Wednesday, March 30, 2016

Silly HSA Tricks

Over at LifeHealthPro, Michael Thomas reports on new legislation being proposed that seeks to update Health Savings Accounts. He does a great job of introducing the background and history of HSA's, and provides a helpful explication of this new initiative. It's a very well-done piece.

That being said, the legislation itself is stupid. It goes off in myriad directions, focuses on non-essential "benefits," and misses the opportunity to actually accomplish something useful.

The purported purpose is to expand eligibility for purchasing and definitions of acceptable distributions (expenses). As to the first, the law "allows Medicare recipients participating in Medicare Advantage MSAs to contribute their own money to Medicare Medical Savings Accounts" which they're currently prohibited from doing. Why is this stupid? Well, go find me an example of a carrier that currently even offers one of these plans.

I'll wait.

In a related section, the legislation "amends the existing law to reauthorize health opportunity accounts in Medicaid as a demonstration program." What, you didn't know that there was such a program in the first place? Don't feel too bad, the original pilot program was such a rousing success that "South Carolina was the only state applying for and approved to participate" in it, and at its peak had enrolled "only two adults and three children."


There are a few decent ideas here: allowing one to buy over-the-counter meds with HSA funds, ducking some of the more onerous Cadillac tax issues. But they are far outweighed by the silliness of allowing "fitness programs" and dietary supplements as legit. I do recall, years ago, being asked if a hot tub qualified (the insured in question has back issues). Maybe this is the answer.

What does it miss? Access.

What do you mean, Henry?

Just this: why must HSA's be tied to a specific type of insurance plan? IRA's don't require you to have a certain job, or tie you to a specific investment plan. Why should HSA's (which are really just medical IRA's)? And why not expand the amount one can contribute? After all, if the idea is to really bend that health care cost curve down, doesn't it make sense to give folks even more opportunity to put their own skin in the game?

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