The new Trump administration is vocally anti-Affordable Care Act and, as the American public will continue to learn, it strongly supports tax advantaged plans in general and health savings accounts (HSAs) specifically. Expect adoption of both consumer driven health plans (CDHPs) and HSAs to continue trending much the way they have been already, though more aggressively so with the likely upcoming changes to health care reform measures.
A recent survey by UBA Benefits indicates that 26.4 percent of all American workers are enrolled in a CDHP, which is a requirement for opening and contributing to HSAs. Devenir’s 2016 midyear report indicates over 18 million accounts, a 25 percent increase in accounts over the previous year, and a 22 percent surge in assets to nearly $35 billion. Meanwhile, HSA investments amount to $4.7 billion, which is an annual increase of 23 percent. Account balances comprised of contributions and investment accounts average over $15,000. Devenir currently projects that by the end of 2018, the HSA market will exceed $50 billion in HSA assets held among over 27 million accounts. Evidence of this HSA-focused administration is evident in the health care re-reform proposals offered up by Republicans so far.
Senate and House of Representatives have both put forth HSA expansion bills. Trump’s administration exemplifies this with Vice President Mike Pence, who enacted Health Indiana Plan (HIP) 2.0 while governor, and co-sponsored nine HSA expansion bills in Congress. He is also leading the health care re-reform agenda.
In addition, Representative Tom Price, who is overseeing the Department of Health and Human Services (HHS), is also a vocal proponent of HSAs. The most recent version of Rep. Price’s 2015 ACA repeal bill, Empowering Patients First Act, H.R. 2300, is nearly 250 pages long, with the majority of the first 45 pages dedicated to HSAs, their expansion, and the inclusion of HSA initiatives within state and federal programs.
Senate Finance Committee Chairman, Orrin Hatch, also known as the ‘designated survivor’ (meaning he’s third in line for the presidency should something dire happen to both the president and vice president) sponsors pro-HSA legislation as well. Hatch’s Health Savings Act of 2016 calls for HSA expansion to include Medicare Part A beneficiaries, amends the Social Security Act to permit Medicaid health opportunity accounts, protects HSAs from bankruptcy claims by creditors, adds to the already expansive list of allowed expenses to also include preventative focused measures such as inclusion of gym and other physical fitness facility memberships, exercise equipment, nutritional supplements, primary care physician fees, and health insurance premium.
Serving as the chief legislative partner, House Speaker, Paul Ryan, also sponsors HSA-focused legislation. His A Better Way passed Congress last year and is touted by some as the blueprint for ACA alternatives. The bill calls for significantly increased account contributions to the maximum allowed yearly deductible and out of pocket limits, rather than to the current limits of $3,400 and $6,750 for individuals and families respectively; allowances for accountholder reimbursement for eligible expenses incurred prior to the HSA opening, as long as one is opened within 60 days of the event; the ability for spouse catch up contributions to be made to the same HSA account rather than in to separate ones; and broadened availability to include TRICARE members and Indian Health Service recipients.
In a nutshell, HSAs are here to stay. They have already proven to be a popular mechanism for employers to supress the fixed cost of insurance premiums, while continuing to educate and arm employees with consumer-driven techniques, tools and incentives. The next four years are poised to take this up a notch. Buckle in.