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J. Kevin A. McKechnie: HHS Challenges HSA Plans April 21, 2015

By J. Kevin A. McKechnie

The Institute for HealthCare Consumerism, April 21, 2015

King vs. Burwell is on the horizon. If the plaintiffs are successful, so goes the theory, subsidies end in 37 exchanges operated by the Department of Health and Human Services and serviced by HealthCare.gov. Coverage gets more expensive, and people won’t be able to afford their policies.

But, this outcome was foretold all the way back in the Senate mark-up of the proposed ACA legislation. Purposely requiring subsidies in state-run exchanges remains the incentive for states to set them up. The administration did not expect so many states elected not to set up their own exchanges, and it is now a big problem. As was noted in 2009 by critics of the bill, if states don’t hand out subsidies, people won’t be able to afford to buy coverage.

In the health savings account industry, the problem is compounded. The ACA law also created a perpetual rule change engine. For example, every year HHS issues what’s called the Letter to Issuers letter to Federal-facilitated Marketplaces (FFMs), in which it discusses all of the fixes that need to be made to exchange operations. This year, HHS has proclaimed that we would all be better off if out-of-pocket maximums (OOPM) for “other than self-only coverage” were restricted to the OOPM for individuals or $6,850 for 2016.

From Centers for Medicare & Medicaid Services:

For example, under the proposed 2016 annual limitation on cost sharing, if an other than self-only plan has an annual limitation on cost sharing of $10,000 and one individual in the family plan incurs $20,000 in expenses from a hospital stay, that particular individual would only be responsible for paying the cost sharing related to the costs of the hospital stay covered as EHB up to the annual limit on cost sharing for self-only coverage that is proposed to be $6,850 for 2016. However, for a plan with other than self-only coverage, as long as the plan applies an annual limitation on cost sharing that is at or below the annual limitation for self-only coverage (proposed to be $6,850 for 2016) for each individual in the plan and at or below the annual limitation for other than self-only coverage (which is proposed to be $13,700 for 2016), the issuer has flexibility on how to apply the plan’s annual limitation on cost sharing between the individuals in the plan.

So, by regulation, CMS is attempting to ignore the ACA statute and change the tax code by which HSAs operate all under the authority the ACA grants them to determine what a Qualified Health Plan is. HSA plans are generally not equipped to operate the additional complexity of tracking out-of-pocket maximums for each individual in addition to separate individual and family deductibles. Sounds great in theory, but in practice it may affect availability of all HSA plans, not only in the exchanges, but in all markets, including the large employer market.

Continued at The Institute for HealthCare Consumerism