You are likely aware of the recent news from last week that the House of Representatives passed two healthcare bills regarding consumer-incentivized health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs). These bills could result in several changes that will markedly increase the allowances of these plans for employees and consumers and generally benefit their wallets when incurring healthcare expenses.
A Synopsis of the Proposed Bills
- It would overturn the Affordable Care Act’s (ACA’s) barring of the utilization of tax-favored health accounts for over-the-counter prescriptions and products, including menstrual consumer products for women.
- It would consider some sports and fitness expenses, such as gym memberships and fitness programs, as qualified medical expenses, with a $500 individual limit and $1,000 family limit per year.
- It would permit a limited usage of onsite employer-offered medical clinics and other employment-related health services without jeopardizing HSA eligibility.
- It would allow high-deductible health plans (HDHPs) to cover up to $250 for self-insured employees and up to $500 for families annually for non-preventive services presently outside the deductible, such as treatments for chronic conditions, and telehealth (phone, computer or cloud-based technologies) offerings not currently covered pre-deductible.
- It would protect HSA-eligible individuals who have opted into a direct primary care (DPC) program from losing their eligibility and permit provider fees to be covered (although with a monthly cap of $150 for individual and $300 for family).
- It would allow individuals with HSA-qualifying family coverage to contribute to an HSA if their spouse subscribes to a medical flexible spending account (FSA), which would be a drastic change in practice up until now.
- It would offer the ACA’s premium tax credit for low and moderate earners to be an option when purchasing cheaper “catastrophic” plans, known as copper plans; not limit these plans to consumers under the age of 30; and permit copper and the lowest-level bronze individual and small-group plans to be HSA-eligible.
- It would up the combined annual limit on out-of-pocket and deductible expenditures for HSAs to $6,650 for individuals and $13,300 for families in 2018. Currently, HSA contribution limits are capped at $3,450 for individuals and $6,900 for families, so this would be an increase of almost double.
- It would allow HSAs to pay for qualified medical expenses as of the start of HDHP coverage for those who have opened accounts within 60 days after said coverage goes into effect.
- At the employer’s discretion, it would allow employees with an FSA or HRA participating in a qualifying high-deductible health plan with an HSA in order to transfer balances from their original account(s) to the HSA. However, said transfers would be maxed out at $2,650 for individuals and $5,300 for families.
- It would permit health FSA balances to be carried over to the following plan year, however it could not surpass three times the annual contribution limit.
- It would permit spouses over the age of 55 to pay an annual catch-up contribution (an extra $1,000) to an HSA if it’s linked to a family health plan. Currently, only the account holder can make catch-up contributions annually.
- It would permit working seniors participating in Medicare Part A and a qualifying HDHP to make contributions to an HSA.
Experts Weigh In
It is important to note that pre-deductible coverage in H.R. 6199 was “dialed back for budget purposes,” although there is optimism that chronic-care coverage could be expanded in future legislation, as Geoff Manville, Principal in HR consultancy, Mercer’s, law and policy advisory group, suggests.
Allowing HSAs to work in conjunction with a DPC program could provide a stimulus to future benefit designs, said Anne Richter, Chief Strategy Officer of Ameriflex, a consumer-driven health plan administrator. She opines that this “would immediately benefit Americans who use HSAs and the growing population of employers, physicians and individual consumers who are choosing DPC to deliver high-quality primary care outside the constraints of a fee-for-service payment model.”
While these bills still need to pass in congress, it is very important to know the scope of their impact for employers, as the landscape and applications of these types of plans could change drastically in the favor of employees and healthcare consumers in the near future.