Americans Need Congress to Act to Help Them Manage Medical Expenses

 Regardless of who controls each chamber of Congress once all the votes are counted, members should focus on helping Americans manage their out-of-pocket healthcare expenses.

 As I write, it’s unclear which major political party will control both the US Senate and House of Representatives. Democrats have enjoyed an historically narrow majority during the current Congress and have been as effective in passing legislation as any Congress in the past half century or more. Pre-election polls projected a Republican take-over of the House and various scenarios in which one party or the other would control the Senate with no more than 52 seats. With many races still to be decided the morning after election day, the House is still up for grabs. And whichever party controls the Senate probably won’t have more than a 51-49 margin.

 With the prospect of divided government, neither party will have a mandate to make major changes in healthcare policy. Many Democrats (more than half the current Democrat caucus in the House) favor a government monopoly on the design, delivery, and funding of medical care, a concept that is often labeled single-payer or Medicare for All. But this approach lacks the political support to become law – at least anytime soon. Meantime, more and more Americans are struggling to pay high out-of-pocket medical costs.

 Politicians who are in tune with their constituents’ needs, regardless of political affiliation, should be able to agree on some approaches that they can adopt now – not in the distant future – to help Americans manage their financial responsibility for medical, dental, and vision care.

 Health Savings Accounts can be an important part of the solution.

 More Health Savings Accounts

 When Health Savings Accounts launched in 2004, most medical plans either a small or no deductible. That’s why the minimum deductible for an HSA-qualified plan - $1,000 for self-only and $2,00 for family coverage – was referred to in the legislation as a high deductible health plan.

 Clearly times have changed. Most Americans covered by private plans face deductibles higher than the inflation-adjusted minimum of $1,500 and $3,000 for an HSA-qualified plan. Yet most of those plans aren’t HSA-qualified because they cover some non-preventive care (such as office visit copays and prescription drugs) below the deductible. Americans enrolled in these plans can’t open and fund a Health Savings Account to offset their out-of-pocket medical (and dental and vision) expenses.

 Many work for companies that sponsor a Health FSA, which offers the same immediate tax benefits. But Health FSAs contain a use-it-or-lose-it feature, don’t allow election changes as out-of-pocket expenses rise, have election limits far lower than Health Savings Accounts contribution ceilings, and don’t allow people to build an emergency medical account. And the 14 million or so Americans who purchase care in the nongroup market – most of whom aren’t wealthy, as about five in six receive premium subsidies – can’t participate in a Health FSA because the plan is employer-sponsored.

 Common-sense nonpartisan solution: Open the Health Savings Account opportunity to more Americans to allow them to better manage their out-of-pocket costs. One proposal is to allow anyone enrolled in a plan deemed minimum essential coverage under federal law to open and fund a Health Savings Account. Another option is to use an actuarial value approach, which would allow anyone enrolled on a plan that falls below a target actuarial value to become HSA-eligible. [Note: Actuarial value refers to the percentage of total claims that the insurer, as opposed to the patient, pays. The higher the deductible and coinsurance, the lower the actuarial value.]

 No Working Seniors Penalty

 Picture the plight of working seniors – primarily Americans age 65 to 75 (though some older people continue to work out of necessity or by choice). They’ve experienced three shocks to their retirement plans during the last 22 years: The dot.com bubble of 2000, the recession of 2008 to 2009, and the pandemic and associated government lockdowns of business. Each event dramatically reduced the value of their retirement nest egg. As a result, many continue to earn income that reduces their need to draw on their retirement savings.

 Many are collecting Social Security benefits as well, either because they need the extra income to make ends meet or they’ve reached age 70 and won’t receive a higher monthly benefit by continuing to defer enrollment. These working seniors face mandatory enrollment in Medicare Part A when they begin to collect Social Security benefits. Even if they’re happily enrolled in their company’s HSA-qualified plan, they’re also covered by Part A. This coverage disqualifies them from receiving an employer contribution to a Health Savings Account or to contribute a portion of their income to an account to reduce their taxable income. This lost opportunity stands in sharp contrast to their younger co-workers and more affluent working-senior colleagues who defer Social Security benefits.

 Common-sense nonpartisan solution: Allow working seniors who meet all Health Savings Account eligibility requirements except for enrollment in Medicare Part A to make and receive contributions to their accounts. Alternatively, change the administrative rule that couples collecting Social Security benefits with mandatory enrollment in Part A. Either approach will allow working seniors to enjoy the same financial benefits as their younger co-workers and wealthier contemporaries in the work force.

 No Veterans Penalty

 As we celebrate Veterans Day later this week, we recognize the sacrifices that military personnel make – long stretches away from family and friends, living and working in difficult and dangerous environments, and willing to give their lives for their country and our freedom. Yet these men and women face some Health Savings Account restrictions when they retire.

 First, if they receive care at a Department of Veterans Services medical facility (VA system) that’s not preventive or service-related, they lose their eligibility to fund a Health Savings Account for three months. Second, if they carry their TRICARE coverage (the medical plan for active military that many can retain after they leave the service), that plan disqualifies them from opening and funding a Health Savings Account. That’s true even if they meet all other requirements and carry TRICARE as secondary coverage.

 Common-sense nonpartisan solution: Allow veterans to participate fully in a Health Savings Account program if they meet all other eligibility requirements, irrespective of their accessing care through the VA or maintaining their TRICARE coverage. Treat them the same as non-veterans who are HSA-eligible. It’s only fair. And it’s good policy.

 The Bottom Line

 Health Savings Accounts are a reliable ally for Americans who struggle to pay their out-of-pocket medical expenses. Our elected officials – whether Republican, Democrat, or members of smaller political parties – should be helping. There are simple solutions – outlined above – that shouldn’t fall victim to partisan bickering. It’s time for Congress to act.

 #HSAWednesdayWisdom #HSAMondayMythbuster #HSA #HealthSavingsAccount #TaxPerfect