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HSA Evolution Could Drive Adviser Opportunity

Since the new Congress began in January, there have been more than 20 bills proposed that impact consumer-driven health plans, and more specifically HSAs.

By John Manganaro | June 13, 2017
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During a recent conversation with PLANADVISER, Chad Wilkins, president of HSA Bank, and Kevin Robertson, senior vice president, outlined their expectations for health care reform and other hot-button items on the policy agenda in Washington.

According to the pair, while much of the media attention around healthcare reform has centered on the more politically charged components of the Affordable Care Act (ACA)—coverage mandates, subsidies, penalties, preexisting conditions coverage requirements, etc.—less attention has been paid to the GOP healthcare proposals regarding Health Savings Accounts (HSAs) and consumer-directed health (CDH) plans.

“Prior to the election, HSAs played an important and prominent role in the U.S. healthcare landscape and in legislative efforts of the last several Congresses,” Wilkins observes. “Driven by their popularity with employers and employees as a cost reduction device and powerful healthcare spending tool, HSAs have emerged as one of the fastest growing elements in health plan design today.”

Numerous bills impacting HSA regulation and expansion ideas have been introduced in the past, the pair explain. However, this is the “first time we’ve seen a clear picture of the Republicans’ vision for HSAs and CDH plans.”

As passed by the House, the GOP health care proposal has six specific impacts on HSAs and CDH plans, most of which will take effect at the beginning of 2018. These include an increase in HSA contribution limits to the high deductible health plan (HDHP) out-of-pocket maximum; repeal of the ACA contribution limit on Flexible Spending Accounts (FSAs); permission for spouses to make catch-up contributions to the same HSA; repeal of the prescription requirement for over-the-counter medications as qualified medical expense distributions from HSAs, FSAs, and health reimbursement arrangements (HRAs); lessening of the penalty for non-qualified HSA distributions made prior to age 65 from 20% to 10%; and finally, permission for qualified distributions to reimburse medical expenses incurred within 60 days of HDHP coverage but before HSA account is established.

Robertson says these changes are collectively “substantial” and “designed to simplify how individuals are able to save with an HSA or CDH plan. The changes “expand the ability to contribute to these tax-advantaged programs,” Wilkins agrees.

NEXT: How significant a change?