2010 Starting
now, domestic and same-sex partners are eligible for HSA reimbursements.
This means that anyone with money in a Health Savings Account can use
funds from that account tax-free to pay for their partner’s medical or dental
expenses. On
September 23rd, the following provisions
will affect all plans in effect since the law was enacted on March 23rd (but will
not apply to grandfathered plans already in force prior to March 23rd).
- Policies
will no longer have lifetime limits (now typically $1 - $5 Million)
- Children
with pre-existing conditions will no longer be denied coverage.
- Young
adults will be able to stay on their parents’ policies until age 26.
- Preventive
services will be covered 100%, with no copay or deductible. The law
references guidelines of the U.S.
Preventive Services Task Force. (Click on a service on their page
– those rated A or B on their list will likely be covered, though details
still need to be approved by the Secretary of Health and Human Services.)
2011 There
are a couple of provisions affecting HSA owners that start January 1 of next year.
- You
will no longer be able to pay for over-the-counter medicine from your HSA.
At that time, only prescribed pharmaceuticals can be paid for from an HSA.
- The
penalty for withdrawals from your HSA for non-medical expenses increases from
10% to 20%.
- A
long-term care insurance program will be available via voluntary payroll deductions.
(However, private coverage is likely to provide a much better value).
2014 Most
of the major changes in the health insurance market officially take place starting
in 2014. HSA out-of-pocket limits in 2014 when the new health exchanges
kick in will be $6,645 for individuals and $13,290 for a family.
- Mandated
health insurance coverage: Everyone will be required to
purchase a specific minimum level of health insurance, with a maximum out-of-pocket
limit of $6,645 for individuals and $13,290 for family plans. This will
limit the types of plans available compared to today. Everyone will be required
to carry maternity coverage and other mandated benefits. A penalty of $95
or 1% of income will be charged by the IRS to anyone who does not carry qualified
coverage, rising to $325 in 2015, and $695 or up to 2.5% of income by 2016.
- Catastrophic
plans only available to young: People under age 30 will be allowed
to purchase lower-cost catastrophic plans that cover only 3 primary care visits
until cost sharing equaling the maximum deductible is reached
- Minimum
actuarial value: Everyone over age 30 will be required to carry
coverage that covers at least 60 percent of the actuarial value of the benefits
offered (that being the average medical expenses incurred by a typical person
in a year). It is not clear if the contribution to a health savings account
will be counted when calculating the actuarial value. If not, the maximum
deductible that is available will go down a good bit
- Maximum
deductibles: Maximum deductibles for HSA-qualified plans in 2014
will be $6,645 for individuals and $13,290 for families. However, it is
not clear if plans with deductibles this high will actually qualify, due to the
minimum actuarial value requirement (see above)
- Guaranteed
Issue: Underwriting will be eliminated, so people with pre-existing
conditions will qualify for coverage.
- Cost
shifting: Younger people will be required to pay no less than one
third what the oldest segment (age 60-64) pay, in order to subsidize the premiums
for older Americans. Males will also be required to subsidize female premiums,
so that premiums are equal for both sexes.
- Subsidized
premiums: Subsidies will be available to individuals earning up
to $29,327, and a family of four earning up to $88,200.
- Out
of Pocket Limits:
These will be reduced for those with incomes up to 400 percent of the Federal
Poverty Limit (FPL), based on the following schedule:
- 100 - 200% FPL:
One third of HSA contribution limits: $1,983 per individual and $3,967 per family.
- 200
- 300% FPL: One half of HSA contribution limits: $2,975 per individual and
$5,950 per family.
- 300
- 400% FPL: Two thirds of HSA contribution limits: $3,987 per individual
and $7,973 per family.
- Small
employer deductible requirements: Deductibles on plans offered
by small employers can be no higher than $2000 for individuals and $4000 for families,
unless a flexible spending arrangement (FSA) is also included to reimburse the
difference between the higher deductible and $2000 or $4000.
- Small
employer individual coverage option: Many small employers will
likely be dropping group coverage and letting their employees get individual coverage,
because of the federal subsidies that some employees would qualify for.
For employers with over 50 employees, there is a $3000 fee per employee receiving
the subsidy, up to a maximum of $2000 per year for all employees. For businesses
with less than 50 employees, there is no fee. Information on the best way
to set up individual coverage for your employees can be found on our HRAs for
Small Businesses page.
We
believe that high deductible HSA-compatible health insurance plans are absolutely
necessary if this new law has a chance of working. We are also recommending
that people get the highest deductible plan that they can now, while they are
still available. You should also consider getting a plan with a two or three
year rate guarantee. If you would like any assistance in choosing a plan
or getting signed up, just give us a call. The
information above is provided for general information purposes. Much of
it is subject to further clarification from the Secretary of Health and Human
Services. There are also numerous legal challenges, including several issues
that will probably result in Supreme Court review. If you need tax advice,
contact your professional advisor or let us know and we'll give you a referral.
Sincerely,
Wiley Long |
