by Phil Larson
A recent announcement by HHS sheds light on the fact that exchange cost share subsidies (those that change the coverage of a plan for certain eligible individuals) may impact HSA eligiblity. In order to qualify for HSA eligibility for contributions, a person must have corresponding High Deductible Health Plan (HDHP) coverage that meets certain requirements. It is important to note that cost share subsidies may turn an otherwise HSA eligible HDHP plan into non-eligible HDHP coverage for HSAs. This means the individual would not be eligible for HSA coverage.
Here is the Q&A:
Cost-Sharing Reductions and Health Savings Accounts
Q8: How should plan variations for QHPs that are high-deductible health plans (HDHPs) designed to be paired with a health savings account (HSA) be structured?
A8: If an issuer seeks to offer a QHP designed to be eligible for pairing with an HSA in 2014, the issuer must comply with the cost-sharing reduction standards described in 45 CFR 156 subpart E. CMS recognizes that certain plan variations of a QHP may require a low or zero deductible, or that certain services be exempt from the deductible. This may result in the plan variation not meeting IRS standards for an HDHP and therefore not being eligible to be offered in conjunction with an HSA. We recommend that issuers and Marketplaces educate consumers about this issue, both during open enrollment and when an individual has a change in eligibility for cost-sharing reductions. An individual who would not be eligible for the tax advantages of an HSA because the plan variation to which he or she would be assigned does not qualify as an HDHP may purchase the plan without cost-sharing reductions.
If you need help understanding cost sharing rules, HSAs, or HDHP programs, please contact Kinney & Larson.
A recent announcement by HHS sheds light on the fact that exchange cost share subsidies (those that change the coverage of a plan for certain eligible individuals) may impact HSA eligiblity. In order to qualify for HSA eligibility for contributions, a person must have corresponding High Deductible Health Plan (HDHP) coverage that meets certain requirements. It is important to note that cost share subsidies may turn an otherwise HSA eligible HDHP plan into non-eligible HDHP coverage for HSAs. This means the individual would not be eligible for HSA coverage.
Here is the Q&A:
Cost-Sharing Reductions and Health Savings Accounts
Q8: How should plan variations for QHPs that are high-deductible health plans (HDHPs) designed to be paired with a health savings account (HSA) be structured?
A8: If an issuer seeks to offer a QHP designed to be eligible for pairing with an HSA in 2014, the issuer must comply with the cost-sharing reduction standards described in 45 CFR 156 subpart E. CMS recognizes that certain plan variations of a QHP may require a low or zero deductible, or that certain services be exempt from the deductible. This may result in the plan variation not meeting IRS standards for an HDHP and therefore not being eligible to be offered in conjunction with an HSA. We recommend that issuers and Marketplaces educate consumers about this issue, both during open enrollment and when an individual has a change in eligibility for cost-sharing reductions. An individual who would not be eligible for the tax advantages of an HSA because the plan variation to which he or she would be assigned does not qualify as an HDHP may purchase the plan without cost-sharing reductions.
If you need help understanding cost sharing rules, HSAs, or HDHP programs, please contact Kinney & Larson.