It's been more than six years since the Affordable Care Act, aka ObamaCare, was signed into law. It's safe to say that ObamaCare has not been the ruination of health care as portrayed by many on the right, nor has it been the panacea that some of the left expected it to be. However, it has certainly caused broad changes in some aspects of health care. In the case of Health Saving Accounts (HSAs), the changes may force them out of existence.
A HSA is a form of medical savings account that is available to consumers who are enrolled in high-deductible health plans (HDHPs). With an HSA, you can make contributions into the fund and use it to pay for certain out-of-pocket medical expenses tax-free.
As a tax-advantaged program, the IRS sets limits on the contributions and upper and lower out-of-pocket limits, indexed annually for inflation. Any health plan that has out-of pocket limits outside this range (either high or low) is not considered to be HSA-qualified. Plans must also meet requirements on the deductible limits and the types of benefits to be covered. The reason HSAs are in trouble is that ObamaCare also has requirements on the same parameters to be compliant with the ACA, and the two sets of requirements are diverging.
The indexing used to capture inflation is not the same between the two methods, and the Department of Health and Human Services (HHS) is requiring health plans to cover an increasing variety of services beyond the preventative measures that are covered by HSAs. Thus, HSAs are faced with narrowing windows of operation. HSA expert Roy Ramthun speculated in the National Review that based on current trends, ObamaCare requirements for the Bronze, Silver, and Gold plans will fall outside the IRS limits — effectively eliminating HSAs.
Out-of-pocket limits for standard Bronze and Silver plans at the beginning of 2017 will be $7,150 — or $600 above the $6,550 projected upper limit for HSA qualification. It is possible that the limits could be adjusted and special carve-outs on benefits could be made by Congress to maintain compliance between ObamaCare and HSA qualifications, but in the current legislative environment, that seems unlikely at best.
While HSAs that should logically thrive under ObamaCare's emphasis on HDHPs are becoming endangered, the opposite is true with respect to employer-based care. Pundits expected the employer mandate and individual insurance options to cause a mass exodus away from employer-based health insurance and cost jobs for companies that retained their health plans, but so far, this has not come to pass.
Ironically, one of the reasons that employer-based health plans have not suffered at the expense of the marketplace is because marketplace plans are not necessarily a good deal by comparison. Certainly, the rocky start of Healthcare.gov did not increase the appeal.
Small businesses are the most likely to drop coverage, just from the standpoint of simple economics. While the percentage of small businesses offering benefits dropped to 56% last year (down from 68% when ObamaCare was signed in 2010), the rate appears to be leveling off.
Meanwhile, the mandates exist but do not pose as great a penalty to businesses as originally expected. Tax breaks offset a portion of the costs, there is an exemption from penalty for the first thirty employees, and employers with less than fifty full-time equivalent (FTE) employees are not subject to the penalties at all.
In essence, ObamaCare has proven to be unpredictable as well as controversial — and that assessment is not likely to change in the near future.