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3 Policy Changes to Increase HSA Access

Posted By Martin Trussell CFC, Friday, May 11, 2018

From ThinkAdvisor, By Anne Richter

As health care costs continue to rise, health spending accounts are gaining momentum as vital tools that help many Americans save money by using pretax dollars to pay for health-related expenses. Flexible spending accounts (FSAs) and health savings accounts (HSAs) are two of the most common such vehicles. These consumer-driven spending accounts are particularly useful in conjunction with high-deductible health plans, which are becoming more common among workplace benefits offerings.

As the use of these accounts increases, legislative changes are needed in order to make them effective and accessible to more Americans. Here are three regulatory updates currently on the table to encourage broader use of FSAs and HSAs among American employers and employees:

1. Repeal or amend the “Cadillac Tax”

The excise tax on high-cost employer-provided health plans (also known as the “Cadillac Tax”) was included in the Affordable Care Act to discourage employers from providing excessively rich health benefits at taxpayers’ expense. It places a 40% tax (paid by the employer) on the cost of health coverage that exceeds certain threshold amounts.

The Cadillac Tax has unintended consequences for HSAs and FSAs. In particular, the inclusion of individual employee contributions to these accounts in the calculation of the tax threshold creates a significant disincentive for employers to offer these benefits, for fear of triggering the excise tax.

An amendment to repeal the Cadillac Tax passed the Senatein July 2017, but the corresponding bill has yet to pass the House of Representatives. On Jan. 22, Congress passed and President Donald Trump signed into law a two-year delay on the Cadillac Taxas part of the federal funding bill to end a partial government shutdown. The tax remains delayed until 2022, but a two-year delay has little impact on the many employers who must make decisions about their benefits programs three to five years in advance. In order to maintain and expand the availability of FSA and HSA accounts for working families, Congress must repeal the Cadillac Tax entirely, or at the very least pass legislation to exempt individuals’ contributions to these accounts from the calculation of the tax threshold.

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Tags:  Cadillac Tax  HSA 

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Has HSA Enrollment Stalled?

Posted By Administration, Thursday, May 10, 2018
FROM NAPA:

 

In 2017, enrollment estimates in HSA-eligible health plans vary considerably – from 21.4 million to 33.7 policyholders and their dependents, according to a new report. But, according to the nonpartisan Employee Benefit Research Institute (EBRI), there is one consistency between the enrollment estimates – most sources show that growth appears to have slowed in 2017, especially when looking at the market share of HSA-eligible health plan enrollment.

The report acknowledges that it can be challenging to determine how many people are enrolled in an HSA-eligible health plan and how that number has been changing. Indeed, the report notes that, for the most part, there are just a handful of surveys used to determine the number of people enrolled in an HSA-eligible health plan.

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Tags:  HSA 

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Education Key to HDHP and HSA Engagement

Posted By Administration, Thursday, May 10, 2018

Just 13% of the 1,100 respondents to WEX Health’s first-ever Clear Insights report identified a health savings account (HSA) as the employer benefit that provides the most pre-tax savings.

In addition, more than half (54%) were not aware that they could invest their HSA funds in stocks, mutual funds and other investment vehicles. And, three-quarters of respondents see their HSA as a way to pay for health care expenses this year, which indicates they may not be aware that funds can be carried over into the next year. WEX Health says all these findings add up to a significant opportunity for further educationon the triple-tax advantages of HSA accounts.

More than three-quarters (82%) of those who participate in high deductible health plans (HDHPs) either somewhat or strongly agree that managing their health care spending account helps them make smarter health decisions. The survey found the ways to motivate employees the most to access resources and make better health care choices are financial incentives (64%), emails (43%), online tools and resources (38%) and online ability to track employees’ health care goals (33%).

The most challenging part respondents cited in using their HSA was making sure to have enough funds set aside to cover deductibles (29%) and figuring out how much money to put in the account overall (21%).

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Tags:  HSA  WEXHealth 

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