Will health “reform” kill HSAs & high-deductible insurance plans?
January 10th, 2010 | by Brian Schwartz |By attacking Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), Democrats want use tax policy to punish people who prefer to buy medical care directly, rather than through insurance. Sounds like they favor the insurance industry, no?
On January 9, the AP reported that:
House Democrats want to require insurers to spend a minimum amount of premium income on benefits, thereby limiting what is available for salaries, bonuses, advertising and other items. The House bill sets the floor at 85 percent; the Senate-passed measure lowers it to 80 percent for policies sold to small groups and individuals.
Depending on how actuarial value is calculated, HSA-qualified plans (those with high deductibles) may become illegal. This is especially true if the calculation does not include contributions to an HSA.
Some background: A high-deductible insurance plan combined with a tax-free health savings accounts (HSAs) allow you to save money to spend on future medical costs, rather than throwing your money “down the premium hole” on a more expensive insurance plan that you may not want.
Democrats have tried to kill this insurance option before (e.g., here). Last fall the Wall Street Journal reviewed how the Senate Health Care Bill (HR 3590) & House health bill (HR 3962) aim to restrict both HSAs and Flexible Spending Accounts (FSAs) - both are ways to buy medical care with tax-free income. Note that HSA-qualified high-deductible insurance plans have been successful in keeping premiums low and encouraging patients to seek proper care.
So what’s the latest? Well, there are lots of details. Over at John Goodman’s blog, Roy Ramthun reviews what the House and Senate Bills say about HSAs and FSAs. Lots of details and differences between the House and Senate Bill, but in general, expect:
- “As of 2011, expenses incurred for over-the-counter (OTC) medications and products will no longer be eligible for payment or reimbursement from any of the health care accounts.”
- FSA contribution limits: “Both the House and Senate versions of health reform legislation would limit [FSA] contributions to no more than $2,500 annually. The limit would be indexed to inflation for future years.”
- preventive care:”…all insurance policies will be required to provide first dollar coverage for preventive care services”
- minimum actuarial value for the benefits covered: This could kill HSA-qualified accounts, depending on what value set the minimum to be, and how to compute “actuarial value.”
- limits on out-of-pocket expenses: Again, politicians want to limit how much of your own money you can spend on medical care, and hence dictate that you spend more on insurance!
Read the whole post: Status of HSAs and Consumer-Driven Health Care in Health Reform.
tags: HR 3590, HR 3962, HSAs, illegal insurance
