Insurers Give Congress 3 Ideas for Making HSAs Work Better

Agents, insurers and benefit plan administrators and consultants are hoping new efforts to expand the health savings account (HSA) program can give Republicans and moderate Democrats a chance to get ordinary bills through Congress this summer.

The House Ways and Means health subcommittee today gave HSA program supporters, and critics, a chance to talk about the program at a hearing.

Matt Eyles, the new president of America’s Health Insurance Plans, a group for health insurers, gave lawmakers three proposals for changing the HSA program.

1. Make plan design rules more flexible.

Congress should make sure that consumers in the individual major medical market, including the Affordable Care Act public exchange market, can buy high-deductible policies that are compatible with HSA program requirements, Eyles said.

Congress should also let issuers provide pre-deductible coverage for people with chronic conditions, such as diabetes, who want to set up HSAs but need to use products such as insulin as part of their routine preventive care.

2. Make HSA spending rules more flexible.

Congress should let HSA holders use HSA money to pay for products such as over-the-counter drugs, and premiums for dental insurance and vision insurance, Eyles said.

3. Improve HSA features for consumers who have no access to employer-sponsored coverage, are self-employed, and earn too much to qualify for ACA public exchange plan premium subsidies.

People who earn more than 400% of the federal poverty level get no premium subsidy help, and many are struggling to pay their health insurance premiums, Eyles said.

The HSA program gives people a way to contribute cash to health accounts, without paying income taxes on the money contributed, and withdraw the cash to pay for eligible expenses without paying income taxes on the withdrawals. To use the program, a taxpayer must buy major medical coverage that has a high deductible, but also has an annual out-of-pocket spending maximum below a limit set by the HSA law.

Some Common Ground

Most major Republican proposals for changing or replacing the Affordable Care Act have included provisions that would expand the HSA program, or create major, broader health account programs that would be similar to the HSA program.

(Related: How Dr. Bill Wants to Change Health Insurance Now)

Many Democrats in Congress are cool toward the HSA program, or hostile, arguing that the HSA program does more to lower the tax bills of high-income Americans than to help other Americans pay for care.