We all want it, so let’s get it. On Monday, government heavy-hitters from the Departments of Health and Human Services, Treasury and Labor, as well as the Federal Trade Commission, all called for higher HSA contribution limits and access on the part of consumers.
In a report and letter sent to the White House, HHS Secretary Alex Azar, Treasury Secretary Steven Mnuchin and Labor Secretary Alexander Acosta specifically said that promoting and expanding health saving accounts and health reimbursement arrangements would expand personal control and introduce more consumer power into the health care market.
“The report recommends expanding access to HSAs, implementing reference pricing where appropriate, and developing price and quality transparency initiatives to ensure that newly empowered health care consumers can make well-informed decisions about their care,” the secretaries note.
They argue that the primary vehicles that put more control in the hands of consumers and reduce the bias toward third-party payment are high deductible health plans (HDHPs) paired with HSAs and HRAs.
Explaining that current annual HSA contributions are limited to $3,450 for persons enrolled in single coverage under an HSA-qualified plan ($6,900 for persons enrolled in family coverage), they add that unfortunately, many people—likely around 60 percent—who have deductibles exceeding the required minimum deductibles for HSA-qualified plans do not have HSA-qualified plans.
They therefore recommend:
- Allow anyone enrolled in a health insurance plan with a 70 percent actuarial value (AV) or below to contribute to an HSA. This will incentivize employers whose current plans have an actuarial value above the threshold to switch to offer a plan or plans with a somewhat higher deductible and copayments (and a lower actuarial value) because their workers could then newly participate in an HSA. Economic theory suggests employers would fund employees’ HSAs with premium savings.
- Allow people with an HSA-qualified plan who also choose consumer-provider, fixed-fee arrangements, such as direct primary care arrangements, to contribute to an HSA. Doing so would provide another avenue for first-party payment of healthcare services, thereby expanding choice and making HSA-qualified plans more attractive relative to comprehensive insurance.
- Allow persons enrolled in Healthcare Sharing Ministries as defined in Code section 5000A(d)(2)(B)(ii) to contribute to HSAs. Healthcare Sharing Ministries are organizations in which people with shared religious or ethical beliefs help pay each other’s medical costs.
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.
