Open enrollment for the Affordable Care Act has officially begun. Despite optimistic projections from pro-ACA factions like the Department of Health and Human Services, enrollment has not taken off as promised. I firmly believe that the biggest problem (aside from poorly designed websites that continually crash) is that people do not know any more about health insurance or health care reform than they did a year ago.
The different plans available are confusing, and the navigators who have been hired to assist applicants do not seem to have nearly the training necessary to answer any questions that might deviate from their prepared script. In addition to this, there is a lot of erroneous information circulating around.
In order to dispel some of the myths surrounding health care reform—and for our purposes here, the misinformation regarding health savings accounts—I have written this post to provide you with more accurate information.
Myth #1: HSA Plans Will No Longer Be Available in 2014
Although I understand why people might get the impression that HSA plans are no longer an option under the ACA, this is patently untrue. HSA plans can still be used, as long as they are combined with a health plan that is compliant with the Affordable Care Act’s requirements.
The combination of a high-deductible health plan and an HSA still remains one of the best ways to keep your health insurance costs down while benefiting from the tax breaks that come with them.
Myth #2: HSA Plans Do Not Meet ACA Requirements
Contrary to popular belief, HSA plans—or rather their corresponding high-deductible health plans (HDHPs)—have always been allowed to pay for preventive care and other services now mandated by the ACA. However, these services were never required to be paid for before the health care reform bill went into effect.
Now, just like all other health insurance plans that are available, all HDHPs are compliant with the Affordable Care Act. This means that preventive care procedures and most childhood immunizations are covered with no out-of-pocket costs charged to the consumer. There is no pre-existing condition waiting period, nor can anyone be denied coverage under an HDHP.
It has also been found that the ACA-required actuarial value of 60 percent (meaning the plan will pay 60 percent of the typical policyholder’s medical expenses in a year) will be met by all HSA/HDHP combination plans.
Myth #3: HSAs Will Be More Expensive in 2014
Having an HSA has historically been an excellent way to protect yourself from a catastrophic health event (for example, a major illness or accident necessitating extensive medical expenses). At the same time, these plans typically offer a much lower premium due to the fact that the policyholder pays a greater amount of his medical expenses out of his own pocket. This fact has not changed with the advent of the ACA.
In fact, the benefits of having an HSA have actually increased due to the Affordable Care Act. The maximum contribution limits have increased, which allows you a higher tax credit for your contributions. In addition, your adjusted gross income (AGI) will be lowered by the amount you contribute. This can actually make it so you have to pay even less for your insurance, as the premiums and out-of-pocket expenses are calculated using your modified adjusted gross income (MAGI).
Myth #4: Fewer People Are Choosing an HSA in 2014
Right now, HSA’s seem to work very well for those who are self-pay patients – but can be just as good for all type of patients. There is no data to confirm the rumor that HSA plans are becoming less popular amongst health consumers. In fact, more employers are choosing to provide coverage using an HDHP and HSA combination, as it lowers their costs while also providing the required coverage under the ACA.
I anticipate that, as the American public becomes more aware of the high cost of health insurance under health care reform, even more people will consider purchasing an HDHP and an HSA. It makes a lot of sense to allow consumers the freedom to shop around and receive lower prices on services, to not limit them to one provider, and additionally, to provide them considerable tax benefits.
Myth #5: You Cannot Purchase an HSA-Qualified Plan on the Health Exchange
This is completely untrue, and is perhaps one of those little-discussed plan options that ACA proponents do not want you to know about. After all, an HSA-compatible plan does not put quite as much money in the insurance companies’ pockets! There are several plans available on the health exchanges that are HSA-compatible.
We Advise to Not Purchase a Plan on the Exchange
Now that I have laid to rest some of the myths surrounding health care reform as they pertain to HSAs, I want to take the time to remind you of something I feel very strongly about. You may have gotten caught up in the panic and hype surrounding the ACA and feel like you need to log on to a health exchange immediately and make a purchase.
REMEMBER: You are not required to purchase a health policy of any kind on either the federal exchange or an exchange managed by your state—nor should you.
You are absolutely allowed to purchase your insurance off the exchange, and this is what I actually advise my clients to do—to instead go through a certified and experienced broker.
A good broker will help you understand your options on and off the exchange. He or she will make sure you are maximizing your tax credits, and will be there to assist if you have problems with the carrier. The cost will be the same, and sometimes is a lot less.
When you log on to a health exchange, you are not getting access to a highly trained and experienced insurance agent or broker. Instead, you are either completely on your own, or, if you contact the call center or use the live chat feature, you are being directed to a customer service representative (also known as a navigator) who more than likely has little to no experience in health insurance.
If you would like to talk to a professional—and I encourage you to do so before making any health insurance decision—please consider calling one of our licensed, experienced Personal Advisors at 866-749-2039.
As a team, we have made it our mandate to be informed and knowledgeable about all aspects of health care reform. We can discuss your budget and what you want and need in a health care policy, and can make the kinds of suggestions that will best fit you on a personal level.
Best of all, our services are offered at no cost to you. You are also under no obligation to purchase anything. We simply want to make sure you have all of the information you need to make an informed decision, and we want to make sure the information you have is accurate.