Author Topic: The ACA, catastrophic heath care plans, and HSAs  (Read 1501 times)

TigreFeliz

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The ACA, catastrophic heath care plans, and HSAs
« on: November 01, 2016, 09:38:23 AM »
Since open enrollment started today, I have been looking at the available plans.  I have a few general questions about them, and I figured that some of the people here might know something that I don't know. 

I'm under 30 and looking for a catastrophic plan.  No subsidies, so I'm open to buying off of the marketplace.  I'm healthy and don't need much coverage.  I'm on a catastrophic plan now that is not HSA eligible.  I just figured I picked a bad plan.  Ok, whatever, my plan for this year was to grab the cheapest plan that they have, an HSA, and be on with my life.

But when I went to the marketplace, the only HSA compliant plans are expensive with mid-level deductibles.  When I looked closer, it appears that the deductible on the catastrophic plan is too high to be HSA eligible.  What?

Here's what I found:

HSA max out of pocket deductible (single person): $6,550
ACA catastrophic plan deductible (single person): $7,150

So the prices end up being:

My catastrophic plan now: $155
Cheapest catastrophic plan for 2017: $198 (no HSA)
Cheapest "HSA eligible" plan for 2017: $256 (bronze)

I feel like I have to be missing something.  Is there any way that the catastrophic plans are not HSA eligible?  Is there some exception that I'm not seeing?  Is this just some bureaucratic oversight?

I tried to google this but didn't see anything directly on point.  Any thoughts/ideas are appreciated.

bacchi

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Re: The ACA, catastrophic heath care plans, and HSAs
« Reply #1 on: November 01, 2016, 09:49:53 AM »
HSA compatible plans have a maximum out of pocket cost. The catastrophic plan is above that.

There may also be other ACA plans that aren't designated "HSA eligible" via the filter but still may qualify as HDHPs.


Etc: The IRS has defined what an HDHP is by maximum OOP and what the plan must provide:

https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204025
« Last Edit: November 01, 2016, 09:58:18 AM by bacchi »

TigreFeliz

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Re: The ACA, catastrophic heath care plans, and HSAs
« Reply #2 on: November 01, 2016, 10:48:07 AM »
Thanks.  That is what I had found, but I guess I thought that I was missing something.  It just seemed absurd that catastrophic plans wouldn't be eligible for HSAs.

boarder42

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Re: The ACA, catastrophic heath care plans, and HSAs
« Reply #3 on: November 01, 2016, 11:22:50 AM »
the 720 extra a year could easily be made up in cost savings of the HSA from taxes. 1700 in savings if youre in the 25% bracket.

GrOW

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Re: The ACA, catastrophic heath care plans, and HSAs
« Reply #4 on: November 01, 2016, 12:18:53 PM »
I feel like I have to be missing something.  Is there any way that the catastrophic plans are not HSA eligible?  Is there some exception that I'm not seeing?  Is this just some bureaucratic oversight?

You are not missing anything. ACA was not written to be HSA friendly. If plans were designed that HAPPENED to be HSA eligible, that's ok but by no means was it an intended consequence. As you already noticed, the onus is on you to be compliant with your plan choice and HSA choice.

There are many reasons this happened. A few are:

1. ACA designers did not want to restrict plan design since they knew the regulations would face many other hurdles as it got off the ground.

2. Insurance plan design is obscenely complex mess of federal laws, state laws, and actuary math. Insurance companies are focused on getting plan design approved and HSA requirements are not a big enough priority.

3. HSAs are often mention in Republican plans to revamp health insurance. This can create a natural disdain for them by the Democrat party since these parties seem to think in absolutes. What you like, we hate and vice versa.