On February 4, 2016, Sen. Orrin Hatch (R-UT) and Rep. Erik Paulsen (R-MN) introduced legislation (click on the bill numbers for the legislative language and other pertinent information: S. 2499 / H.R. 4469) that the HSA industry considers the “gold standard” for changes to the HSA program. Over the next several weeks I will post summaries of the provisions of the bill. Read the first one below and look for my future posts.
Part 1
Sec. 101 – Renaming “High-Deductible Health Plans”
This section renames high deductible health plans that make people HSA-eligible as “HSA-qualified health plans.” Here’s why.
When HSAs were created twelve years ago, the concept of a high-deductible health plan was relatively unheard of in the insurance industry except in the individual market. The technical term used in the law — “high deductible health plan” or “HDHP” — originally meant the unique plan that made people eligible for health savings accounts. And the term stuck.
One of the most frequent questions I got as I traveled around the country teaching people the rules and requirements for HSAs was, “Why aren’t you using a more consumer-friendly term?” As we have learned over the years, they were right ask that question. Sales experts taught me that if you really want to sell someone a high deductible health plan, don’t use such a scary sounding term.
Fast forward a decade and we find that high deductible plans are now much more common, so the term “high deductible health plan” can be applied to the majority of health plans, especially those sold through the state insurance exchanges. In the Silver and Bronze metal tiers, virtually every plan available is a high deductible health plan.
But that has created a new problem. Which high deductible health plans actually make someone eligible to contribute to a health savings account? It’s not easy to tell in many cases.
Over time the industry has adapted to the criticism and started using the term “HSA-qualified plans” to distinguish those high deductible plans that made people eligible to contribute to an HSA from those that didn’t. Section 101 of the Hatch-Paulsen bill would make that change official in the law.
When would this change be effective? Not until the first calendar year after it is enacted (i.e., not before 2017 at the earliest).