Obamacare Replaced with Roth Health Savings Accounts?

But will they cover everyone?
But will they cover everyone?

As momentum for the repeal and replace of the Affordable Care Act gains steam in Republican-controlled Congress, one possible contender is a Roth health savings account (HSA).

Bill Cassidy, R-Louisiana, Susan Collins, R-Maine and Lindsey Graham, R-South Carolina, are among several senators cosponsoring the Patient Freedom Act of 2017, which they bill as “a comprehensive replacement plan for Obamacare.”

Cassidy, a physician, spearheaded the proposal, which repeals five federal mandates under Obamacare: the individual mandate, the employer mandate, Essential Health Benefits, actuarial value requirements, and age band requirements.

It keeps what it calls “essential consumer protections,” including guaranteed issue, guaranteed renewability, no annual or lifetime limits, dependent coverage through age 26, prohibiting pre-existing condition exclusions, and prohibiting discrimination based on health status.

“The money will be deposit directly into an individual’s Roth HSA to assist in the purchase of health care,” the bill’s language reads. “States will have the option to either receive the total sum of money for administration by the state, or to have the Federal government directly administer and give a tax credit to qualifying individuals. States will have the option to auto-enroll individuals.”

If auto-enrollment is selected, individuals will be allowed to opt-out of coverage. The auto-enroll feature eliminates the need for either an individual or employer mandate.

HSAs’ popularity in general continues to rise, especially in retirement planning. The number of assets in HSAs “rose steadily” to $30.3 billion, a 16.7 percent increase year over year, 401(k)-provider giant Ascensus reported last November. Current projections show it continuing, and the HSA industry is on track to reach $50 billion in assets by 2018.

The overall number of HSA accounts has also increased, rising 22 percent in 2015 (the latest data available) with 16.7 million open accounts, which “are favored by savers at or near retirement,” according to the company.

John Sullivan
+ posts

With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.

1 comment
  1. Why would Americans want to start taxing the tax-free HSA? 401Ks and Roth IRAs are old taxed accounts. HSAs enjoy tax-free deposits, growth and withdrawals, AMEN!

    Americans don’t want to start taxing tax-free HSAs, sorry John Sullivan. TRUST me, I enrolled the 1st tax-free HSA when they were called tax-free MSAs over 20 years ago, October 1996.

Comments are closed.

Related Posts
Total
0
Share