Almost six years to the day after the Affordable Care Act was enacted, the Department of Health and Human Services (HHS) has taken steps to kill health savings accounts (HSAs) in the state health-insurance exchanges. It was bound to happen at some point, although some may be surprised that it took this long. In case you missed it, final regulations published on March 8 will make it impossible to offer HSA-qualified plans in the future. Whether this is by accident or design, the outcome is clear.
Over the past several years, HHS has fended off industry concerns about the availability of HSA-qualified plans in the state exchanges while (a) doing nothing to help consumers identify HSA-qualified plans on the exchanges or (b) provide information to individuals that choose HSA-qualified plans about where to get more information about opening and contributing to an HSA. In the March 8 rule regarding the requirements for health plans that will be offered on the state insurance exchanges for 2017, HHS stated that HSA eligibility was not a meaningful distinction for health plans because consumers can determine whether a plan is HSA-qualified by examining a plan’s cost-sharing amounts. So, it will not require HSA-qualified plans to be designated as such.
Buried in the details of the final rule are the two main reasons why HSA-qualified plans will not survive:
2) Plans must cover services below the deductible that are not considered “preventive care.”
Regarding the deductibles and out-of-pocket limits, no Bronze, Silver, or Gold plans adhering to the standardized benefit designs will likely be HSA-qualified for 2017. We say “likely” because the Internal Revenue Service (IRS) has not yet determined the 2017 inflation-adjusted minimum deductibles and out-of-pocket limits for HSA-qualified plans. The IRS will not officially publish the 2017 limits for HSA-qualified plans until April at the earliest. But we closely track the data needed to make these projections every month and we are projecting that the HSA limits for 2017 will not change from their current levels of $6,550 for self-only coverage and $13,100 for family coverage.
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Every year, HHS publishes the annual limits on out-of-pocket cost-sharing for plans offered in the exchanges. Up until now, plans have been permitted to use lower limits on out-of-pocket expenses as long as they do not exceed the maximums. For plan years beginning on or after January 1, 2017, all health plans must have annual out-of-pocket limits that do not exceed $7,150 for self-only coverage or $14,300 for family coverage.
Bronze standardized plans will be required to have a deductible of $6,650. This amount is $100 above the projected maximum deductible of $6,550 for HSA-qualified plans for 2017.
Gold standardized plans will be required to have a deductible of $1,250. This amount is $50 below the projected minimum deductible for HSA-qualified plans for 2017.
Bronze and Silver standardized plans will be required to have out-of-pocket limits of $7,150, well above the projected out-of-pocket limit of $6,550 for HSA-qualified plans for 2017.
The deductible, out-of-pocket limits and other features of these standardized designs can be found in the table below. Note that the amounts shown are for self-only coverage. Amounts for family coverage will be twice the amounts for self-only coverage.
It is not immediately clear why HHS is requiring plans to use such high out-of-pocket limits (i.e., the maximum allowed under the law). We suspect it is because they have added so much in the way of new first-dollar coverage that it was the only way to keep the actuarial values within the +/- 2 percent range for each metal tier.Regarding the second reason, HHS is requiring plans to cover a variety of services below the deductible in an attempt to make them more appealing to consumers. These services include a limited number of primary-care visits, specialty-care visits, mental-health and substance-use-disorder outpatient services, urgent-care visits, and drug benefits. But for those who are unfamiliar with HSAs, HSA-qualified plans are not permitted to cover any services below the deductible except for preventive services. Since HHS did not provide any exceptions for HSA-qualified plans, covering these services will also prevent plans covering these services from being HSA-qualified.
Now that HHS has finalized its proposed standardized benefit designs for the Bronze, Silver, and Gold metal tiers, it is only a matter of time before the HSA-qualified plans completely disappear. That could happen as early as 2017 even though the standard benefit designs are optional. By 2018, when the designs likely become mandatory, HSAs will cease to exist in the marketplace.
— Roy J. Ramthun, “Mr. HSA,” is president and founder of HSA Consulting and a nationally-recognized expert on Health Savings Accounts and consumer-directed health-care issues. He led the U.S. Treasury Department’s implementation of HSAs after they were enacted into law in 2003.