GOP senators introduce bill replacing COVID-era ACA premium subsidy boost with HSA

People ages 18 to 49 would get $1,000 each, and people ages 50 to 64 would get $1,500 each.

If those eligibility rules were in effect this year, the HSA contribution access limit would be $109,550 for an individual in most of the country and $225,050 for a family of four, according to the U.S. Department of Health and Human Services.

Crapo is the chairman of the committee, and Cassidy is a member of the committee.

The HSA contribution provision appears to reflect Trump administration interest in putting at least some ACA subsidy money in patient-controlled health savings accounts, rather than sending the money to insurers.

In addition to putting cash in HSAs, the Crapo-Cassidy bill would let the federal government restore funding for "cost-sharing reduction" subsidies starting in 2027 and expand access to catastrophic, "copper tier" plans in 2027.

The cost-sharing reduction subsidy provision: The ACA cost-sharing reduction subsidies are supposed to help exchange plan users with income under 250% of the federal poverty limit pay health plan deductibles, copayment requirements and coinsurance bills.

Republicans zeroed out the CSR subsidies in 2017.

When the subsidy was still in effect, the subsidy provided about $7 billion in funding for issuers of individual health coverage, or an average of about $1,000 for each of the 7 million exchange plan users who received the subsidy.

Milliman estimated that, in 2016, the subsidy accounted for about 7% of health insurers' 2016 individual major medical coverage revenue.

The Crapo-Cassidy bill does not specify how much CSR subsidy funding could be provided, but it states that the government could get the cash to make the CSR subsidy payments "out of any monies in the Treasury not otherwise appropriated."

The copper plan provision: Catastrophic tier plans cover only about 50% of the actuarial value of a standard health benefits package before the patients meet their annual out-of-pocket spending maximum.

For ordinary health plans, the percentage of the actuarial value of a standard benefits package covered ranges from about 60%, for bronze plans, up to about 90%, for platinum plans.

Coppper plan insureds could easily face $7,000 or more in out-of-pocket costs in a year before their plans pay for anything other than routine preventive care.

Federal law has limited access to copper plans to people under the age of 30 and to some other ACA exchange users who are not eligible for ACA premium tax credits, who find that their share of the premiums for any other available major medical coverage would exceed about 8% of their income, or who qualify for a hardship exemption, according to HealthCare.gov managers.

The Crapo-Cassidy bill would let all exchange plan users buy copper plans.

The provision could give health savings account providers and direct primary care practices a big boost.

In July, the new One Big Beautiful Bill Act eased restrictions on who can open HSAs. In the past, federal law classified many copper plans and bronze plans as being too skimpy for the users of those plans to open HSAs.

OBBBA loosed the coverage quality restrictions and let all holders of copper-level coverage and bronze-level coverage open HSAs.

Another OBBBA provision lets people with a combination of high-deductible health coverage and HSAs use some of the HSA cash to pay for direct primary care practice memberships, or access to entities that provide access to ordinary health care in exchange for monthly, quarterly or annual fees. The DPC provision means that consumers may now have an incentive to think of their copper plans as catastrophic health plans and use DPCs to provide their everyday care.

The backdrop: The Crapo-Cassidy bill is part of the legislative fight to cope with the Dec. 31 expiration of the current ACA premium subsidy levels.

Related: Cassidy pushes for bipartisan compromise to extend ACA subsidies

The ACA originally limited access to subsidies to people with income under 400% of the federal poverty limit, but Congress responded to the COVID-19 pandemic by temporarily increasing the subsidy levels and made the subsidy levels available to people at any income level if those people's share of the premiums would amount to more than about 9% of their income. The temporary subsidy boost is now about to end.

Many Republicans in Congress are uncomfortable with the current high levels of subsidies, but some are talking about reports about how much more some people could pay for health coverage starting Jan. 1, 2026.

Congress originally increased the subsidies in response to the COVID-19 pandemic.

Sen. Lisa Murkowski, R-Alaska, reported at a recent hearing of the Senate Health, Education, Labor and Pensions Committee, which is chaired by Cassidy, that a friend told her that her own family's premiums could soon increase to $3,000 per month, from less than $500 per month today.

What it means: The ACA premium subsidy fight could have the most effect on employers and benefits firms that are using individual coverage health reimbursement arrangement programs or other "cash for coverage" programs, and who are counting on workers having easy access to affordable individual major medical coverage.

But the fight could also affect any aspect of the health benefits or retirement benefits sector, because Congress could end up adding other types of benefits provisions, such as HSA or ICHRA provisions, to ACA premium subsidy fix bills to win votes for the ACA premium subsidy provisions or to offset the cost of the ACA premium subsidy provisions.