Buried in the 13,000 pages of draft ObamaCare regulations are two particularly insidious land mines designed to explode only when applied to Health Savings Accounts qualified health plans, but leave all other insurance unmolested. HSAs are the fastest growing financial or health care product in America, but if the Department of Health and Human Services (HHS) does not back off, HSAs might not be around much longer.
HHS is pushing a new regulation called the Medical Loss Ratio rule. Imposition of this new rule will essentially deny five millions with individual and small business HSAs from participating in the new health care exchanges.
Here is how the rule would work: Say your employer gives you $3,500 a year in your Health Savings Account, to be used to pay your $5,000 deductible for your HSA qualified health plan. One of the HHS regulations will simply not count most of the employer contribution – so that when they do the math on their rigged rules, your HSA qualified health plan comes up short. But HHS doesn’t stop there, if you decide to add $125 a month to make up for the $1,500 that your employer did not add to fully fund your $5,000 annual deductible, HHS will count exactly zero of your contribution towards it’s Actuarial Value rule.
That right. HHS simply does not count your contribution or most of your employer’s contribution in the rigged Actuarial Value calculation. Failure to count these contributions means failure to qualify for the exchanges. Failure to qualify for the exchanges means no HSAs. This despite President Obama’s repeated promises you could keep you plan. “If you like your plan, you can keep it,” he promised.
Lest you think this is just some oversight, and there is no HHS strategy to make sure HSAs can never comply in the markets where these rigged rules apply: the individual and small group markets, meaning those who are self-employed or work for an employer that does not provide health insurance, or for a small business that does provide health insurance, a look at the Final Interim regulation for HHS’s Minimum Loss Ratio (MLR) rule may change your mind. HHS’s MLR rule follows the exact same let’s just not count it strategy.
HHS has decided, despite repeated petitions to amend their rule, to simply not count any of the monies paid by HSA insured towards their deductible. HHS will only count monies paid by insurers. So, if you have a $5,000 deductible, and pay $3,000 in health expenses to meet your deductible, for the purposes of HHS’s rigged rule, none of that money counts – because you paid it, not the insurer. Given that only roughly 6% of the HSA insured population will hit their $5,000 deductible, it is just about mathematically impossible for the HSA qualified insurance to meet the MLR regulation. HHS knows this, they have been told for just about two years by HSA policyholders and advocates.
Since HHS is in full “let’s just not count it” mode, HSA qualified health plans in the individual and small group market can not comply with the combined rigged rule effect of both the MLR and AV regulations. This means the 5.4 million Americans in these two markets who now have an HSA will not be able to find HSA qualified health plans. Poof – forty percent of Americans with an HSA just won’t be able to have one.
It appears another ObamaCare promise is going up in smoke.