Health Savings Accounts and Health Care Reform

By Wiley P Long

You can keep your health savings account (HSA), and your HSA-qualified health insurance with the new health care reform laws. Existing plans will be “grandfathered” in, so you can keep existing coverage for as long as the insurance company continues to sell it.

If you’ve put off researching the benefits of HSA plans, now is the time to do so. Why now? Plans may change as portions of the new laws take effect, and insurance companies alter the plans they sell. Find the best plan to fit your needs now, and compare that to new plans as they become available. That way you’ll be guaranteed the best coverage for your situation among the existing plans, and the plans to come.

High-Deductible Health Insurance Plans

The high-deductible health insurance plans that are qualified to be combined with health savings accounts offers lower premiums. Since the selection of these plans could be reduced in the future, shop now to lock in lower premiums.

Starting in 2014, you will no longer be able to have a plan with a $20,000 deductible. However, if you already have a high-deductible plan, you will be able to keep it as long as it’s for sale. Several insurance companies offer two- and three-year rate guarantees, including Assurant, Golden Rule, and World.

Health Care Reform Changes This Year

Here are some of the changes, and how you can maximize your benefits and minimize your costs.

On September 23rd, the first phase of the law will bring some welcome benefits. The lifetime limits in policies will end so policies will be more valuable. Those limits now are typically from $1 to $5 million.

In addition, children with pre-existing conditions will no longer be denied coverage. Coverage will also increase for young adults because they will be able to get coverage through their parents’ policies until the children reach age 27.

As a HSA owner, you may stay healthy by focusing on preventive services, and with the new law, preventive services will be covered 100 percent. That means no co-pay or deductible.

Also in 2010, HSA reimbursements will be expanded to domestic and same-sex partners. This means that anyone with money in a HSA could use those funds to pay for a partner’s medical, or dental expenses tax-free.

Health Care Reform Changes For The Future

In 2011, over-the-counter medicines will no longer be qualified expenses from your HSA unless a doctor states they are medically necessary. The penalty for withdrawals from your HSA for non-medical expenses will also increase from 10 percent to 20 percent.

In 2014, people without minimum health insurance coverage who are not eligible for subsidized help will face a penalty of $95, or 1 percent of their income. That may make health savings accounts with their lower-premium, high-deductible plans even more popular.

If you’re under age 30, lower-cost catastrophic plans that cover only three primary care visits until the deductible is reached will be acceptable.

If you’re over age 30, you’ll need insurance that covers at least 60 percent of the actuarial value of the benefits offered, or the average medical expenses incurred by a typical person in a year.

With underwriting eliminated, if you have pre-existing conditions, you will qualify for coverage. There will be a maximum 90-day waiting period before a new policy holder can be covered.

HSA Tax Deductions Become Increasingly Important

Individuals with annual incomes that exceed $200,000, and couples with combined incomes that exceed $250,000 will pay an additional 0.9 percent in Medicare payroll tax beginning in 2013. There will also be an additional 3.8 percent Medicare tax on investment income.

When people are required to maintain minimum health insurance coverage, HSA plans will continue to be the best value for most consumers. See what the lower premiums, and tax deductions can mean for your bottom line.

By Wiley Long – President, HSA for America (–savings– ) – The nation’s leading independent health insurance firm specializing in HSA Plans that works with a Health Savings Account.

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