HSAs under GOP bill expand options for out-of-pocket cost savings
The new bill can change HSA-eligible plans if list of services covered pre-deductible were expanded, particularly for those with chronic conditions.
Erin Corbelli takes three medications to treat high blood pressure, depression and an anxiety disorder. Her health plan covers her drugs and specialist visits, but Corbelli and her family must pay a $3,000 annual deductible before the plan starts picking up any of that tab.
Corbelli's insurance is linked to a health savings account so that she and her husband can put aside money tax-free to help cover their family's drug and medical expenses. But there's a hitch: Plans like theirs can't cover any care for chronic conditions until the deductible is satisfied.
Those out-of-pocket expenses could shrink under a Trump administration draft executive order that would change Internal Revenue Service rules about what care can be covered before the deductible is met in plans linked to health savings accounts, or HSAs.
"It would save us a lot of money," said Corbelli, 41, who lives in Orlando with her husband and their two children, ages 3 and 5.
Health plans with deductibles of thousands of dollars have become increasingly commonplace. Plans often cover services like generic drugs or doctor visits before consumers have satisfied their deductibles, typically requiring a copayment or coinsurance rather than demanding that consumers pony up the entire amount.
But plans that link to health savings accounts have more restrictions than other high-deductible plans. In addition to minimum deductibles and maximum HSA contribution limits, the plans can't pay for anything but preventive care before consumers meet a deductible. Under current IRS rules, such preventive care is limited to services such as cancer screenings and immunizations that prevent a disease or condition, called "primary prevention." With HSA-eligible plans, medical services or medications that prevent an existing chronic condition from getting worse or prevent complications from occurring -- called "secondary prevention" -- can't be covered before the deductible is paid.
The Trump administration's draft executive order, which was first obtained last month by The New York Times and has yet to be issued, would allow such secondary preventive services to be covered.
Under the Affordable Care Act, most health plans, including HSA-eligible plans, are required to cover services recommended by the U.S. Preventive Services Task Force without charging consumers anything for them. That requirement is generally limited to primary prevention.
"We know health savings accounts are here to stay and we'd like to make them better," said Dr. A. Mark Fendrick, an internist who is director of the University of Michigan's Center for Value-Based Insurance Design and who has advocated for the change.
If people have diabetes, for example, they need regular eye and foot exams to prevent complications such as blindness and amputations down the road. But HSA plans can't pay anything toward that care until people satisfy their deductible. "The executive order gives plans the flexibility to do that," he said.
Similarly, it's critical to remove obstacles to treatment for people like Corbelli with high blood pressure or heart disease, said Sue Nelson, vice president for federal advocacy at the American Heart Association.
"For people with cardiovascular disease, affordability is their No. 1 concern," Nelson said.
The draft executive order is short on details, and administration officials would have to determine which new preventive services should be covered pre-deductible. Guidelines from medical specialty boards and quality metrics that many physicians are already being measured against could be used, said Roy Ramthun, president and founder of HSA Consulting Services who led the Treasury Department's implementation of the HSA program in the early 2000s.
Back then, they took a conservative approach. "We said we can be more flexible later, but we can't put the genie back in the bottle," said Ramthun, who supports expanding preventive services coverage.
Many more employers would offer HSA-eligible plans if the list of services that could be covered pre-deductible were expanded, said Tracy Watts, a senior partner at human resources consultant Mercer. Fifty-three percent of employers with 500 or more workers offer HSA-eligible plans, according to Mercer survey data. Three-quarters of employers put money into their employees' HSA accounts, she said.
Erin Corbelli's husband's employer contributes up to $1,500 every year to their health savings account, which can help cover their pre-deductible costs.
Not everyone is so fortunate. "You're kind of at the mercy of what your employer can offer and what your disposable income is," she said.
Republicans have long advocated for the expanded use of health savings accounts as a tax-advantaged way for consumers to get more financial "skin in the game."
Consumer advocates have been much less enthusiastic, noting that the accounts typically benefit higher-income consumers who have cash to spare.
Still, given the reality of the growing prevalence of high-deductible plans, with or without health savings accounts, it's a sensible proposal, many say.
"This is not a silver bullet or a solution to the problems that high-deductible plans can pose," said Lydia Mitts, associate director of affordability initiatives at Families USA, an advocacy group. "But this is a good step in thinking about how we offer access to treatment people need in a timely and affordable way."
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Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.
