Many people are interested in HSAs and the health plan that makes them possible: the high deductible health insurance plan (HDHP).
HSAs offer many benefits, but they continue to be a complex area for consumers and employers to navigate. Additionally, although the Affordable Care Act didn't directly change HSAs, it has affected HDHPs.
Here are 10 FAQs about HSAs, with information that's specific to 2017.
FAQ No. 1: What would happen to HSAs if the law prevented future HSA contributions?
If the ACA did impact either an HSA owner's health plan or health plans in general in a manner that would cause individuals to lose HSA eligibility, existing HSA owners could continue to use any amounts in their HSA for qualified medical expenses even if no longer eligible to contribute more. This is important to know in case changes do make HDHPs less available. The HSA remains one of the best tax-favored options available. A good strategy is for people to accumulate assets now in the HSA to prepare for future changes that might occur.
This article is excerpted from 2017 Health Savings Accounts Facts published by the National Underwriter Company, a division of ALM. BenefitsPro Editors also contributed.
A critical component of the definition of an high deductible health insurance plan (HDHP) is the deductible. (Photo: iStock)
FAQ No. 2: What are the HDHP deductible limits?
A self-only HDHP must have a deductible of at least $1,300 (2017) and the family deductible must be at least $2,600 (2017). HDHPs must also have a maximum out-of-pocket limit.
FAQ No. 3: Will HDHPs be offered on state exchanges in 2017?
A 2016 ruling by Health and Human Services will likely limit or possibly even eliminate HDHPs from state insurance exchanges starting in 2017. On March 8, 2016, HHS issued its annual notice titled "HHS Notice of Benefit and Payment Parameters for 2017." In the details of this notice are two rules that will likely eliminate HDHPs from the state health exchanges starting in 2017, at least for standardized plans (the rules allow insurance companies to offer non-standardized plans, which may retain HSA eligibility).
The first rule is HHS's use of the maximum out-of-pocket costs for plans offered at the various metal levels on the exchanges. For silver and bronze plans, HHS is moving to the higher out-of-pocket maximums. This will result in the loss of HSA eligibility for those plans and the plans will no longer qualify as HDHPs.
The second rule is HHS's requirement that plans offered through the state exchanges provide for primary care visits, specialist visits (at the silver and gold levels), mental-health/substance use disorder outpatient services, and more before the deductible is met. HSA rules require that the HSA owner pay amounts below the deductible. HSA rules provide exceptions, including for preventive care, but the new HHS requirements do not appear to meet those exceptions.
The Affordable Care Act didn't directly change health savings accounts, but it has affected hgh deductible health insurance plans. (Photo: iStock)
FAQ No. 4: Does the Affordable Care Act's maximum deductible limit for the small group market impact HSAs?
No. The Affordable Care Act included the small group market provisions described below. However, in 2014 Congress passed legislation signed by the President eliminating these provisions retroactively to the passage of the ACA (The Protecting Access to Medicare Act of 2014).
The rule would have required small groups that currently offer higher deductible HDHPs to lower their deductibles. The ACA imposed a maximum deductible for the small group markets of $2,000 for individuals and $4,000 for families. Although these deductible levels remain HSA-eligible in 2017, the lower limits would have increased premiums in the small group market.
Even before the law change, Health and Human Services issued regulations allowing for some flexibility for increased deductibles in the small plan market. The regulations allowed a health plan's annual deductible to exceed the annual deductible limit ($2,000/$4,000) if that plan could not reasonably reach the actuarial value of a given level of coverage without exceeding the annual deductible limit. This flexibility is no longer necessary given the repeal of the law.
FAQ No. 5: Does Department of Veterans Affairs (VA) health coverage disqualify someone for an HSA?
Starting in 2016, veterans are not disqualified from HSAs by reason of receiving medical care for service-connected disabilities under programs administered by the VA.
The IRS issued further guidance in IRS Notice 2015-87, providng a safe harbor for what is a "service connected disability." The notice provides the following:
"Distinguishing between services provided by the VA for service-connected disabilities and other types of medical care is administratively complex and burdensome for employers and HSA trustees or custodians. Moreover, as a practical matter, most care provided for veterans who have a disability rating will be such qualifying care. Consequently, as a rule of administration simplification, for purposes of this rule, any hospital care or medical services received from the VA by a veteran who has a disability rating from the VA may be considered to be hospital care or medical services under a law administered by the Secretary of Veterans Affairs for service-connected disability."
Prior to 2016, the answer depended upon whether or not the veteran had used the service. VA coverage did not disqualify individuals for HSAs provided they had not actually received any benefits from the VA in the preceding three months.
See also:
HSA eligibility is determined on a monthly basis. (Photo: iStock)
