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You Have To Have An HSA Qualified Health Plan In Order To Set Up An HSA

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It’s tax season, and that always correlates with an increase in questions about HSAs.  We always get several calls at this time of year from people who want to set up just an HSA by itself and are wondering how to go about that, and we’ve even had people call and tell us that their accountant told them to go set up an HSA because it would be an excellent way to get an additional tax deduction.

HSAs (health savings accounts) are indeed a great way to get an above-the-line tax deduction.  They’re also a great way to save for future medical expenses and/or retirement.  But it’s not as simple as just setting one up and contributing money.  You have to have an HSA qualified high deductible health plan in place in order to be able to contribute money to an HSA.  Not all high deductible health insurance policies are HSA qualified.  The IRS has very specific guidelines in terms of how HSA qualified HDHPs have to be structured, and if a plan meets those guidelines, it will be labeled as such in the marketing materials.

Look at the picture below:

“PPO (0) – HMO (0)”  ??? That’s confusing too! PPO and HMO are network types and HSA qualified has nothing to do with networks. HSA qualified plans can be PPO or HMO. In Colorado, all individual health insurance is PPO, except for Kaiser Permanente. They’re the only individual/family HMO.

Only HSA Qualified Health Insurance Plans

To give an example, our family had an HSA qualified HDHP for several years, and we contributed to our HSA during those years.  But in 2011, we switched to a Core Share plan from Anthem Blue Cross and Blue Shield.  It’s less expensive than Anthem’s HSA qualified plans (and less expensive than most of the other plans we looked at as well), and even though it’s a high deductible plan, it doesn’t meet the requirements for being HSA qualified.  The maximum allowable out-of-pocket expense limit for a family on an HSA qualified plan is $12,500 in 2013, and our plan has a $15,000 maximum out-of-pocket exposure for a family.  So even though the policy has a high deductible, covers preventive care before the deductible, doesn’t have copays, and generally meets all of the other requirements, the higher out-of-pocket limit means that we cannot contribute money to our HSA unless we switch back to an HSA qualified health plan in the future.

That same IRS link also explains how you can switch to an HSA qualified health plan anytime up until […]

Cavalcade of Risk And Social Media Use In Healthcare

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The 179th edition of the Cavalcade of Risk is live now, over at My Personal Finance Journey, with posts from several notable bloggers.  I thought this post from David Williams was especially interesting, focusing on social media and healthcare providers: a topic about which basically all providers needs to educate themselves.  (And it ties in… Read more about Cavalcade of Risk And Social Media Use In Healthcare

Welcoming Submissions for the HealthCare SocialMedia Review

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We’re excited to host the next HealthCare SocialMedia Review (#hcsm) on Wednesday, March 27th. No specific theme other than articles relating to social media and healthcare/medicine. Please email submissions to Louise: louisen78 at gmail dot com by Monday, March 25th at 6PM MDT.  Please include the following information: Email Subject: HealthCare SocialMedia Review Blog Title:… Read more about Welcoming Submissions for the HealthCare SocialMedia Review

Could Cash-Only Clinics Be A Viable Solution For The Uninsured?

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David Williams did an excellent job with the most recent Health Wonk Review, hosted at his Health Business Blog.  There are lots of great articles about a wide range of healthcare policy topics, so be sure to check it out.  One of my favorite posts in this edition comes from Wright on Health.  Brad Wright… Read more about Could Cash-Only Clinics Be A Viable Solution For The Uninsured?

Let Medicare Negotiate Drug Prices And The Government Can Afford Subsidies

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Medicare Negotiates Drug Prices And The Government Can Afford SubsidiesRight in the middle of the sequestration mess seems like a good time to discuss the subsidies that are going to be a major part of the ACA starting next year.  As of 2014, nearly everyone in the US will be required to have health insurance, and all individual health insurance will become guaranteed issue.  There are concerns that premiums in the individual market might increase significantly, but for many families the subsidies enacted by the ACA will help to make coverage more affordable.  The subsidies will be available to families earning up to 400% of the federal poverty level; the premium assistance will be awarded on a sliding scale, with the families on the upper edge of that income threshold receiving the smallest subsidies.

But how much will those subsidies cost the taxpayers?  How will a government that is so cash-strapped that it’s curbing spending on programs like Head Start and special education be able to fund the subsidies called for in the ACA?

Last summer, the CBO estimated that the exchange subsidies will cost $1,017 billion over the next ten years.  Undoubtedly a large sum, but probably necessary in order to make guaranteed issue health insurance affordable for low- and middle-income families.

That sum is partially offset by the CBO’s projections of $515 billion (over the next ten years) in revenue from individual mandate penalties (fines imposed on non-exempt people who opt to go without health insurance starting in 2014), excise tax on “Cadillac” group health insurance policies, and “other budgetary effects” enacted by the healthcare reform law.

That leaves us with $502 billion.  Not an insignificant sum of money even when […]

The Expansion Of Medicaid Primarily Targets The Uninsured Population

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[…] I would say that another possible explanation is that the population that is most likely to be impacted by Medicaid expansion is the population more likely to be uninsured prior to the Medicaid expansion. The bar graph on page 2 of this Kaiser Family Foundation document shows significantly higher numbers of uninsureds in the population that earns less than 200% of FPL, compared with the population that earns more than that amount. So it’s likely that Medicaid expansion is most likely to cover people who didn’t previously have insurance. For the reasons Jason detailed, I would agree that it’s unlikely that very many people who already have private health insurance would choose to drop their private coverage and enroll in Medicaid, unless Medicaid coverage were to become as good as private health insurance.

Will Marketplace Customer Service Be On A Par With Private Industry?

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One of our clients recently told us about a health insurance plan that was being marketed to him, and we were curious enough to want to look into the situation further.  In a nutshell, it’s not a discount plan, not a mini-med, and not a traditional limited-benefit indemnity plan.  All of those plans should be avoided in general, and the ACA has sort of skirted around them a bit:  numerous mini-meds have been granted temporary waivers in order to continue to operate, discount plans aren’t addressed by the ACA at all (and aren’t regulated by most state Division of Insurance departments either, since they aren’t actually insurance), and limited benefit indemnity plans are exempted from ACA rules (although people who have them will likely have to pay a penalty for not meeting minimum benefit requirements).

Anyway, the plan that was marketed to our client resembled traditional health insurance, but was very convoluted and sold with numerous riders to cover all sorts of different scenarios.  The brochure was 27 pages long and included numerous detailed examples showing how awesome the marketed coverage was when compared with “traditional major medical.”  It noted that the plan isn’t subject to ACA mandates, and the policy is still being marketed with a $5 million lifetime maximum.  When I spoke with an agent for the plan (a captive agent, of course – plans like that are never marketed by brokers who have access to other policies), he told me that the policy will not be guaranteed issue next year, and that they aren’t concerned about the potential penalties that their clients will have to pay starting in 2014 for not having ACA-compliant coverage.  His reasoning (and the marketing pitch that they’re making to their clients) is that their premiums will be so much lower than ACA-compliant plans that their clients will save enough money to more than make up for the penalty (currently their premiums were roughly the same as those of reputable health insurance policies).

In short, everything about this policy sounded sketchy.

health insurance marketplaces (aka exchanges) customer service vs private industryA rather lengthy Google search didn’t bring up much in the way of regulations pertaining to this sort of issue.  I remembered my efforts in the fall of 2011 to get specific details about regulations regarding mini-meds… and I wasn’t encouraged.  At the time, the Colorado Division of Insurance wasn’t aware of a solution to the problem our client was facing (although to give them credit, I was able to speak with someone as soon as I called them).  They referred me to HHS, where I had to leave a voice mail.  The outgoing message said that someone would get back to me within five business days, but that was a year and a half ago and I’m not holding my breath for a reply.  I also left a message for the National Association of Insurance Commissioners (NAIC) about the issue and never heard back from anyone there.  We ended up getting the client onto an Anthem Blue Cross Blue Shield plan, but we never heard back from any of the government agencies we contacted regarding his mini-med situation.

So back to our current questions about the sketchy-sounding health insurance being marketed to our client.  I contacted HealthCare.gov via Twitter but got no response.  I called the Colorado Division of Insurance and was told that I should send in an email with the specifics.  I did that on Wednesday and haven’t heard anything back from them yet.  I called them this morning to follow up, and they told me that they had received my email but didn’t know to whom it had been assigned yet – this is two days after I sent it, so I would assume that perhaps the employees there are overworked and understaffed.  I didn’t contact the national HHS office again, because I didn’t feel like wasting my time any further.  However, I did send an email on Friday morning to the regional HHS office in Denver, so hopefully I’ll hear back from them sometime soon.

I’m also hopeful that I’ll hear back from the Colorado DOI sometime next week.  They usually end up being a helpful – and local – resource, even if we have to wait a few days.  Once we get some more information, I’ll write a follow-up post about how an individual carrier is apparently able to operate entirely outside the regulations of the ACA.

But for now, I’m struck by how difficult it can be to obtain information from a government agency, or even speak with a real person as opposed to just leaving a message or sending an email that may or may not ever get read.  I know that private companies aren’t always shining examples of customer service, but I can’t imagine calling the claims or customer service number on the back of our Anthem Blue Cross Blue Shield card and being told […]

Health Insurance Premiums Coming To A W2 Near You

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I’ve noted many times on this blog that one of the difficulties faced by proponents of health care reform is the fact that a lot of Americans are somewhat shielded from the actual cost of health insurance because a portion of their health insurance is paid for by their employer.  And when we talk about… Read more about Health Insurance Premiums Coming To A W2 Near You

Pre-Existing Condition Insurance Plans (PCIP) Stop Accepting Applications

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[…] Fortunately, Colorado has CoverColorado, which will continue to operate. But if you live in a state that has a federally-funded but state-run high risk pool and you need to secure coverage through it, make sure that you get your application submitted before March 2, 2013.

Looking beyond the PCIP, I have to wonder how this bodes for the health insurance exchanges/marketplaces and the entire individual health insurance market once plans are all guaranteed issue. The cost of caring for people with pre-existing conditions is high – there’s not really a way around that unless we can start making inroads into reducing the actual cost of care. And although guaranteed issue health insurance is definitely a step in the right direction in terms of getting access to healthcare for everyone, it’s also going to result in higher health insurance claims, and almost certainly higher health insurance premiums in the individual market. Hopefully the individual mandate will be successful at bringing enough young, healthy people into the insurance pool to offset the higher cost of care for people with expensive pre-existing conditions. With enough healthy people enrolled, the guaranteed issue individual market could be a solid health insurance pool. But if the balance shifts more towards unhealthy people, the individual market could start to resemble the structure of the PCIP, which isn’t sustainable in the long run without huge premium increases.

The ACAs Looming Premium Hikes are Big – How We Can Lower Them

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It’s been almost three years since the ACA was signed into law, and in that time, the implementation process has been both steady and plagued with difficulties.  The major provisions of the law have largely adhered to the original scheduled time frames, but there have been numerous hiccups along the way, culminating last summer in a Supreme Court case that challenged the legality of several aspects of the law.  Once SCOTUS ruled in favor of the ACA, the path was largely cleared for implementation of the health insurance exchanges (marketplaces) that are scheduled to be open for business this fall with policies effective next January.  The individual mandate will also take effect in January, but the penalty for not having health insurance in 2014 will be very small ($95 per uninsured person, or 1% of taxable household income).  This has caused some concern that the mandate might not be strong enough to avoid the looming problem of adverse selection: specifically, that people who are in need of healthcare might be much more likely to purchase health insurance than people who are currently healthy once all plans are guaranteed issue.

Last month I wrote an article about how the ACA will largely erase the differences that currently exist between the small group and the individual health insurance markets.  Once that happens, it would be odd to expect to not see a corresponding change reflected in the premiums.  I think it’s unlikely that the premiums will equalize via a drop in small group premiums (if anything, the requirement that small group plan deductibles not exceed $2000 might mean that the average small group premiums increase too).  The individual market is poised to become more like the small group market once the policies become guaranteed issue, and the premiums in the small group market are currently significantly higher than the premiums in the individual market.  There will likely be a price decrease for people at the upper end of the age spectrum in the individual market, since their premiums are going to be limited to a maximum of 3 times the premiums for young people.  But there is a growing concern that those young people – and probably a lot of people in the middle too – might be in for some sticker shock.

How to lower the looming big ACA premium hikesYes, the subsidies will help cushion the blow for people earning less than 400% of federal poverty level.  But that still leaves a lot of people facing higher premiums and no subsidies.  People who aren’t poor but definitely aren’t wealthy either – in other words, people who are middle class.  Some of them are probably quite healthy.  Some of them might have money stashed away in HSAs in order to pay for unexpected medical bills.  Some of them might be happy to opt for higher deductibles and “catastrophic” health insurance plans in trade for lower premiums.  But the way the ACA is currently written, they won’t be allowed to do that.  The “catastrophic” plans will only be available to people under the age of 30 or people who meet the economic hardship qualifications.  Everyone else will have to have at least a “bronze” plan that provides a broad range of benefits mandated by the ACA.

Please don’t misunderstand me here.  I firmly believe that our healthcare system needed […]

Patients Not Impressed By Recommendations For Less Preventive Care

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Peggy Salvatore did an excellent job hosting the most recent Health Wonk Review – the Valentine’s Day Edition.  I found this article by David Rothman, published at Health Affairs, to be particularly interesting.  Although there has been much talk over the past few years about comparative effectiveness research, evidence-based medicine, and over-utilization of healthcare, patients… Read more about Patients Not Impressed By Recommendations For Less Preventive Care

The Downside Of Limited Benefit Association Health Plans

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We recently worked with a client who is a Colorado REALTOR and a member of the National Association of REALTORS. She mentioned that she was eligible for coverage through NAR, but wanted to compare her options in the individual market with the policies that she could get as a NAR member. She sent over the details for us to look at, and we noticed that the coverage that NAR was touting as a benefit for members is basically just a guaranteed-issue limited benefit indemnity plan. Members have a choice of three different policy designs: The Physician Plan ($200/month for our client’s family of four) doesn’t include any inpatient benefits at all; it covers up to $100 per visit for office visits and ER visits, and up to $1000 for accidents. The Value Plan ($300/month for our client’s family) and Platinum Plan (almost $500/month) included limited inpatient and surgery benefits, but even the Platinum plan capped its benefits at $1000/day for inpatient care and $3000 per operating session for inpatient surgery. The plans are all guaranteed issue, but they have a 12 month pre-existing condition exclusion for any hospital or surgical expenses.

NAR makes it clear on their website – for people who are detail oriented – that the coverage offered through the REALTORS Core Health Insurance is not major medical and that the benefits are limited. They also provide a good informational page on their site about the struggles that self-employed people face when it comes to securing health insurance, and the efforts that NAR has made and continues to make in terms of making true group health insurance available to independent contractors who are part of a large association-type group like NAR. Presumably all of this will be a moot point as of next January when the individual mandate and guaranteed issue individual health insurance are implemented, but for now, it does appear that NAR is cognisant of the problems faced by many self-employed people who are trying to obtain medically-underwritten individual health insurance.

My concern is […]

Committee Kills Bill That Would Have Repealed Colorado Exchange Law

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Colorado Representative Janak Joshi (R, Colorado Springs) is continuing his efforts to get government out of healthcare, but his latest bill died in a 9-2 vote in the House Health, Insurance and Environment Committee, with the no votes coming from both political parties.  Joshi’s defeated bill would have repealed the 2011 law that created Colorado’s… Read more about Committee Kills Bill That Would Have Repealed Colorado Exchange Law

Value Based Health Insurance Plan Design Pilot Program Shows Promise

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[…] With HSA-qualified plans, there have long been concerns that policy-holders are more likely to avoid necessary as well as unnecessary treatments, in an effort to save money. This is because the plan structure usually doesn’t cover any costs except preventive care until the insured has met the deductible. With the sort of value-based plan design being tested in the San Luis Valley HMO program, care that has a high level of evidence-based backing might be covered with no cost-sharing, while other treatments require some financial contribution from the patient. So it’s not the same as an HSA-qualified plan’s structure that just relies on a high deductible to deter a patient from seeking excessive care. And instead of putting all of the burden on the patient, the value-based insurance design incorporates a team approach, with involvement from patients, doctors and health insurance carriers. All in all, it seems like an excellent idea.

Colorado Lawmakers Push Ahead On Medicaid Expansion

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Lawmakers in Colorado voted last week to reject a Republican proposal that education funding be a higher priority for the state budget than Medicaid expansion.  In my opinion, the state’s Medicaid expansion plan is a good idea, and one that’s worth funding.  The alternative is that we continue to have a significant segment of the… Read more about Colorado Lawmakers Push Ahead On Medicaid Expansion

Are Marketplaces Duplicating Existing Health Insurance Comparison Sites?

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[…] So although I agree with Senator Lundberg when it comes to what’s available in Colorado, I don’t think we can necessarily extend that generalization to all states. And the subsidies (only available in the health insurance marketplaces, aka exchanges) have to be taken into consideration too, since those are the overwhelming “carrot” that officials are hoping to use to entice millions of currently uninsured middle-income Americans onto the health insurance rosters. In a state like Colorado, we probably could have done just fine by adding subsidies to our current system. We already had a solid high risk pool (not all states did) and we’ve already been making progress in terms of general reform and access to care. So the changes brought by the introduction of the ACA and the health insurance marketplace in Colorado might not be as significant as they will be in other states. That perspective – as well as the idea that we’re all in this together as a country rather than a bunch of isolated states – is helpful in terms of understanding “why all the fuss” about setting up marketplaces that might seem to duplicate a lot of existing services. In some places, yes. In others, definitely not.

It’s a Health Insurance Marketplace, Not An Exchange

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HHS has officially started referring to “marketplaces” instead of “exchanges” when describing the state-based online venues where people will be able to purchase health insurance and receive income-based subsidies starting in 2014.  Some are calling this a sign that HHS is desperate to garner approval for the ACA-created system for purchasing individual and small group… Read more about It’s a Health Insurance Marketplace, Not An Exchange

Small Improvements In Healthcare Lead To Big Overall Cost Savings

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[…] Both of these scenarios describe changes that need to be made anyway in order to improve healthcare outcomes (fewer injection errors and fewer c-sections would be better for patients), and together they would result in $10 billion in healthcare cost savings. If we identify numerous similar situations – and implement changes needed to make improvements – we could make significant headway in reducing the cost of healthcare, which would in turn reduce the price of health insurance.

Strengthening The ACA Individual Mandate

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Many people have expressed concerns that the mandate portion of the ACA isn’t strong enough to balance out the expected sharp increase in premiums that will accompany guaranteed issue coverage starting next year.  Open enrollment windows are a possibility, but I’m not the only person who has noted that compressing each year’s applications into a… Read more about Strengthening The ACA Individual Mandate

Individual Health Insurance Premiums And The ACA

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Chris Fleming hosted the Inauguration Edition of the Health Wonk Review this week at Health Affairs Blog, and it’s an excellent compilation of articles.    The article written by one of our favorite bloggers, Maggie Mahar, about health insurance premiums in 2014 and beyond caught my attention, because that’s an issue we’ve been watching closely for some time.  It’s a question that’s on a lot of minds right now – especially for people who buy their own health insurance and are in the segment of the population that is most likely to experience changes (in coverage, premium, how policies are purchased, etc.) in 2014.  Jay and I not only work in the individual health insurance industry, but we’re also policyholders – we’ve have individual health insurance since 2003.  We’ve had two carriers and several plan designs over the last decade, and we’ve experienced double digit percentage rate increases nearly every year (somewhat offset by the fact that we’ve been willing to increase our deductible and out-of-pocket limits several times).

We currently pay just over $400/month (for our family of four) for an Anthem Blue Cross Blue Shield CoreShare plan with a $3500 deductible and another $3500 in coinsurance.  We know that our rate will go up in the fall – it always does – but how much?  How much will prices go up for all of our clients who are covered by all of the biggest health insurance carriers in Colorado?

Individual Health Insurance Premiums and the ACAI don’t know the answer to that question.  And I don’t think that anyone really does.  The post Maggie wrote references an article from Bob Laszewski that predicts rate increases of 25 – 50%, with some rates actually doubling, while Maggie’s prediction is more along the lines of a price decrease for people who qualify for subsidies, with an average price increase of just over 10% for those who don’t (anyone making more than 400% of FPL).  The answers seem to change based on who’s doing the math, and it would be disingenuous to say that all of the numbers are objective.  In general, I’ve found that the people who support the ACA are more likely to predict small rate increases and smooth sailing next year, while those who oppose the law are likely to predict large rate increases and general doom and gloom.

Here’s what I do know.

The MLR (medical loss ratio) has already been in effect for two years.  Carriers have had to limit their overhead to 15 – 20% of premiums since […]

Tobacco Cessation And Health Insurance

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[…] Although higher health insurance premiums do provide a financial deterrent to smoking, the number of smokers who try and fail to quit every year is testament to the powerful nature of nicotine addiction. Providing real support in the form of therapy and/or medication designed to help smokers kick the habit seems like a better solution. Including smoking cessation treatment in the list of preventive services that must be covered by all health insurance plans without cost sharing was a good provision of the ACA. But a study released last fall indicates that implementation of the provision has been inconsistent at best. Hopefully this issue will be fully resolved as new health plans are designed heading into 2014, and tobacco cessation will no longer be a grey area when it comes to health insurance benefits and provider reimbursement. […]

A Little Flurry of Snow in Northern Colorado Today!

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Just enough snow came through the Fort Collins area for the kids to plow… and mow. We’re hoping the mountains get a lot for skiers and snowboarders. We put the kids to work in the yard. Plowing…

Good exercise plowing the snow

And mowing…

Mowing the snow

Here is a video of the front end loader in action plowing the snow off of the porch! It was a gift from a friend and is their favorite toy…

Open Enrollment For Individual Health Insurance Plans Starting in 2014

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Ever since the PPACA was first being discussed, the individual mandate has been touted as a buffer to protect health insurance carriers – and in turn, policyholders – from adverse selection that would otherwise certainly occur in a guaranteed issue individual market.  It seemed that as long as people were required to maintain health insurance coverage, adverse selection would be minimized and people would be unlikely to purchase health insurance only during periods of sickness. But there was still enough concern about adverse selection that HHS issued a proposal for open enrollment periods in the individual market starting next year.  This proposal was released at the end of November, and the specific details regarding the open enrollment period are on page 70595 of this Federal Register.

Open Enrollment For Individual Health Insurance Plans Starting in 2014To sum it up, they’re proposing an initial open enrollment period for individual/family health insurance that starts in October 2013 and runs through the end of March, 2014 (a six month window in order to accommodate the large influx of initial applications), and then open enrollment periods that mirror Medicare’s: October 15th until December 7th each year.  Beyond that window, only “qualifying event” applications would be allowed for […]