You might know that currently more people are enrolled in HSAs than are enrolled in all federal and state run exchange health plans. HSAs continue to increase as a health plan offering in many parts of the U.S. with lower cost trends, unique tax rules, and more opportunity for participants to obtain financial benefits for their own health care decisions.
Several new legal changes in the last three months may impact how these programs are run.
New final regulations were announced in August 2015 that clarify the items or services that qualify as preventive care. These regulations are required for many health plans under the Affordable Care Act §2713, but not so called grandfathered health plans. This guidance was after new federal FAQs (part XXVI) on this ACA requirement released in May 2015 also clarifying some of these requirements.
For HSA purposes, IRS Notice 2013-57 provided that HSAs may still provide items or services required under the ACA §2713 below the deductible and not risk losing their eligible status. This means the new preventive care rules and guidance above may apply and not impact a persons HSA eligibility.
The new preventive care regulations will apply to plan years beginning after 9/24/15--which means 1/1/16 for plans operating under a calendar year.
A recent bill signed into law called the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 also changed HSAs. Specifically, this bill amended the tax code to allow Veteran Affairs coverage so it will not impact the eligibility of HSA participants. The new language of the code reads as follows:
An individual shall not fail to be treated as an eligible individual for any period merely because the individual receives hospital care or medical services under any law administered by the Secretary of Veterans Affairs for a service-connected disability (within the meaning of section 101(16) of title 38, United States Code). [Additionally, guidance from IRS Notice 2015-87 clarified that as a rule of administrative simplification, for purposes of this rule, any hospital care or medical services received from the VA by a veteran who has a disability rating from the VA may be considered to be hospital care or medical services under a law administered by the Secretary of Veterans Affairs for service- connected disability.]
Prior to this change, Veteran Affairs coverage used in the last three months impacted participant eligibility for HSAs. This new eligibility requirement will apply in 2016.
IMBEDDED INDIVIDUAL DEDUCTIBLES:
Another recent change impacts how plans will operate their out-of-pocket maximums including the corresponding High Deductible Health Plan (HDHP) that is needed for HSA eligibility. In a nutshell, HSA plans will be operating with a new rule for individuals who are enrolled in the HDHP. See blog post dated 6/15 for further details and links on this new requirement. This new HDHP plan requirement will apply in 2016.
Caselaw also continues to evolve on HSAs including a recent case out of Colorado's highest court which provided that HSAs do not fall within the characterization of an retirement plan in order to shield the HSA from a creditors claims. The court ruled that because these programs can be used at any time during the account holder's lifetime, therefore they are not "retirement plans" under the Colorado's garnishment exclusion. See Roup v. Commercial Research, LLC (June 1, 2015).
The rules around HSAs are complex and continue to evolve. For legal questions on HSAs, please contact Kinney & Larson LLP.