WHAT WILL HAPPEN TO HEALTH SAVINGS ACCOUNTS UNDER OBAMACARE?
May 27, 2010
More than 10 million Americans are covered by health savings account eligible health plans, according to a census of insurance firms that America's Health Insurance Plans released last week. The plans allow individuals to contribute thousands of pre-tax dollars to HSAs, which participants may spend on health care needs or "roll over" indefinitely, says Dan Diamond, a contributing editor with California HealthLine.
Despite the slow-but-steady growth, analysts still question the long term viability of the six-year-old HSA model, which President Bush conceived as a tactic to promote medical price transparency and ultimately reduce health costs. Moreover, the last president's signature health reform appears to be threatened by the current president's sweeping overhaul, says Diamond.
According to John C. Goodman, President, CEO and the Kellye Wright Fellow with the National Center for Policy Analysis:
- Although ObamaCare contains relatively few HSA specific provisions -- most notably, the accounts will no longer cover over-the-counter medications as of 2011 -- the law opens the door to the death of HSAs by regulation.
- ObamaCare requires the Health and Human Services secretary to review and determine required benefits under all health plans each year, which could lead to changes that essentially prevent individuals from adding new money to their HSAs.
According to Paul Ginsburg, president of the Center for Studying Health System Change:
- The accounts eventually will become redundant under ObamaCare.
- The so-called Cadillac tax on high cost health plans will accomplish HSAs' purpose of lowering premiums by forcing employers to craft new benefit designs that encourage lower utilization and have higher deductibles.
According to Paul Fronstin of the Employee Benefit Research Institute:
- In the short term, HSA eligible health plans will be included in the health insurance exchanges called for under the overhaul.
- Employers continue to deal with significant cost increases and will be pushed to hike deductibles, and "it can easily be argued that consumer driven health plans will continue to play an important role" in addressing these concerns.
Source: Dan Diamond, "What Will Happen to HSAs Under Reform?" California Healthline, May 26, 2010.
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