5500 Preparer's Manual for 2012 Plan Years
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from Spencer’s Benefits Reports: Health reform legislation threatens to derail the adoption of health savings accounts (HSAs) and high-deductible health plans (HDHPs), and ultimately kill HSAs, according to a brief published by the National Center for Policy Analysis (NCPA).
The Senate bill includes provisions that restrict “HSA options in insidious ways that will delay, deny, defeat, and ultimately kill them,” according to the NCPA brief Congress Declares War on HSAs by Ron Bachman, an NCPA fellow. Mr. Bachman is president and CEO of Healthcare Visions, Inc, a consumer-driven health care and mental health parity consultant.
“By empowering individuals, emphasizing personal responsibility, and encouraging more effective use of health care services, consumer-driven health plans have been shown to lower overall health costs more than managed care plans, such as preferred provider organizations (PPOs),” Mr. Bachman wrote. He listed what he believed would be the ultimate effects on HSA plans of the Senate health reform bill:
1. The bill favors premiums over savings—it limits the deductibles for small group plans to $2,000 for individual and $4,000 for family, much lower than the current HSA plan deductible limits. “Many people” would chose the much higher deductible possible with an HSA plan in exchange for a lower premium and to deposit the premium savings into an HSA, Mr. Bachman said.
2. The proposed legislation ignores the cost reductions HSA plans yield.
3. The health insurance excise tax on “cadillac” plans limits HSAs’ potential because HSA contributions would count toward the premium cap subject to the excise tax.
4. Regulations would stifle HSAs since the Department of Health and Human Services (HHS) would be charged with defining the essentail benefits required.
5. Regulatory powers could make HSAs illegal—“With broad powers, the [HHS] Secretary could easily outlaw HSA plans by defining essential health benefits to include coverage that would violate HSA eligibility under federal law,” Mr. Bachman wrote. For example, people under age 30 would be allowed to buy low-cost catastrophic coverage, but the law would require that these plans cover at least three primary care visits. This would rule out HSA plans because coverage would be available before the high deductible is met.
6. HSA funds could not be used to buy most over-the-counter drugs, which are much cheaper than their prescription-only equivalents and thus discourage cost reduction.
7. It would double from 10% to 20% the penalty for non-health care qualified withdrawals from the HSA.
8. Rewards for healthy behaviors would be left out because the law prohibits using health status to determine premium rates; also, employer HSA contributions are not on the list of rewards that may be offered for participation in wellness programs.
9. Price controls—“the Senate bill would require premiums for young adults that are no less than 33% of the premiums charged to older adults,” Mr. Bachman noted. “This will raise the cost of single and family premiums by 50% to 100% or more. Artificial government price controls will deny equitable risk pricing and defeat efforts to lower the number of uninsured.”
For more information, visit http://www.ncpa.org.
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