CCIIO Proposes HSA Plan Valuation Approach

PPACA Section 1302(d)(2)(B) directs the secretary of the U.S. Department of Health and Human Services (HHS) to issue regulations that will incorporate employer HSA contributions in HSA program actuarial value calculations.

Officials at CCIIO say leaving employer contributions out of actuarial value calculations could understate the value of coverage.

“Yet accounting for the total coverage provided by the combination of the HDHP and the full value of the HSA or HRA could overstate the [actuarial value] because, empirically, only a portion of these accounts are used toward health in a given year,” officials say.

CCIIO officials say they intend to propose the following approach to calculating the actuarial value of an employer health benefit plan: The annual employer contribution to an employee’s HSA will be treated as being part of the health plan benefit design.

Similarly, at an HRA-based program, the “amount made available for the first time in a given year” will be treated as being part of the plan design.

CCIIO would assume that the annual HSA contribution or the initial HRA amount made available will be used by the employee to pay for cost-sharing, officials say.

“For example, if a HDHP with a $3,000 deductible has an [actuarial value] of 55% and the employer provides an HSA contribution of $1,000, that contribution would be applied towards the numerator of the [actuarial value] calculation,” officials say. “However, because generally only a portion of an HSA is used in a year for health services, HSA contributions would be adjusted so that the employer receives the same credit for HSA contributions in the numerator of the [actuarial value] calculation as it would receive for the same amount of first-dollar insurance coverage.”

The same rule would apply to HRA amounts.

In the individual market, however, an individual’s HSA contributions would not be part of the actuarial value calculations, officials say.