If not, many people may be in for a surprise after the election. Of course, I know a lot of people who support Obamacare who say they don't mind paying more for health care if it means everyone is covered, among other things. Fine and good, but let's let the People decide if they agree with that as a majority.
Based on the surprise to the increases and changes I've already seen, there may be quite a few Americans that are unprepared for just how much getting everyone covered is going to cost them, especially in light of the promises that came with Obamacare to reduce health care costs.
Health Savings Accounts are taking some of the biggest hits, and it looks like employer support of them could be dropping significantly. That isn't good news for many who saw it as a good option between being covered and being frugal by cutting overall health care costs yourself and saving money for future health needs. Costs for the minimum premiums are going up for both individuals and employers, and how contributions to the HSA accounts are accounted for is also causing controversy over whether it really makes sense to contribute much money to them at all.
And if you liked the idea of using Flexible Spending Accounts, the $2,500 contribution limit may really hamper your plans if you have kids that need braces, or have needs that exceed $2,500 per year. Unless someone can show me otherwise, this new limit is an "invisible" tax on every dollar above $2,500 that the normal FSA account holders was used to contributing to their accounts in years past.
But it isn't just those costs that have gone up. Even traditional plan premiums are going up for employers and individuals.
I'd start asking your employer and/or health care provider to get you information about what next year's costs are going to be, before you vote this year. Once you determine how it will affect you, then cast your vote.
The next few weeks left in the election are America's open enrollment period. We'd better be ready for what the majority decides it wants. Because it will be many years before we again have a chance to change our plan as a nation.
Below is some information from the HSA Council on changes being made through Obamacare.
The primary issues of concern for high-deductible plans are that:
- The medical loss ratio formula doesn’t take into account contributions to HSAs. Many high deductible health plans are accompanied by an HSA, which covers much of the first-dollar costs before the plan’s deductible is reached. HSA contributions are currently not reflected in the medical loss ratio calculations.
- High deductible health plans may not be able to raise rates fast enough to keep up with rising costs. High deductible health plans will require larger annual rate increases than typical medical plans because medical inflation will have a greater impact on claim levels than plans with lower deductibles.
- High deductible health plans have fewer premium dollars to cover their fixed expenses. Every plan has fixed expenses that it covers with premiums. Since high deductible health plans have lower premiums than other plans, a greater percentage of the premium must be used to pay these fixed expenses. For example, $400 of fixed expenses represents 40 percent of a $1,000 premium, but only 20 percent of a $2,000 premium and just 8 percent of a $5,000 premium. Therefore, it is harder for a lower premium plan to keep its non-claim expenses below 20 percent of its adjusted premiums as the medical loss ratio rule requires.
- High deductible health plans have less predictable claims experience that could increase the risk of paying rebates. High deductible insurance plans pay fewer claims than plans with low deductibles. But when high deductible health plans pay claims, the claim dollar amounts tend to be larger. This lower-frequency/high-payment creates less actuarial predictability which can result in high claims in one year and low claims in another. If the plan has low claims, it may not meet the 80 percent medical loss ratio and be required to pay rebates. If the plan has high claims, it may lose money that it cannot “make up” in other years.
The information below was provided by HSA Bank:
• Qualified Medical Expenses: Starting January 1, 2011 you will no longer be able to pay for over-thecounter medications from your HSA as a qualified medical expense. The new law removes over-the-counter
drugs not prescribed by a physician from being paid from an HSA, FSA, or HRA on a tax-free basis.
• Non-qualified expense penalty: Under the new law, if you use your HSA funds for non-qualified expenses,
you will face a higher penalty. The tax penalty for non-qualified HSA distributions will increase, effective
January 1, 2011, from 10% to 20%.
• Mandated insurance coverage: Effective January 1, 2014, the legislation will require most U.S. Citizens
and legal residents to have health insurance. It also outlines the minimum coverage and essential health
benefits that need to be provided for a plan to qualify for the mandated coverage. This could potentially limit
the types of health plans that will be available to consumers. Below are a few of the areas which require
clarification by the Secretary of Health and Human Services:
• Preventive care services: All insurance policies will be required to provide first dollar coverage for
preventive care services. While HSA-compatible health plans are currently allowed to provide first-dollar
coverage of preventive care services, in the future, all plans will be required to do so. These provisions
will go into effect in 2014. Additionally, further clarification must be provided regarding what constitutes
“preventive care” under the new regulations and whether or not that definition conflicts with current IRS
guidance on what constitutes “preventive care” for HSA purposes.
• Minimum actuarial value: All insurance policies will be required to provide a minimum actuarial value
of at least 60 percent for the benefits covered. Clarity must be provided regarding how “actuarial value”
is defined. It is also not clear whether a plan’s actuarial value would include employer or individual
contributions made to the individual’s HSA. Including the contributions in the calculation of a plan’s
actuarial value would make it easier for more HSA-compatible health plans to meet the minimum
actuarial value requirement. If contributions are not included, many plans could no longer be sold.
• Small employer benefit requirements: The legislation also includes a provision that would prevent small
employers from offering plans with deductibles greater than $2,000 for singles and $4,000 for families
(indexed annually). Employers may offer plans with deductibles higher than $2,000 / $4,000 if the employer
offers a flexible spending arrangement (FSA) that reimburses the difference between the higher deductible
and $2,000 / $4,000. This provision will affect the health plans that can be offered to small employers and
still qualify for HSA contributions. This provision goes into effect in 2014.
• Excise tax on ‘Cadillac’ plans: The new law will impose an excise tax of 40 percent on employersponsored coverage that has a benefit value in excess of $10,200 for single coverage and $27,500 for
family coverage (indexed annually). The benefit value of employer-sponsored coverage would include the
value of the group health plan and contributions to employees’ FSAs, HRAs, and HSAs. This tax would be
imposed on insurance companies, including self-insured plans and plans sold in the group market, and plan
administrators. However, this provision does not go into effect until 2018.
• Medical loss ratio requirement: The new law imposes a “medical loss ratio” requirement. It would require
a set percentage of premiums to be paid directly to medical claims. Since HSA-compatible plans have lower
premiums, this may make it challenging for plans to meet the established ratios and still qualify for HSA
coverage.
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