The “Health Savings Accounts” from ’s Medicare bill were scraped together and turned into law so quickly that the federal bureaucracy and the insurance industry are still trying to figure out what it all means.
For legal tax resisters and run-of-the-mill tax avoiders these HSAs are a new way to legally squirrel away some of our hard-earned money and keep it out of the hands of the tax collector.
But the details are still being worked out. , Treasury Secretary John Snow released some new interpretations of the rules regarding HSAs.
Part of the motivation for these new plans is to encourage people to move over to high-deductible health insurance. If you have a $2,000 deductible, which is considered a “high-deductible,” the first $2,000 or so of your health costs come out of your pocket, and the insurance company only starts paying after you reach that deductible.
The reasoning behind encouraging plans like this is that if people have to use their own money to pay for the minor cuts-and-scrapes and ointments & pills that most people encounter during a year, they’ll be less likely to run to the doctor for every little thing, and when they do go to the doctor there won’t always be insurance paperwork involved. This, in theory, should lower health costs and health insurance costs.
An analogy I’ve frequently seen is with auto insurance. If your auto insurance covered everything — from oil changes to tire replacement — then the amount of paperwork, fraud, and annoyance would go way up. People who sell tires and oil would charge higher prices because people would be less likely to bargain shop. But auto insurance doesn’t cover the small stuff, but only high-ticket items like crashes. The theory goes that if health insurance uses this model, eventually health-care costs will drop.
To encourage this, the HSAs are offered only to people who have a high-deductible health insurance and nothing else.
’s guidance from the Treasury Department clarifies what this means. First off, the restriction includes prescription drug plans: “a plan that provides first-dollar benefit coverage for prescription drugs by either a flat dollar amount or percentage co-payment for all prescription drug expenses, even those underneath the deductible, will not be considered a high deductible plan and a person covered by such a plan could not make a contribution to an HSA.”
But what about preventive health care? Things like regular check-ups, immunizations, and prenatal care? Insurers have often covered such things more generously, thinking that money they spend to encourage their customers to get preventive care will be money they save when the preventive care prevents future medical problems. Can they continue to pay for preventive care under high-deductible plans, or must they force the patient to pay for these things up to the deductible?
’s guidance says: “there is an exception for benefits for preventive care. The guidance issued today provides a safe harbor list of benefits that can be provided by an HDHP, generally clarifying that traditional preventive care benefits — such as annual physicals, immunizations and screening services — are preventive care for purposes of HSAs, as well as routine prenatal and well-child care, tobacco cessation programs and obesity weight-loss programs.”
They’re still considering things like “certain drug costs benefits provided by employee assistance programs, mental health programs, or wellness programs.”