The tax-favored plans feed employers’ hunger for slowing down run-away health care costs.
And individuals who purchase their own insurance flock to HSAs as well for the lower premium costs.
Employers and individual purchasers feared health reform would knock HSAs off their health plan menu.
Recent decisions affecting health insurance exchanges appear to indicate HSAs will survive health reform.
At least for now.
What is a Health Savings Account?
A Health Savings Account (HSA) is a combination of a health insurance plan and a savings plan.
- The first part of an HSA is a health insurance plan that must meet specific rules to qualify, including a high deductible requirement.
- The second part of an HSA is a tax-favored savings account that helps you save money for health-related expenses.
The Internal Revenue Service (IRS) sets the rules and limits for an HSA, including:
- What qualifies as an eligible health insurance plan
- Maximum contributions limits
- Distribution rules
The IRS updates the limits annually.
For example, for 2013 ~
- The deductible for an individual must be at least $1,250
- The deductible for family coverage must be at least $2,500
- The maximum contribution for an individual is $3,250
- The maximum contribution for family coverage is $6,450
The Health Savings Accounts document in Free Stuff provides additional information.
The Health Reform Opponent
If HSAs help stem health care costs, what’s the problem with health reform?
Okay, don’t answer that. I don’t think there is enough room in Comments.
The reason HSA supporters feared health reform was due to its provisions regarding minimum coverage.
- State health insurance exchanges will offer four levels of coverage
- There is a minimum amount of coverage required for each level
Would HSAs meet minimum coverage requirements?
The question had analysts reaching for their calculators.
The Contribution Factor
The plan providing the least amount of coverage (60%) in health insurance exchanges is known as the bronze plan.
Because of the high deductible of HSAs, there was concern that HSAs would not meet the minimum coverage requirement.
Would the government allow HSA contributions in the calculations?
Employers that offer HSAs often contribute to the account – sometimes several thousand dollars.
The Kaiser Family Foundation’s 2012 Employer Health Benefits Survey reported the following average employer contributions to HSAs.
- $4,668 for single coverage
- $11,056 for workers with family coverage
So, if you include contributions into the minimum coverage requirement – no problem.
UPDATE: Thanks to a comment from Richard Quinn that clarified the above figures represent the premium PLUS the employers’ contribution to the HSA (as noted in Kaiser’s table).
Health reform provisions do allow a fudge factor in calculating minimum coverage – a plus or minus 2 percent.
According to analysts and their trusted calculators, that’s all the leeway HSAs need to qualify for minimum coverage – barely – but enough.
An often overlooked piece on health reform’s title is the “affordable” piece of the Affordable Care Act.
With insurers’ gloomy predictions of huge premium increases, HSAs may be one of the few plan designs left that slightly brush against affordable.
Of course, receiving care is another story.
How about you? Does your employer offer an HSA?
Or do you purchase your own insurance? If so, do you have an HSA?
Notice of Disclaimer –Cathy Miller is not an attorney or health care provider and cannot provide legal or health care advice. The information provided is for your general background only, and is not intended to constitute legal or health care advice as to your specific circumstances. We recommend you review legislation with legal counsel and visit your physician for health care issues.