19 Jan Post-Election Update: Are HSAs a health care solution?
As we anxiously await further action by Congress, we want to continue to share with you some of the possible changes to our health care system. Today we are talking about if high deductible health plans and Health Savings Accounts (HSA) are a health care solution.
High Deductible Health Plans
A high deductible health plan is a health insurance plan that has a very high deductible. A deductible is a fixed dollar amount that you have to pay before your health insurance coverage begins. You could have a $0 deductible or a $10,000 deductible, depending on the plan that you choose. This applies to plans that you might get through your employer or a plan that you would get from an insurance company. Now, when we say “high” deductible that is going to mean something different to each of us. But generally, in 2017, a high deductible health plan can have a deductible of $1,330 or more. But some plans have deductibles as high as $7,000. This means that you have to pay your $7,000 deductible out-of-pocket first, before your health insurance coverage kicks in.
The ACA did guarantee access to some preventive care and immunizations without having to pay a deductible, but if the ACA is repealed that protection might also go away.
Having to pay $7,000 or more before your health insurance coverage starts is something that most people would find difficult. And that is what contributed to the problem of medical bankruptcy. Prior to the ACA, 62% of all bankruptcies in the US were based on medical debt. And 78% of those individuals that had to file bankruptcy because of their medical bills actually had health insurance. Their higher out-of-pocket costs forced them into filing bankruptcy. Higher out-of-pocket costs also cause people to go without medical care.
On the other hand, the benefit to a high deductible health plan is that the monthly premium is usually lower. This might be a useful plan option if you are healthy and don’t need ongoing medical care. But, if you have a serious medical condition like cancer, you will likely pay more out-of-pocket with this type of coverage.
Health Savings Accounts or HSA’s
One way to deal with the costs of this type of coverage is by also choosing a Health Savings Account or HSA. A health savings account is a personal savings account where you can save money to pay for your medical expenses, including your deductible. There are significant tax benefits of having this account, because you don’t pay taxes on the money that you put in your HSA (up to a certain amount each year). The downside is that you actually have to have money to put in the HSA to use to pay your deductible and other medical expenses. And the concern is that most people don’t have the ability to save that kind of money to pay for their medical expenses.
Click here for a detailed overview of how high deductible health plans work with health savings accounts, and whether or not this is a realistic solution for individuals and families with lower incomes.
We hope that our elected officials will keep these issues in mind as they make their decisions over the next few days, weeks, and months on any changes to health care system.
What You Can Do
We will have to continue to wait and see what happens, but in the meantime, there is something that you can do.
- Share your experience and concerns: Call or email your elected officials and share your health insurance concerns. To find your elected officials or learn more about becoming an advocate, visit our Advocacy resources page. You can also find the Facebook and Twitter handles for the current members of Congress here.
- Tell your story: Share your story with Families USA or the National Coalition of Cancer Survivorship (NCCS), two health care advocacy organizations that are working to help our elected officials understand the dire consequences of repealing the ACA and how certain changes to our health care system can impact us all. But they need the stories of real people. If you feel comfortable doing so, you can share your story at http://familiesusa.org/share-your-storyor at canceradvocacy.org/blog/share-your-aca-story.
Do You Need Health Insurance Now?
We also want to remind you that change is Washington is rarely swift and that we may not see changes for most of 2017. That means that we have to continue to operate with the system we have for now and ensure that people have health insurance coverage for 2017. If you do not have health insurance coverage, you can apply for Medicaid at any time or purchase a policy through the State Health Insurance Marketplaces until January 31, 2017.
For more information about how to choose a health insurance policy (including making choices between employer-sponsored options), watch our recorded webinar. If you aren’t sure what your health insurance options are, you can get personalized information on our recently released resource: www.CancerFinances.org.