NCPA fellow does not see clear solution for shortage of HSA-eligible consumers
The study also found that most high-deductible health insurance plans are not Health Savings Account (HSA)-eligible, which catches more than 80 percent of all consumers who have high-deductible insurance by surprise.
“Tax law requires that HSA-qualifying plans must have minimum deductibles of $1,300 per individual or $2,600 per family,” Devon Herrick, health economist and senior fellow at the National Center for Policy Analysis (NCPA), recently told Patient Daily. “The only first-dollar benefits a plan can provide and remain HSA-qualifying is preventive care.”
Herrick explained that as a marketing tool, many insurers apparently decided that providing a few extra benefits below the deductible would attract more enrollees than having their plans be HSA-eligible.
“About 83 percent of marketplace enrollees receive subsidies to help pay premiums,” he said. “By definition, they have modest incomes and may not save much in taxes by opening an HSA. The companies designing plan benefits may have decided an extra doctor visit, maybe a generic drug prescription with only a copay would be preferable to many potential exchange plan enrollees than HSAs.”
Those who have chronic conditions are just as affected as those with lower incomes, Herrick said.
“This means that many potential enrollees will not have an incentive or a tax-free means to save for costs under their deductibles,” Herrick said. “It also means people with chronic conditions that require out-of-pocket spending will pay nearly double compared to if they had an HSA.”
Herrick dissected the savings for those who may, or may not, qualify.
“Depending on a person’s marginal tax bracket, an HSA can save up to 30 percent to 45 percent,” he said. “That is, 15 percent to 25 percent tax bracket, 15.3 percent payroll tax and maybe a 5 percent state and local tax.”
Herrick argues that the problems with this particular issue are not easy to solve.
“There’s really not much that can be done about it,” Herrick said. “Insurers are designing what they think will sell. Lawmakers could adjust tax law to stipulate plans with a coverage gap (rather than deductible) of $1,300/$2,600 are eligible and that first-dollar benefits cannot exceed some nominal amount.”
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