The topic of Health Savings Accounts, otherwise referred to as HSAs, has come back to the forefront of policy discussion because the election and inauguration of President Trump signals the possible repeal of President Obama’s Affordable Care Act. However, the GOP cannot repeal the ACA without first creating a satisfactory replacement for it. If they weren’t to do so, millions would be left without health insurance. Health Savings Accounts have been consistently included in almost all replacement plans that have been proposed by Republican representatives in D.C. HSAs are a dominant similarity in the GOP’s proposals because one of the longest-held fiscally conservative views is that consumers ought to take on more responsibility for their own medical and health care spending. Each of the proposals being discussed on Capitol Hill are diverse but a majority of them suggest the possibility of larger tax-free contributions for the accounts along with some more flexibility on the kinds of medical services that the HSA funds can be used for.
The basic theory behind HSAs is if consumers need to cover a larger upfront share of their health care costs through the use of a savings account which makes it easier for the average American to save a portion of their paycheck pre-tax for the purpose of health care then, perhaps, consumers would use the health care system more sensibly leading to the slowing of the constantly increasing costs. Strong supporters of the widespread use of HSAs say it is the most beneficial route for health insurance because it’s premiums are lower and the tax savings cover all contributions, all growth of the funds in the account, and every withdrawal that is used for health purposes. On the contrary, critics point out that the tax breaks may only benefit the wealthy rather than those who earn less and don’t have an ability to save. No matter which philosophy you believe, it’s a good idea to know a little bit more about HSAs since you will likely be hearing about them a lot in the coming months.
As of now, HSAs must always be paired with a qualifying health insurance plan that has a high annual deductible of at least $1,300, for an individual plan, and $2,600 for families. Unlike most insurance plans, consumers are required to pay the full cost for any health care until the deductible has been met. Policyholders are meant to pay those deductibles using their HSA which they have, hopefully, been making regular, tax-free contributions to. As of 2017, the maximum amount a policyholder can deposit into their HSA is $3,400 for individuals and $6,750 for families; however, all of the unused funds at the end of the year roll over and can be used in the next. Currently, HSAs can only be used for out-of-pocket health costs like deductibles, co-payments for doctor visits, and hospital/emergency care. They cannot be used for premiums. Many of the replacement proposals for the Affordable Care Act, including Paul Ryan’s Better Way white paper, seek to increase the HSA contribution limit. Some wish to abolish the limit altogether like Senator Rand Paul’s Obamacare Replacement Act. Rand Paul has also proposed that it not be necessary to couple HSAs with high-deductible plans but all insurance plans.
An estimated 26 million Americans are covered by an HSA-eligible plan and 24% of employers that offer coverage, provide HSA-eligible plans. HSA insurance plans have lower premiums because of their higher deductibles which can make them financially beneficial if the policyholder is a wise consumer. In fact, numerous policy experts and economists claim that HSAs may encourage people to become better health care consumers and improve their ability to shop for medical and health procedures. Americans struggle to comparison shop for the best prices in medical care because they feel they don’t have the resources to do so efficiently. People on high deductible health plans often forego critical exams such as MRI or CT scans simply because they are unsure how to shop around for medical procedures with their pre-tax savings. ZendyHealth’s discount bidding platform works optimally with HSA account holders since they can now manage their accounts in a better way by efficiently shopping for better values on various procedures in health and dental. With ZendyHealth, shopping for health care is easier – the goal is that not a dollar of your HSA money goes to waste.