Group Plans Will Offer HSAs With Higher Deductibles — Real Health Care Reform Healthshare

Group Plans Will Offer HSAs With Higher Deductibles

good news!The Affordable Care Act (ACA) states that health insurance deductibles will be lowered to $2,000 per person, or $4,000 per family, in group plans. But a deductible that low would change the structure of an HSA plan you already have, making it less favorable as an investment tool and a security against health emergencies.


Employers Will Run from ACA Regulations


Actually, employers are likely to switch to HSA-qualified plans with even higher deductibles… That’s because there’s a loophole in the law.


The fact is the ACA cannot lower the deductible on Health Savings Accounts that far and still allow a plan to meet other conditions of the law. It’s true that the law states in one area that a group plan should have a maximum deductible of only $2,000 for an individual. But the law also says the following in another section:


“Section 1302(c)(2)(C) of the Affordable Care Act directs that the limit on deductibles described in section 1302(c)(2)(A) for a health plan offered in the small group market be applied so as to not affect the actuarial value of any health plan…we propose that a plan may exceed the annual deductible limit if it cannot reasonably reach a given level of coverage (metal tier) without doing so.” (The emphasis is mine.)


In other words, the law waffles, stating that the deductible can be raised above $2,000 if the actuarial value of the plan won’t meet the minimums for a bronze plan, for example.


The Simple Meaning of “Actuarial Value”


You’re going to hear the term “actuarial value” more in the news in coming months, so here’s what it really means. It means that the government figures the amount of money that a typical policyholder will receive in medical services in an average year—that’s the actuarial amount.


Then, the metal tiers in the ACA pay different percentages toward meeting that value; for example, the bronze tier pays for 60 percent  of the actuarial value—60 percent of the yearly amount that the average policyholder spends. And the policyholder pays the other 40 percent.


Good News for HSA Policyholders


But the math simply doesn’t work to create the actuarial value if the deductible is set at the low $2,000 level on an individual bronze plan. So people will be allowed to purchase a policy with a higher deductible, such as an HSA plan.


This is good news, because HSA plans typically cost at least 30 percent less in premiums than traditional copay plans. And having been in the HSA business since they first became available in 2004, we know that people with Health Savings Accounts spend their money carefully, because it is their own money.  With an HSA you also have a tax-advantaged savings account to pay for services when you need them most—and to grow into an additional retirement account if you stay healthy.


What’s interesting to me is that our high-deductible HSA plans will meet the guidelines of the ACA better than the typical plans that the law proposes. The wisdom of saving money for yourself and building it tax-free is clearer and clearer, and real reform is still possible if more people do this.


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