The American Health Care Act had only a 17% approval rating before being pulled without a vote on Friday, March 24. The legislation would have made a number of positive changes for Health Savings Accounts, but the good news for HSA fans is that Republican lawmakers have another shot at expanding these popular tax-advantaged accounts.
On February 15, the Health Savings Act of 2017 was introduced by Senators Orrin Hatch (R-UT) Representative Erik Paulsen (R-MN). This bill would make many of the same changes that were proposed in the American Health Care Act plus a whole lot more:
- Change the name from “High Deductible Health Plan” to “HSA-qualified health plan”
- Allow both spouses to make catch-up contributions to the same Health Savings Account
- Allow people with Medicare Part A only to continue to contribute to an HSA
- Allow members of a Health Care Sharing Ministry to contribute to an HSA
- Allow HSA funds to be used for Direct Practice Physicians
- Allow embedded deductibles that meet the minimum individual deductible rather than the minimum family deductible amount
- Allow HSA funds to be used for over-the-counter drugs
- Allow rollovers from an FSA or HRA to an HSA
- Protect HSA funds from bankruptcy proceedings
- Increase the maximum HSA contribution to the amount of the deductible and out of pocket limitation
- Allow HSA funds to be used for certain exercise equipment and nutritional supplements
The big question is whether this bill has a chance of passing—can it actually get some Democratic support? Nobody knows at this point since there’s very little agreement between the two sides, but this bill is certainly less controversial than some of the other healthcare proposals because it wouldn’t result in people losing health coverage or paying more for health insurance; instead, it would simply make HSAs easier for account holders to use and allow them to pay more expenses with tax free dollars. It’s certainly worth keeping an eye on this proposed legislation, which is currently being considered by the Senate Finance Committee.
The Health Savings Act of 2017 is not the only bill being considered that would make changes to Health Savings Accounts. For example, Dr. Michael Burgess (R-TX) has introduced a bill in the House of Representatives that would increase the HSA contribution amount, allow a rollover of HSA funds to the child, parent, or grandparent of an account holder, and, interestingly, expand the definition of an HSA compatible plan to include bronze and silver plans on an insurance exchange. Another bill called the Health Savings Account Expansion Act of 2017 would significantly increase the contribution limits (to $9,000 for single coverage and $18,000 for family coverage) and would eliminate the requirement that a participant in an HSA be enrolled in a high deductible health plan. Given the number of HSA expansion ideas, it’s likely that additional bills will be introduced as well.
What can you do?
If you believe Health Savings Accounts are a good solution for your clients and agree with some of the expansion ideas, you should absolutely contact your elected officials to share your thoughts and offer to provide answers to their questions, testimonials from your clients, and anything else they need. That really does make a difference.
What a lot of agents are wondering, though, is what they should tell their clients and what actions they can take now, before any of the rules change, to position themselves for success when a health reform bill or a more specific HSA bill passes and becomes law. Here’s our advice: try to guess where the market is going and then find solutions that will help your clients regardless of the specific changes lawmakers are considering.
You don’t need a crystal ball to do that. For instance, we know that the number of Health Savings Accounts increases every year, as does the number of people with high deductible, HSA-compatible coverage. HSAs were growing before the Affordable Care Act and continued to grow during the Obamacare years. That means they’ll probably continue growing and will be a big part of the solution going forward, regardless of what happens in Washington. When you pair that reality with the fact that HSA expansion is included in every major ACA replacement plan and a number of separate bills like the Health Savings Act of 2017, it’s easy to see that agents who want to grow their business should be prepared to sell HSA-compatible plans, recommend a good Health Savings Account Administrator, and then offer other products like accident and critical illness policies that pair well with a consumer-directed strategy and help clients preserve their HSA funds.
At AHCP, we can help you with many of the products that you should be selling alongside HSAs. If you’re currently selling health insurance but not offering supplemental coverage, we should probably schedule a time to talk. Give us a call today.