Department of Health and Human Services (HHS) is promoting high-deductible
health plans (HDHPs) that can be used in conjunction with tax-favored health
savings accounts (HSAs) on the HealthCare.gov exchange. The IRS defines an HDHP
as any plan with a deductible of at least $1,350 for an individual or $2,700
for a family. HHS claims that HSAs help consumers make more cost-efficient
health-care decisions. However, Democrats and Affordable Care Act (ACA)
supporters argue that HSAs primarily benefit wealthier consumers who can afford
to take money from their paychecks to contribute to an HSA.
2017, nearly 500,000 individuals in the 39 states using the federal
HealthCare.gov exchange enrolled in HSA-eligible HDHPs, which made up 6% of
federal exchange enrollment that year. Enrollment in HSA-eligible plans has
grown significantly since HSAs first became available in 2004, but there has
been “very little growth” in enrollment from 2014 to 2017, according to the Employee
Benefit Research Institute.
2014 when the ACA Exchanges opened, they included high-deductible catastrophic
plans, which usually have lower premiums. They were not eligible for ACA
premium tax credit subsidies and could not be paired with HSAs. Individuals can
receive tax-free distributions from their HSA to pay or be reimbursed for
qualified medical expenses incurred—this includes dental treatment and expenses.
House of Representative passed H.R.
6311 and H.R.
6199 in July to expand the use of tax-advantaged HSAs, increase
contribution limits for HSAs, and broaden the types of health plans that can be
used with them. Similar legislation hasn’t been introduced in the Senate.