Now that health care reform has passed, people must begin preparing for changes to their Texas health insurance and finances. While nearly everyone will be affected by these reforms, those with Texas health savings accounts will be particularly affected.
Wiley Long, President of HSA for America, has put together a timeline of reforms and some strategies to help people maximize their benefits while minimizing their costs. While the majority of changes won’t occur for three to four years, some changes are already underway.
On September 23, policies will no longer have lifetime limits, children with preexisting conditions cannot be denied coverage, and kids can stay on their parents’ insurance until their 26th birthday. Another change is that domestic and same-sex partners will become eligible for HSA reimbursements. In effect, anyone with money in an HSA can use funds from that account tax-free to pay for their partner’s medical or dental expenses.
On January 1st, people with health savings accounts can no longer use their HSA funds to pay for over-the-counter medicines, and the penalty for withdrawing money from an HSA for non-medical expenses doubles from 10 percent to 20 percent.
2014 is when the majority of changes are enacted, including a government mandate that all Americans purchase a minimum level of health coverage or face a monetary penalty. Other major changes are that people with pre-existing conditions cannot be denied coverage, and government subsidies will be available to individuals earning up to $29,327 and families of four earning up to $88,200.
These and other health care reforms are raising questions from confused Americans on how to minimize their costs in the face of comprehensive legislation and expected tax hikes. Wiley Long suggests the following strategies for maximizing benefits while keeping costs low:
1. Maximize your deductible – The higher your deductible, the lower your monthly premium. Since insurance rates are likely to increase at an accelerating pace, and the government may decrease maximum deductibles in 2014, Americans should consider switching to a higher deductible health plan now. Regardless of how reforms affect deductibles in the future, people with high deductible plans will be able to keep them as long as the insurance companies continue to offer them.
2. Lock in current rates – Several insurance carriers offer two or three year rate guarantees. Locking in your current rates could save you a lot of money over the next few years.
3. Beware of Rising Taxes – Health care reform will be expensive, so several new taxes will be implemented to help pay for it. Individuals earning more than $200,000 and couples earning more than $250,000 will face an additional 0.9 percent Medicare payroll tax starting in 2013, as well as an additional 3.8 percent Medicare tax on investment income, like interest, dividends and capital gains.
4. Maximize Your HSA Contribution – Since taxes will increase, take any action you can to lower your tax bill, like making tax-free contributions to an HSA. If you had an HSA-qualified plan in place by December 1, 2009, you should make a contribution to a health savings account by April 15, and continue to fund it every year.