Healthcare Reform and HSAs

HSAs may become more common in the future because the Affordability Act mandates that all employers offer health insurance coverage. HSAs (paired with high-deductible health plans) are generally cost effective for employers because of their lower premiums. This could mean that people with a wider range of incomes will be introduced to HSAs, which have so far proved most attractive to higher earners who are self-employed or part of a group plan.

Changes that will affect HSAs include:

• Cap on out-of-pocket expenses for consumers who fall between 100% and 400% of the Federal Poverty Level (FPL).
• 100-200% FPL: $1,983/individual and $3,967/family
• 200-300% FPL: $2,975/individual and $5,905/family
• 300-400% FPL: $3,987/individual and $7,973/family


• Limit cost sharing at the current 2010 levels for individuals ($5,950) and families ($11,900) in HSA plans
• Exclusion of the cost of over-the-counter drugs not prescribed by a physician from being a reimbursable expense through an HRA or health FSA or tax-free through an HSA
• Increased penalty from 10% to 20% for non-qualified expenses withdrawn from an HSA account

Under the new law, everyone will be required to have health insurance with one of four benefit levels: Bronze, Silver, Gold and Platinum. Each level has a different actuarial value – that means the portion of covered benefits paid by the health insurance plan. All plans must have an actuarial value of at least 60 percent.

Because the high-deductible plans that go with HSAs typically have low actuarial values they may be too low to meet the requirements. It hasn’t been established yet if contributions to an HSA (whether from an individual or an employer) can make up the difference.

“We don’t know exactly when we’re going to find that information out,” says Roy Ramthun, president of HSA Consulting Services, who created HSAs during his tenure as a healthcare advisor to President George W. Bush. “It’s obviously something I’m going to be watching very closely.”

Another leading expert on HSAs thinks the chances are good. “Our sense is that lawmakers are going to work with HSAs to make sure people with these plans can keep using and benefiting from them,” says Eric Remjeske, president of Devenir LLC, a wealth management and corporate services firm.

In Remjeske’s view, HSAs may become more common. “HSAs have low premiums, and therefore may turn out to be a low-cost option for employers required to offer health insurance to their employees,” he says. “Smaller companies are especially likely to offer HSAs, because unlike big companies, they can’t afford to pay the fines they’ll incur if they don’t offer health insurance.”

Ramthun agrees that it’s possible HSAs will become more common in the next few years, but at this point it’s hard to say for sure. He says it depends on many factors, such as whether HSAs are available through the state-run exchanges where individuals and many small businesses will shop for health insurance.

He also contends that it depends on how well health insurance companies that sell high-deductible plans fare under new rules about “medical loss ratios” - the portion of premium revenue that an insurance company uses to pay for medical services (as opposed to administrative or other costs).