With the implementation of the federal Affordable Care Act (commonly known as Obamacare), some Americans worried that they would lose the ability to use Health Savings Accounts (HSAs). HSAs are tax-free, interest-bearing accounts, enabling healthcare customers who have high deductible health insurance plans to put away tax-exempt funds to pay for qualified medical expenses. They work similarly to a flexible spending account, with one major difference – the funds are able to be rolled over year after year. That can be very appealing to healthcare customers, and HSAs have been a very popular healthcare solution for both employers and employees.
Fortunately HSAs are still a great health care solution, even with the transformation in the health insurance marketplace due to Obamacare. However, Obamacare has caused some changes to how HSAs operate. Read on to learn more about how Obamacare has impacted HSAs, and how you can get the most out of your health care plan:
Health insurance marketplace under Obamacare has multiple levels
As of 2014, there are four main levels of health insurance in the Affordable Care Act marketplace – bronze, silver, gold, and platinum. The types of medals indicate the type of coverage. Bronze and silver plans have lower premiums, but customers have to pay a higher percentage of out of pocket costs, such as deductibles, coinsurance and copays. With the gold and platinum levels, customers have to pay more on their monthly premiums, but face lower out of pocket costs. HSAs are designed to be used with the bronze and silver plans, which cover 60% (bronze) and 70% (silver) of eligible health care expenses.
In addition, some individuals may be eligible for subsidies from the federal government to pay for their Obamacare insurance plans. Those individuals making under $46,000 a year could potentially qualify for a tax credit, or upfront subsidy, to pay for their medical insurance. Families have a higher threshold of income when it comes to federal subsidies; it depends upon the family’s size and income.
Consumers who had a high deductible health insurance plan who decide to go with a gold or platinum plan can still keep their HSA, but they can no longer make contributions to it. HSAs are designed for high deductible health insurance plans only.
There are recent changes to the limits of the coverage
The Internal Revenue Service recently announced some changes to the HSA limits. As of 2014, the maximum annual contribution limit is $3,300 for individuals, up from $3250 in 2013. The maximum annual contribution for families is now $6,550, increased from $6,450 in 2013.
In addition, the minimum 2014 deductible for high deductible health plans has also been increased. As of 2014, it is $1,250, the same as 2013. For families, the deductible is $2,500, also the same as 2013. The federal out of pocket maximum for individuals for 2014 is $6,350, up $100 from 2013, while the family maximum is $12,700, up $200 from 2013. There is also a $1,000 HSA contribution limit for 2014, the same as 2013. All of these numbers are tied to inflation, so they are expected to increase year after year.
Some things are no longer covered
When it comes to the health insurance marketplace, consumers can no longer use the account to pay for over the counter medications, such as aspirin or non-prescription acid reflux medication. They can only use the money in an HSA account to pay for medications which are prescriptions.
In addition, while consumers can still withdraw money from the account for non-health care expenses, they will face a higher penalty for doing so. It is now 20%, up from 10% in 2013.
HSAs are still valuable for healthcare customers
While HSAs have undergone changes under Obamacare, they are still a terrific deal for qualified consumers, thanks to the tax and savings benefits in the program. Contact us to learn more about how an HSA can provide for your unique health care coverage needs, or get started now with a free quote.
Health Savings Accounts are an invaluable resource for those looking for affordable health care coverage. For more information about the benefits and advantages of HSAs, please see our Benefits guide, or find all the answers to your questions in our HSA Frequently Asked Questions guide.
We can help you find an HSA that gives you great coverage at a low price. Contact us today!
