We had a big question upon hearing about the streamlined health benefits allowed with California health reform's Metallic Plans especially since they were based on the very rich, Kaiser no deductible copay plan. What would happen to HSA's after health reform hits the market in earnest Jan 1st 2014? We now have an answer with California's release of the final Health Plan Benefit summaries. Let's take a look at the options.
First, a quick refresher on HSA's or Health Savings Accounts
We've written extensively on the benefits of HSA's and we've been big proponents (and even members) of HSA plans since their inception for the simple reason that they were well-priced and their tax benefit furthered the savings for those able to fund the accounts. You can find detailed information on how the HSA's work at our page dedicated to them. By definition, the HSA's require a high deductible health plan in conjunction to a tax favored checking account where you fund money toward paying out of pocket expenses you may meet towards the high deductible. You would save on the insurance portion and if need be, use this savings for expenses that arise. If you had a good year, you would save that money and it could grow tax-free in the HSA account. It was very popular for over a decade and we weren't sure if they would survived the richer benefits landscape that Health Reform would usher in. Would there be high deductibles large enough to meet the Federal miminums.
HSA's go Metallic in California
We have to now introduce a newer term to delve into the HSA's future on the California health market. Please meet the Metallic Plans. As part of health reform, the law stipulates four basic levels of health plan benefits (and a catastrophic option for people under age 30). They are the Platinum (richest), Gold, Silver, and Bronze. Each level must meet a certain threshold of health benefits. For example, the Platinum plan must pay 90% of expected health care costs for the enrollee. The Gold would pay 80%. The Silver would pay 70% and the Bronze would pay 60%. If we were going to have an HSA eligible plan, it would be in the Bronze or Silver range...which is exactly what happened.
State of California unveils new HSA health benefits available Jan 1st and after
We received detail which cleared up any questions on the availability of HSA plans on the California market. The Standard Benefit summary lists all the Metallic plans and there are two HSA options there. One is a Silver plan and the other is a Bronze plan as expected. We feel the Bronze will be much more popular due to its higher deductible which mirrors what most people choose on the market now. The Silver HSA deductible is 00 which no one really purchases now (due to cost). The Bronze HSA deductible 00 which is actually higher than the average now (around 00) although the max out of pocket is comparable. There's one more wrinkle to discuss.
Health Exchange versus Non-Exchange HSA plans
The two HSA plans mentioned above will be available on both the Exchange and outside the Exchange. The only reason to purchase in the Exchange is if you are eligible for a health subsidy (Silver plan). To be eligible, you must make no more than 400% of poverty and it's hard to see how people making up to poverty levels might also want to fund a separate HSA account with additional funds. Most likely, those individuals would opt for one of the richer Silver plans in the Exchange. Outside the Exchange (no subsidy), most people will go with the higher deductible option as the whole point of the HSA is to save monthly premium due to the deductible. We'll keep you posted as we get more information (such as the crucial piece..rates) but for now, we fully expect to have HSA qualified plans at midnight, Jan 1st, 2014.
Dennis Jarvis is a licensed agent for Health insurance in California with extensive knowledge of the Individual California health market. More info on the California HSA Health Exchange Plans
Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual and Small Group California health insurance market.