Follow Us: Google+
 
Bankrate.com

insurance

Stormy forecast for health savings accounts

Stethoscope, money and pills
Highlights
  • New legislation provided a range of free, preventive health care services.
  • If your HSA predates health reform, it may be time to shop for a new plan.
  • More than 11 million Americans have health savings accounts.

What's the "whether" forecast for Americans debating whether to purchase a high-deductible, tax-advantaged health savings account, or HSA?

While the skies remain sunny for now, the long-term forecast shows storms ahead as the popular health insurance plans struggle for survival under new health care reform regulations.

A range of preventive services

Let's start with the good news. Not only did the Affordable Care Act outlaw the lifetime benefit limit across all health insurance plans including HSAs, it also provides health savings account holders and their families with a wide range of free preventive care services. Depending on your age, you can now partake in free diabetes and cholesterol screening, mammograms, colonoscopies, flu shots, regular well-baby and well-child visits, and routine vaccinations for measles, meningitis and polio, among other services.

However, the preventive care benefits don't automatically apply to HSAs written before Sept. 23, 2010, when those ACA benefits kicked in.

"For so-called grandfathered plans that were in effect before that date, that coverage is not there," says Wiley Long, president of HSA for America, an HSA broker in Fort Collins, Colo. "Now, the HSA company could have decided to include it, but most haven't and it's not required to be part of the plan."

If your HSA predates health reform, you may benefit by shopping for a new plan.

"Compare prices; if it's roughly the same or less, it probably makes sense to change," Long says. "But the new plans are generally more expensive because the carriers are facing more costs for having to cover all of this preventive care."

A health care solution for companies

Individual and group health savings accounts have grown steadily since 2004, with 11.4 million Americans now covered by HSAs, according to a June census by America's Health Insurance Plans, an industry trade group. Enrollment has nearly doubled during the past three years, with large-group plans up 26 percent in 2010 alone.

"Because of the new pressures that the (ACA) law places on businesses, this is kind of the go-to solution for most businesses," says Roy Ramthun, president of HSA Consulting Services in Silver Spring, Md. "Large employers are turning to these types of plans very quickly. It's the only way they can control their health care spending."

Ramthun calls HSAs the wave of the future for corporations, many of which have started their own self-funded HSA programs that eliminate the insurance company entirely. "Where an employee used to have a choice of PPO and HMO, it's now frequently just a choice of deductibles," he says. "They're all high deductibles that qualify for HSAs."

Those high deductibles, which HSA account holders gladly trade for lower premiums, also may place HSAs on a collision course with the Affordable Care Act.

For starters, there's the ACA's new actuarial value standard, which measures the percentage of your health plan's benefits your insurer will pay. The ACA designers plan to allow four plan levels -- bronze, silver, gold and platinum -- when state health insurance exchanges open in 2014. Bronze will be the lowest allowable actuarial value at 60 percent, meaning your insurer must pay at least 60 percent of your medical benefits.

advertisement

Show Bankrate's community sharing policy
            Connect with us
Compare Insurance Rates



advertisement
Most Read
  1. 10 ways to turn off a homebuyer
  2. No more Social Security at 62?
  3. What TV homes cost in real life
  4. 5 frugal ways to expand living space
  5. Naughty things credit card won't buy
  6. What it takes to remodel kitchen
  7. Danny Bonaduce's house for rent
  8. Bruce Willis' house for sale
  9. 12 meanest cars for the environment
  10. Celebrity estate planning mistakes
Auto Insurance Averages
Product Rate
Auto - Couple, age 30
$ 1638.13
Auto - Couple, age 45
$ 2794.86
Auto - Female, age 50
$ 1505.29
Auto - Male, age 50
$ 1561.24
View rates in your area:
A law group claims that young women are improperly being denied maternity coverage under their parents' health insurance.
advertisement
Partner Center
advertisement

Advertising Disclosure: Bankrate.com is an independent, advertising-supported comparison service. Bankrate may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.