without major medical problems.
The problem with that concept is it puts control in the hands of the consumer, and can keep billions of tasty dollars out of the maw of the all-consuming Federal and State governments. Far better that wise and intelligent bureaucrats in Washington decide where your money goes instead. (/snark)
In years since ZeroCare was passed I’ve gone from:
-paying zero contributions to my employer healthcare and 15-25 copays for visits and scripts.
-then to a ‘small contribution” to premiums, if you call ‘small’ $3000/year.
-then my contribution went to $4500 year and all of my co pays increased to $25-$50
-them my contibs went to $6000/year and a $2000 deductible.
-Now my contribs are at $7000/year and a $4000 deductible plan.
IOW, I can’t use my insurance unless I pay $11000 out of my pocket in premium contributions and deductibles. I have yet to see my $2500 year savings for my family.
This is not what they meant when they talked about coming up with a “catastrophic coverage” plan.
I enrolled in an HSA at a job I ended up only working 3 months at. On my next to last day with the company I discovered I had to spend the $300 I had put in by the end of my last day or lose it. I now have an entire bathroom closet shelf full of contact solution…and $300 less on my gross income last year.
The HSA is a fools game. First- the concept of the IRS coming in and auditing my health care expenses is just creepy.
But the biggest issue is you are parking a ton of money to save on taxes this year which is then not earning squat .
The people who should use these don’t pay jack in taxes anyway… but are stupid enough to be lured into a savings account by the promise of a tax break… and probably not disciplined enough to just sock that same money away into an investment account rather than a jet ski.
These “mitigations” have the smell of a kind of cold war waged by statists on the productive sector. I’ve little confidence that any political or legal process exists to roll any part of O’care back in any meaningful way.