Industry Trends: New Year, New President, New Requirements for HSAs?

Industry Trends: New Year, New President, New Requirements for HSAs?

The fast approaching end of 2016 provides the opportunity to look back at an incredible and unpredictable year as well as forward as to how President-Elect Donald Trump might shape the future landscape of health care.  In particular, the growing popularity of Health Savings Accounts that now must be paired with a qualified high deductible plan.

With the election of a new president, health care plans and the fate of the Affordable Care Act are a hot topic of discussion. As part of his seven-tier health plan, President-Elect Trump has proposed a shift in the way health savings accounts (HSAs) are offered.  As you are well aware, an HSA is a savings account for medical expenses. HSAs are tax advantaged accounts an individual can open in addition to their current health plan to pay out-of-pocket expenses ranging from co-pays to surgery deductibles to even dental expenses. HSA’s can only be offered to individuals and families with qualified high deductible health plans (HDHPs). However, Mr. Trump’s new health plan strategy is enacted, an HDHP would no longer be an eligibility requirement, significantly impacting health care options for millions of Americans.

Trump’s new health plan would make HSAs readily available to everyone by removing the HDHP eligibility requirements that is currently in place. Mr. Trump has also said he will change policy to allow families to share the accounts between one another. Any contribution or interest-earned by an HSA is tax-deductible, and individuals with HSAs can withdrawal money tax-free for certain medical expenses ranging from transplants to acupuncture. These tax-advantages create dramatic savings options for those who choose HSAs. While Trump has said he will change some factors of HSAs, he plans to keep these advantages.

In the past, HSAs have been more attractive for retirees. Health care costs tend to rise in the retirement stage of life, which makes an HSA a more cost-efficient option. Since individuals are allowed to take out money for medical expenses without being taxed, retirees have the advantage of saving large amounts of money in the later stages of their life. However, under Mr. Trump’s proposed plan, HSAs will continue to grow in popularity for younger people because individuals will continue to be allowed to roll over money contributed to their HSA in a given year into the next, giving young and healthy people the ability to save sizable amounts for use later in life.

While much remains to be seen about which aspects of President-Elect Trump’s health plan will be enacted when he takes office, it is very interesting to see these new potential provision changes and how an HSA could work for you.

As your benefits partner, our job is to help you analyze your benefits experience and coverage plan strategy offered to your employees. Your Kistler Tiffany Benefits’ Consultant is prepared to discuss your full benefits package and what offerings are the right fit for you and your employees.