The most successful and popular healthcare reform that has already taken place started in 2004 - Health Savings Accounts. This is a special account kind of like an IRA, where anyone with a qualifying high-deductible health insurance plan can put aside pre-tax money to cover future medical expenses.
Health Savings Accounts encourage people to save for their future, and when they do need to tap into the money to pay for medical expenses they have much greater incentive to be careful how they spend that money. It is this consumerism that facilitates price among providers, which helps keeps costs down for everyone.
HSA plans have become very popular, in part because they are much less expensive than conventional copay plans. So many people are concerned that these high-deductible plans and Health Savings Accounts will not be available after healthcare reform passes.
Since there is no final bill yet at this time, we can only speculate what will happen. But it does look like yes, Health Savings Accounts and high deductible health insurance plans will probably still be available under Obamacare.
The first clue that these plans will still be available is the minimum benefit levels defined in the Baucus proposal in the Senate. The bronze benefit package would allow an out-of-pocket limit up to the current
Health Savings Account law limit ($5950 for individuals and $11,900 for families in 2010).
The bill also makes some changes to how distributions from Health Savings Accounts are handled. Distributions from a Health Savings Account that are not used to cover medical expenses will be subject to a 20 percent additional tax penalty, instead of 10 percent as it now stands. Not that big of an issue if you use your Health Savings Account as it is intended.
So we can see they seem to be thinking about
Health Savings Accounts. But here's the possible catch. All qualified health insurance plans "would be required to provide primary care and first dollar coverage for physician services and prescription drugs."
Under current law, an HSA-qualified health insurance plan cannot offer first dollar coverage, other than for certain preventive benefits. So currently a plan cannot comply with the requirements in the Senate bill, and also be HSA-qualified.
Both the House and Senate bills give authority to work out this issue to an appointed official. In the House it is the "Health Choices Commissioner." The Senate Finance Committee (Baucus) proposal gives authority to the secretary of Health and Human Services.
So while there is no certainty at this point, we are expectant that not only will Health Savings Accounts be part of the package if healthcare reform is passed, but will become more popular than ever due to the much lower premiums, the tax benefits, and the long-term saving opportunities.
Regardless of how healthcare reform works out, remember that most of new laws would not actually go into effect until 2013. So it still makes sense to get and fund an HSA plan right now. Anyone who has a qualified HSA health insurance plan in place by December 1st can make a 2009 contribution, and cut their April 15th tax bill by up to $1900 or more.
By
Wiley Long - President,
HSA for America - The nation's leading independent health insurance agency specializing in individual and family
HSA plans that works with a
Health Savings Account.
