Health Care Reform Brings Changes to Your HSA in 2014

Changes AheadWhen it comes to the flood of information pouring in about how the Affordable Care Act (ACA, or Obamacare) is changing the face of health insurance, it seems like there are more questions than answers. It often seems the answers do not make sense, or are subject to change based on any number of factors. It is no wonder so many people are more confused and angry about the issue of health insurance than ever.

In this blog post, I am going to talk specifically about health savings accounts and how they are being affected by the ACA. As you know, I strongly believe that an HSA combined with a high-deductible health plan (HDHP) is one of the best ways to save money on your insurance premiums, reduce your modified adjusted gross income (MAGI), and provide tax benefits that can last for years. My opinion on the benefits of an HSA has not changed, nor is it likely to.

Changes to HSA Plans?

•    There have been so many changes to health insurance since the inception of the Affordable Care Act that you might be wondering how these changes are going to apply to your HSA and HDHP. The reality? Not very much. Most of the changes to HSA plans occurred after the ACA was signed in 2010 and have already taken effect.

•    The only real difference is that HSA-compatible health plans now have the same coverage requirements as all other policies under the new health care reform laws. Some of these requirements include preventive health benefits, maternity coverage, and most childhood immunizations.

•    There is also a minimum actuarial value of 60 percent for all health policies. This means that health policies in 2014 must pay at least 60 percent of the typical health consumer’s medical expenses in a year. HSA plans do meet this requirement.

Are These Changes Positive or Negative?

I don’t think any of the changes are so much positive or negative as much as they simply are. While many aspects of the new health care reform laws do not benefit everyone and actually penalize others, we have no choice but to adhere to them. Therefore, it does not do any good to analyze and criticize all of the negatives—we can only deal with the reality of the Affordable Care Act and make changes as we need to.

However, there is in fact one absolute positive about HSA plans. The contribution amount has increased for 2014. Contributing to your HSA will reduce your MAGI, which may allow you to qualify for an additional tax credit or subsidy on your insurance premiums. The contribution amount is still tax-deductible as well, so there are significant benefits to choosing an HSA plan.

Are There Other Changes to Be Aware Of?

Although I have covered the most obvious changes that could affect you, there are also changes to how small employers can provide health insurance. Under the ACA, they are no longer allowed to offer plans with deductibles of more than $2,000 per person or $4,000 per family unless they also provide an FSA (flexible spending arrangement). This could definitely have an impact on HSA plans offered as part of a small group health plan.

There is also going to be an additional tax on employer-sponsored high-benefit plans (also called Cadillac plans) beginning in 2018. Calculations for these plans will include employer and individual contributions to FSA accounts or HSA accounts. This tax could be as much as 40 percent on these types of plans.

HSAs and High-Deductible Health Plans Remain a Great Choice for Many

Even in the midst of health care reform, HSA plans remain an excellent way to provide quality health insurance at a lower premium. In fact, I would venture to say that an HSA plan is even more important now that the ACA has gone into effect. The fact that HSA contributions are tax-deductible and also lower your modified adjusted gross income (which is how insurance premiums are now calculated) can make a huge difference in terms of both your taxes and your health insurance.

In addition, I feel like the more control you have over how your health care dollars are spent, the better consumer you are. If you have the freedom to shop around for the lowest prices and refuse to blindly follow what your insurance decides is the appropriate cost, you will be better off by far—not just financially, but in terms of being able to make your own health care decisions based on what you think is best.

  Date posted: Wednesday, November 6th, 2013
Category: Health Reimbursement Arrangements, Health Savings Accounts

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