For many years, I’ve seen how Health Savings Accounts (HSAs) have been extremely valuable for millions of Americans. These are essentially lower initial-cost, higher deductible plans that include a tax-favored savings account. That’s proven to be the smart healthcare choice for many people, but new regulations could make HSA plans more expensive and more difficult to find. The reason has to do with changes to “Aggregate Deductibles.”
What Are Aggregate Deductibles?
For a family, an aggregate deductible means that either everyone in the plan pays out of pocket until the deductible is met, or one person with the highest healthcare costs takes on the responsibility of meeting the deductible, making it easier for the rest of the family to afford their healthcare. That’s about to change.
Under the Affordable Care Act, the Center for Medicare Services (CMS) issues new regulations each year on health insurance plans, and this year’s suggested changes will eliminate aggregate deductibles. That could make it harder for families to meet their deductibles and make insurance companies less likely to offer HSA plans.
3 Benefits of HSAs for Everyone
I believe these suggestions reducing the availability of HSA plans and increasing the costs of HSA-qualified health insurance plans are not positive changes for consumers. Consider these three points about how HSA-qualified plans help the families who use them and the general public:
- HSA plans are a forward-thinking solution, allowing individuals and families to put aside money in a tax-free account to cover future medical expenses.
- The price of health insurance has nearly doubled in the past couple years for people who don’t qualify for government subsidies. The tax savings provided by HSA plans can defray some of those extra costs and help people afford their health insurance.
- Anyone with a high-deductible HSA-qualified plan will pay close attention to medical costs because initial charges are coming out of their own pocket. This puts competitive pressure on healthcare providers to lower their prices. That competition lowers costs for everyone.
Alternative Suggested Changes
Shouldn’t our public policy be doing more to encourage HSA plans instead of attacking them? Here are some alternative, positive changes instead:
- HSA-qualified plans should not have to cover first-dollar expenses or preventive care, which would lower monthly premiums.
- Premiums could be lowered even more by allowing higher deductibles, and allowing individuals to make higher contributions to their health savings accounts.
In the end, this will provide better tax benefits for those who plan ahead and set aside funds to cover future medical expenses. While the Affordable Care Act has helped many people, it has also made health insurance much more expensive for those who don’t qualify for government assistance. Let’s make sure that our public policy isn’t making things more difficult than they already are. Shouldn’t the Affordable Care Act strive to make healthcare more affordable for everyone?
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.