After months of partisanship, Washington, D.C. is finally experiencing a respite from partisan brawling over health care. The U.S. House last week passed two bills related to Health Savings Accounts (HSAs) and drew some bipartisan support in the process. This could be just the tip of the iceberg as Congress has started to move numerous bills to pave the way for lower health care costs for millions of Americans.
Many Families Will Be Helped By Increased HSA Contribution Limit
Lawmakers have proposed an increase to HSA contribution limits to equal what a patient may pay for their health plan deductible and out-of-pocket limits. Put simply, the new limit would allow someone to put aside pre-tax money ahead of time to pay for these costs. This means health care consumers could potentially pay up to $1 less in taxes for each $3 placed in an HSA—resulting in real savings for patients.
For example, take a family now paying $900 per month for a health insurance plan with a $12,000 deductible, who may have needed to only meet a $4,000 deductible just a few years ago. However, the proposed change to HSA contribution limits would allow the full deductible amount to be saved without tax penalty in the family’s HSA, leaving money for unplanned, catastrophic health expenses. If those catastrophic expenses never come, they can use the HSA contribution for their Medicare copays and supplemental policies when they retire, or for long-term care needs further down the road. This one change has the potential to save American households thousands of dollars if they incur high health care costs in a year.
Other Positive HSA Changes
The bills also expand access to HSAs by allowing anyone with a bronze or catastrophic health plan to open an HSA and allowing individuals with Medicare part A to contribute to an HSA, a huge benefit for the millions of Americans age 65 or older in the US workforce today.
The laws being considered also contain a number of additional provisions aimed at fixing long-term problems plaguing HSA account holders, including fixing the inability of spouses to make deposit ‘catch up contributions’ into a single HSA and enabling someone to contribute to their HSA if their spouse is concurrently contributing to a Flexible Spending Account (FSA).
Among the positive reforms is the restoration of a commonsense policy that once again allows for over-the-counter medications to be paid for with an HSA and allowing individuals to spend up to $500 annually on qualified sports and fitness expenses, including gym memberships.
HSA Changes For Direct Primary Care Could Help Chronically Ill & Healthy Patients Alike
And the reforms finally attempt to address the ambiguity surrounding HSA compatibility with Direct Primary Care (DPC) arrangements. The new law would authorize individuals to pay directly for DPC services out of their HSA account, a necessary reform given the expansion of DPC practices around the country, many of which often set monthly subscription fees in exchange for access to a wide range of medical services.
These practices are helping improve the lives of Americans with chronic conditions and often save money in the process. A woman named Lisa recently shared that her diabetes management has improved dramatically since switching to a DPC doctor and that she feels better than she has in many years. For Lisa, like many other patients, it’s simple: she feels like she has a relationship with her doctor—who takes the time to learn about her—again.
Additional Senate DPC Tweaks Could Increase Impact
As the House moves these commonsense reforms, the Senate should consider further enhancements to expand the scope beyond primary care to other medical practitioners and specialists. They should also add additional flexibility for the types of services provided by DPC physicians to include prescription drugs, as many DPC practices can dispense certain prescription medications at significantly lower costs to their patients—changes that could result in massive price decreases between 50-95 percent.
Congress has struggled to find common ground in health care since before the repeal and replace effort, but these House bills provide a series of effective, simple, commonsense changes that will bring immediate cost relief to millions of Americans—while improving people’s lives. Bipartisan healthcare reforms like these would benefit all Americans and are needed sooner rather than later.
Piece written with contributions from Joel Allumbaugh.
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