Is the HSA (health savings account) an endangered species? Yes, if you believe this National Review article. But at InsureBlog, Hank Stern explains why a lot of the National Review’s points are essentially conjecture.
I agree with Hank on this one, and there’s more to the story if you read the details in the 2017 Benefit and Payment Parameters (BPP) that triggered the alarm over HSA-qualified plans.[For reference, the discussion about whether HSA-qualified plans need to be designated as such is on page 382-383 of the BPP. The issue of standardized plans starts on page 303 of the BPP].
Is HHS getting rid of the HSA-qualified designation?
According to the National Review, HHS “will not require HSA-qualified plans to be designated as such.” But the context of page 382-383 indicates that the section isn’t an effort to remove the HSA designation from QHPs that meet the requirements for an HSA-qualified plan. That section is talking about meaningful differences between plans, and is an effort to prevent carriers from flooding the market with plans that are very similar to one another (a practice that has sometimes been described as “spamming the exchange”). What they’re saying is that a carrier cannot offer two identical plans and simply designate one as HSA-qualified in an effort to get around the requirements that QHPs be meaningfully different. They explain that calling a plan HSA-qualified is redundant if the plan is in fact HSA-qualified based on its cost-sharing structure.
HHS comes back to this point on page 450 of the BPP, stating
“As we believe the health savings account eligibility criterion to overlap with cost-sharing criterion (that is, we believe that a plan that meets the meaningful difference standard for health savings account eligibility would also meet the standard under the cost-sharing criterion), we do not believe that removing this criterion will have any impact on issuers.“
This appears to clarify the point that they are not trying to get rid of HSA-qualified plans. Rather, they’re just pointing out that HSA-qualified plans are already meaningfully different from other plans, and that will continue to be the case. But QHP issuers can’t offer two identical plans and just designate one of them as HSA-qualified in order to spam the exchange with multiple plans that aren’t meaningfully different.
What about standardized plan designs?
The National Review article then goes on to address the standardized plan designs that HHS finalized in the BPP. It does note – at the very end – that standardized plans are optional for 2017. But that’s a key point. For 2017, carriers can offer standardized plans if they like (and HHS is working on a way to differentially display them – they will most likely show up first when people get quotes, or they may be highlighted with a special icon or color, for example). But carriers are not required to offer standardized plans. And if they do offer standardized plans, they’re also allowed to offer other non-standardized plan designs.
So for 2017, I’d say it’s a pretty safe bet that HSA-qualified plans will still be available.
But what about 2018? The National Review piece says that standardized plans will “likely become mandatory” by 2018. Of course, we don’t yet have any idea whether that’s true or not. It’s possible. It probably depends on how things go during the 2017 open enrollment period, but I would say it’s fair to assume that the issue of whether standardized plans should be mandatory will be addressed in the 2018 BPP (the proposed BPP should be published in November, and there will be an opportunity for public commentary – so if you’ve got thoughts on this, be sure to give HHS your feedback; judging from the detailed commentary and HHS responses in previous editions of the BPP, it certainly appears that they take comments seriously).
So let’s assume that they do decide to make standardized plans mandatory in the federally-facilitated exchange in 2018 (or another year further down the road).
Would that mean the end of HSAs?
Let’s look at a few state-run exchanges that already have mandatory standardized plans. They all still have HSA-qualified plans available.
- Covered California does not allow non-standardized plans at all. All of the plans for sale in the exchange have standardized plan designs. So they created a standardized HSA-qualified plan design. It’s currently got a $4,500 deductible, 40% coinsurance, and a $6,500 out-of-pocket maximum.
- Massachusetts implemented standardized plans in their individual market in 2010, and continues to use the standardized plan model in the ACA-compliant exchange. Carriers are required to offer standardized plans, but they can also offer non-standardized plans. And while the bronze level standardized plan in Massachusetts is clearly not HSA-qualified, HSA-qualified plans (non-standardized) do appear when you browse plans on the Massachusetts Health Connector site.
- The DC exchange began offering standardized plans for 2016, but the exchange just mandates that if a carrier offers plans at a particular metal level, the carrier must offer a standardized plan at that metal level. The standardized plans do provide a significant amount of coverage for non-preventive care prior to the deductible (ie, they are not HSA-qualified), but again, a check of DC Health Link’s plans shows quite a few HSA-qualified options.
Those are three examples of state-run exchanges that have already implemented mandatory standardized plans to at least some degree. And they all still have HSA-qualified plans available. In the case of California, where non-standardized plans aren’t allowed at all, they simply created a standardized version of an HSA-qualified plan. And the other two exchanges have given carriers enough leeway to continue to offer HSA-qualified plans, even without a standardized plan design that’s HSA-qualified.
We have no way of knowing whether HHS will decide to make standardized plans mandatory in the federally-facilitate exchange in the future. Even assuming they do, we have no way of knowing whether the mandate would be as strong as California’s or as mild as DC’s. And even if Healthcare.gov eventually moves to only offering standardized plans, there’s no reason to assume that they wouldn’t follow California’s lead and create a plan design that’s HSA-compliant.