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Solving the Health-Care Puzzle: Proposed Legislation Adds to Allure of HSAs

The topic of health care in the United States is always top of mind, but no more so than during the leadup to a presidential election. As Democratic candidates exchange blows about one another’s proposed plans to fix the system, the Trump administration is still in the process of stripping down elements of the Affordable Care Act (ACA).


In June, the administration finalized rules that will allow employers to pay for their workers’ health insurance by subsidizing premiums in the ACA’s individual marketplace. More recently, at the behest of an executive order from President Trump on June 24, the Treasury Department and Internal Revenue Service (IRS) issued guidance on adding treatments for a range of chronic conditions to the list of preventive care benefits that may be provided by a high-deductible health plan (HDHP) with a health savings account (HSA).

The IRS guidance paired with The Health Savings for Seniors Act, a bipartisan bill introduced in the U.S. House of Representatives that would allow people enrolled in Medicare to open and contribute to an HSA without any changes to their preexisting coverage, creates an interesting new landscape in health care.

Specifically, the bill adds preventive care benefits for chronic conditions such as diabetes, asthma, depression and heart and liver disease provided by an HSA-compatible or HDHP.

“One of the weaknesses in the original HSA design was the fact that some of these chronic conditions were still fully subject to the deductible and there was concern that people might not take their diabetes drugs, or might not stay current on their statins, or might not attend to their heart condition or their asthma,” said David Speier, managing director of benefits accounts at Willis Towers Watson. “That was problematic, because that could lead to higher future cost. So, some companies didn’t adopt them at all or at least made them only optional.”

Speier said that this legislation is unlikely to greatly shift the current health-care landscape, as many employers already offer an HSA. To wit, WorldatWork’s “2018 Total Rewards Inventory Programs and Practices” survey found that 77% of organizations offer an HSA. However, he also indicated that this legislation might cause some employers to tweak their current HSAs or perhaps even move to an HSA-only model.

At any rate, this legislation is part of a larger trend in the health-care market: the growing popularity of HSAs. It’s a prominent piece of the health-care puzzle with benefits that still aren’t widely understood. The triple-tax advantage that is often associated with HSAs refers to the ability to put money in before taxation, build it up tax free and then take it out — again, tax free. Yet, they often aren’t used as such. Willis Towers Watson’s “2018 Health Accounts Employee Attitudes Survey” demonstrated this, as it found that 65% of employees use the money in their HSA for current health-care expenses, while just 8% are saving it for retirement.

Speier said he anticipates that usage changing because of this kind of legislation, which further establishes HSAs as a permanent fixture in the market.

“I think the financial community is getting more astute to the benefits of an HSA. While people don’t necessarily understand HSA’s, even the financially astute, I think that will slowly change over time,” Speier said. “As employees use the tools that incorporate decisions between 401(k)s and HSAs, you’ll get more enrollment in them and get more assets in them and that will continue to grow. I strongly believe that will continue to happen.”

A significant hindrance to the proper utilization of HSAs now is the education around them. But Speier said he expects that too will change, as employers improve their decision support tools.

“Educational materials are beginning to become more robust and companies are using that,” Speier said. “Then there’s a general trend about overall wellness, which is thought of as a much broader spectrum of things. It used to be health wellness and now it’s a more holistic viewpoint of health, financial and emotional [wellness]. Those components are being brought together holistically and HSA is becoming a part of that dialogue for employers.”



What Does the Future Hold?

Dr. Richard Feldman wonders what’s next for health care in the U.S. in a column for the South Bend Tribune. Dr. Feldman runs down the list of health-care options presented by Democrats and Republicans and surmises that some form of single-payer plans could be where health care is headed.  

Expanding the Scope

A trio of authors at the National Law Review break down the IRS notice that will allow people with chronic health conditions who participate in HDHPs with HSAs to receive necessary care that may otherwise be out of financial reach. The authors point out that the IRS has not expanded the scope of preventive care beyond what is listed in the official notice.

More Retirement Savings

Amanda Umpierrez of PlanSponsor writes about a recent legislative bill that may expand the advantages of HSAs, which would include an expansion on retirement savings. Umpierrez’s article notes that the bill could save $1,800 for an average household led by someone age 65 or older with a household income of $48,000.

Debating the Future of Health Care

In response to the Democratic presidential candidate debate on Tuesday night, Washington Post columnist Paul Waldman laments how the topic of health-care reform is discussed. Waldman presents four prudent questions U.S. voters should ask of their candidates when it comes to health-care plans.

Blockchain in Health Care

Three authors for Medical Economics explore the use cases for blockchain technology in the health-care system. The authors delve into how blockchain’s secure ledger could assist in the drug supply chain, medical staff credentialing and electronic health records.

About the Author

Brett Christie is a staff writer at WorldatWork.

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