The end of HSA's?

[stephenandrew]

I read this

Reform plans leave Health Savings Accounts in limbo - Sep. 15, 2009

on CNN.COM. I have an HSA and have been very happy with it. Hope they manage to draft a healthcare bill that somehow manages to preserve these plans. For us, the combination of an HDHP and as HSA has meant: (1) insurance at a lower cost (premiums + out of pocket costs) vs. traditional health plans, (2) a means to reduce current taxes by contributing pre-tax dollars to the HSA; and (3) a meand for funds to grow free. Sort of a trifecta of insurance. Too good to be true--so makes sense they would kill them.

 

[Sarah in SC]

Disappointing to me--I'd hoped to use this option once DH retires early, as we've been using his company sponsored plan.

 

[ziggy29]

It's possible. I suspect they will at least grandfather existing account balances under current rules, but may stop the ongoing tax breaks for them. Personally I've been very happy with mine and I'd hate to see it go.

 

[Notmuchlonger]

I was planning on using one in another year or two. Suppose Ill have to readjust my plans.

 

[Gone4Good]

HSA's are supported by the political party not currently in power. As such, I don't think they'll survive.

 

[Sevo]

Remember the House bill is over a thousand pages of legalese. There is NOTHING good for honest tax payers that is going to come out of this. Any thing that works like HSA's are going to be destroyed for sure.

In 1966 President Johnson, estimated that Medicare would cost an inflation-adjusted $12 billion by 1990. In 1990, Medicare topped $107 billion. Only God know what it is today. The lie's being told today are are at least in the same league as the ones told in 1966 and in my opinion much larger.

All we can do now is hang on and hope.

 

[frayne]

Way too early to bury the HSA, with the speed in which Congress acts, I think the HSAs will be around for awhile.

 

[FUEGO]

HSA's are supported by the political party not currently in power. As such, I don't think they'll survive.

Those in power will probably get rid of the HSA in favor of some new program that they are giving the American people. It will be very similar to the HSA and allow rollovers. Maybe call it the Savings Account for the Doctor or "SAD".

Seriously I figure at a minimum my existing HSA balance will be grandfathered in and it can continue to grow tax free.

 

[MichaelB]

Without doubt congress will still want to provide an incentive toward higher deductibles. Tax treatment of medical expenses also needs to be revisited. HSA is far from abolished and could even be strengthened.

 

[ziggy29]

Without doubt congress will still want to provide an incentive toward higher deductibles. Tax treatment of medical expenses also needs to be revisited. HSA is far from abolished and could even be strengthened.

I just saw a "summary" (still over 200 pages) of the Baucus plan and it doesn't seem to eliminate HSAs. It does, however, propose increasing the penalty for early HSA withdrawals for non-medical reasons from 10% to 20%.

 

[FUEGO]

I saw this from the msnbc article on the Baucus plan just released:

"Everyone covered through an employer would learn the full costs of their health benefits, which starting next year would be reported on employees' W-2 tax forms. Although family coverage averages about $13,000 a year most workers don't know how much their employer is paying."

This doesn't make it clear whether the health insurance costs will be merely shown on the W-2 (ie informational) or whether they will actually be added into your gross taxable income on the w-2. If the latter, I hope whatever "benefits" come out of this bill kick in next year as well, and not 4 years later like was proposed earlier.

This bill makes it sound like the plans offered will be tightly regulated. As a result, they may not repeal the HSA, but they make it impossible to contribute to one, thereby effectively repealing the HSA. The way the HSA authorization is written now, you must have a qualifying high deductible health insurance plan to be eligible to contribute to an HSA. Those high deductible plans may be disallowed under any new health insurance legislation.

 

[easysurfer]

I guess along with the question with health care reform be the end of the HSA? Let's say after reform the HSA does not go away and pretty much stays the same and several of the reform items (no pre-existing conditions, no lifetime maxium, reasonable premiums) does past, which type of insurance would you choose?

Guess it's way too early in the ballgame now, but that's a question all HSA owners may decide later.

 

[ziggy29]

I guess along with the question with health care reform be the end of the HSA? Let's say after reform the HSA does not go away and pretty much stays the same and several of the reform items (no pre-existing conditions, no lifetime maxium, reasonable premiums) does past, which type of insurance would you choose?

Guess it's way too early in the ballgame now, but that's a question all HSA owners may decide later.

Yeah -- it's way too early to say. It would depend on how the reforms and initiatives change the pricing of health insurance.

 

[FUEGO]

I guess along with the question with health care reform be the end of the HSA? Let's say after reform the HSA does not go away and pretty much stays the same and several of the reform items (no pre-existing conditions, no lifetime maxium, reasonable premiums) does past, which type of insurance would you choose?

I would adversely select myself into the plan with the highest benefit to cost ratio. If my family and I were very healthy, I would choose the absolute cheapest plan that provided adequate coverage. If my family and I have expensive medical needs and/or pre-existing conditions, I would choose the gold plated plan as long as it would provide more from it than what I was paying in.

It isn't really clear how any of these proposals are going to address the adverse selection issue between different coverage tiers. And furthermore, it may be much more reasonable to pay the $3800 a year fine for a family for having no coverage and pay out of pocket until you get some big condition that will be expensive. Then pay the insurance premiums on a gold plated plan.

I would assume the plan crafters and budget analysts/forecasters are at least moderately familiar with the basic economic issues in the insurance marketplace. Let's hope so.

 

[Gone4Good]

It isn't really clear how any of these proposals are going to address the adverse selection issue between different coverage tiers.

My guess is that they'll do that by mandating what insurers must cover.

And furthermore, it may be much more reasonable to pay the $3800 a year fine for a family for having no coverage and pay out of pocket until you get some big condition that will be expensive. Then pay the insurance premiums on a gold plated plan.

Some people will do that. It is actually an economically rational thing to do if you don't have any assets that you need to protect. But for anyone who actually owns something they don't want to lose, it seems like a foolish gamble. You can run up hundreds of thousands of dollars in medical bills in a month, no problem.

In NJ, where you can't be denied coverage for pre-existing conditions, you have to wait a year before your coverage for those conditions takes effect if you didn't have insurance before.

 

[Sevo]

I get confused about these things. I guess that is why I have always w**ked for a living instead of being smart enough to be a politician.. Lets see now about 40 percent of children born in this country are born out of wed lock. Would some one explain to me who you are going to charge the $3800 to if this "Family" decides to not have health insurance?....... A) and unwed mother with children..... B) the biological father..... C) The present boyfriend.... D) "retired rich people"

Are we going to start putting people in Jail if they don't buy Health insurance and don't pay the fine.. ?

 

[aaronc879]

Lets see now about 40 percent of children born in this country are born out of wed lock. Would some one explain to me who you are going to charge the $3800 to if this "Family" decides to not have health insurance?....... A) and unwed mother with children..... B) the biological father..... C) The present boyfriend.... D) "retired rich people"

Are we going to start putting people in Jail if they don't buy Health insurance and don't pay the fine.. ?

Whom ever has legal custody would be liable for the charge. If there's joint custody then they pay equally. Seems simple enough. If you don't buy health ins. or pay the fine then it gets treated just like not paying your taxes.

 

[quietman]

Whom ever has legal custody would be liable for the charge. If there's joint custody then they pay equally. Seems simple enough.

Some states have different custody laws than the feds, so you can have murky situations that are not that simple.

 

[Gone4Good]

Some states have different custody laws than the feds, so you can have murky situations that are not that simple.

Only one person gets to claim the kid as a dependent for tax purposes. Seems pretty simple to me.

 

[Sevo]

Whom ever has legal custody would be liable for the charge. If there's joint custody then they pay equally. Seems simple enough. If you don't buy health ins. or pay the fine then it gets treated just like not paying your taxes.

Ok I'm a little confused here. I hear you saying you think that it is moral, rational and legal under the constitution of the United States for the federal government to mandate and force an individual to buy health insurance (from a Private insurance company that is making huge [-]bribes[/-]/ political contributions to the people who wrote the law) and if that person refuses or is unwilling to do so then the Government has the right to garnish their wages, seize their home, arrest and imprison that person. This also means that the government has the right and in fact is mandated to use what ever violence is necessary up killing that citizen if they do not comply. These forms of force are used against citizens to enforce tax law. Please stop and think about this for a minute. Do you want your children to grow up under a government that has that level of control over their lives. If the answer is yes. Allow me to suggest Cuba as a w**kers/ retirees paradise. They really do have universal health care and a wonderful climate.

Would some one put their finger on the section of the constitution that gives that power to the Federal Government and point it out to me. I keep a copy around and you can get one for $1 from the cato institute. I can't find anything any where that remotely gives that power to the Feds.

Frankly I am terrified at the lack of common sense, knowledge of history and ignorance of our cultural history as a free people that the voters of this country show.

 

[M Paquette]

Would some one put their finger on the section of the constitution that gives that power to the Federal Government and point it out to me. I keep a copy around and you can get one for $1 from the cato institute. I can't find anything any where that remotely gives that power to the Feds.

Article 1, Clause 3

[The Congress shall have power] To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

There were a number of cases during the 1930s that shifted the focus in this clause onto 'regulate'.

Findlaw.com has some good annotations on this clause that the amateur legalist can start in on, as well as case citations to chew on.

Note: Damnit, Jim, I'm a retiree, not a lawyer.

 

[Sevo]

thanks M Paquette. I know. the commerce clause. Only the very most tortured reading of that clause could allow one to read into it the right of the Federal Gov to use force against a citizen to force he or she to buy anything. Seriously. That poor maligned clause has been used since FDR to justify anything that the Feds want to do and the Voters are silly enough to put up with. Oh well again this is all just to allow us to vent. The Federal Government is and has been for a long time totally with out control. They will do anything they want to as long as they feel it will get them re-elected. We will just have to live with the consequences. We'll just have to hang on and hope while our masters decide our fate. Then we'll just go to the polls and re-elect the same cynical ruthless politicians all over again.

Oh by the way would that be Article 1 section 8 clause three. ??

 

[Tesaje]

The govts. force you to buy car insurance if you own a car.

I can't see the existing HSAs going away completely. That money will always be mine and I will always be able to use it on medical expenses. Whether in the future these types of plans will be available is unknown. I'm sure I will adapt as I have in the past. Heck, doing the HDHP and HSA was an adaption.

What bothers me is none of the proposals address the out-of-control health cost inflation. That is what scares me in retirement.

 

[Midpack]

As I understand it:

• We pay more per capita for health care than anyone else in the world and do NOT have better health statistics to show for it.
• We pay the highest health care administrative costs in the world and have the by far the highest associated legal expenses related to our health care.
• Every other developed country has universal health care in some form.

Sacrifices will have to be made, but something has to be done. The longer we wait the more costly and painful it will be --- yet we wait, and kick the can down the street over and over. America is a great country, but we have a collective habit of ignoring many issues until circumstances are almost beyond repair when we could have been ahead of the curve. And we love to blame politicians and special interests as the source, when ultimately they reflect our views or often our apathy.

 

[ERD50]

Ok I'm a little confused here. I hear you saying you think that it is moral, rational and legal under the constitution of the United States for the federal government to mandate and force an individual to buy health insurance ....

Frankly I am terrified at the lack of common sense, knowledge of history and ignorance of our cultural history as a free people that the voters of this country show.

Sevo, I generally agree with this theme of "personal responsibility to decide and personal responsibility for the consequences and keep govt out of it if we can". However, I think there is a reasonable argument to say that health care does fall into the "for the common good" clause (yes, that phrase is subject to overuse/abuse).

For me, the "common good" is for us all to pool our risk. We all benefit from that. But it has a bit of "tragedy of the commons" to it - we can't all benefit unless we all partake in it. The only way I know to do that is to regulate it. A shining example of a "tragedy of the commons" and a regulated solution was the Clean Air Act which regulated auto emissions. Not perfect, but it really did get the job done, and left most of it up to the free market to decide the "how". The problem would not have improved if just a few people bought "greener" cars.

I would prefer the least invasive form of regulation possible. Like you say, with ins lobbies, lawyers/lawmakers against tort reform, etc, I don't expect that we will get that. We will likely get a mish-mash of micro-management that may be a cure that is worse than the disease.

I hope the above comments conveyed some common sense, knowledge of history and acknowledged that our cultural history as a free people sometimes requires us to balance those freedoms with our responsibilities to our fellow citizens (I'm not "free" to drive 120mph down the road either - and that is good, IMO).

The govts. force you to buy car insurance if you own a car.

And this seems to work OK. Some posters are saying that medical is "different", but I suspect that is because we don't have true competition in health ins. I think the "piece work" issue that has been brought up would go away if there was real competition. Maybe other reforms are needed, but I'd like to start there and see what happens. Take some baby steps while the govt brings all these cost savings to Medicare/Medicaid that they claim they can make. That would build up a bit of trust in their ability to deliver on promises.

With baby steps, we could see how things go, and adapt and expand as needed. I think a "baby step" bill could actually get passed and do some good. The public just has too much distrust of govt (look at polls, esp Congressional approval rates), to have a big complex bill shoved down our throats. So nothing happens. Something would be better than nothing.

-ERD50