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.
In order to figure out exactly how HSAs will be eliminated, one has to sift through a massive, more than 500-page-long rule. This will be accomplished through the new standardized benefit designs for plans offered within the lower three “metal” tiers: Bronze, Silver, and Gold. Yet the proposed rule published last fall gave no hint at just how lethal these standardized plan designs in the final rule would be.
Buried in the details of the final rule are the two main reasons why HSA-qualified plans will not survive:
1) Plans must apply specific deductibles and out-of-pocket limits that are outside the requirements for HSA-qualified plans.
2) Plans must cover services below the deductible that are not considered “preventive care.”
[Regarding the first reason] ... Because of a different inflation-adjustment factor applied to [PPACA compliant plan] limits than for HSA-qualified plans, the gap between the annual limits has and will continue to grow. Based on our projections, we’re extremely confident that our analysis below will hold true.
- 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.
... 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.
... [I]t 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.Full story here.