No sweeteners added to tax bill to spread use of health savings accounts

The ongoing uncertainty about congressional changes to the health law — and their impact on insurance and the online marketplaces — continues to raise questions among consumers. Here are answers to recent queries.

Q: Does the GOP tax bill affect health savings accounts?

At this time, there are no changes aimed specifically at HSAs. These are savings accounts linked to high-deductible plans and exempt from tax liability.

Congressional Republicans have been very interested in expanding the use of these tax-free accounts, and bills to repeal and replace the Affordable Care Act last summer included provisions to increase the maximum amount people could contribute to them or to allow people to use them to pay their health insurance premiums, among other things.  The GOP promotes the plans as a way to help consumers play a larger role in controlling their health spending and says that the tax advantages help people afford care.

The GOP tax legislation doesn’t incorporate any of those changes, said Roy Ramthun, president of HSA Consulting Services.

Some analysts say it's still possible that HSA changes could be attached to other pieces of legislation, such as a spending bill or a bill to extend the Children's Health Insurance Program.

"The GOP would like to get some of these HSA expansion provisions into one of these bills," said Dorian Smith, a partner at human resources consultant Mercer.

Q: Republicans are seeking to repeal the individual mandate as part of the tax bill. Would that go into effect next year?

Probably not. The joint bill that House and Senate negotiators have agreed to doesn't repeal the ACA's requirement that most people have health insurance, called the individual mandate. But it does repeal the penalty for not having coverage. That change wouldn't take effect until 2019, however.

So, assuming the bill is enacted, most people will face a penalty if they don't have health insurance next year of the greater of 2.5 percent of household income or $695 per adult.

Many people, however, qualify for one of several exemptions to the mandate. Those include people who have suffered a hardship like eviction or bankruptcy and those whose earnings are low enough that health insurance is considered unaffordable.

In 2017, health insurance is considered unaffordable if the cheapest comprehensive coverage you can find would cost more than 8.16 percent of your household income.

"Because premiums have gone up so high in 2017 and 2018, there will be more people who qualify for the affordability exemption," said Timothy Jost, an emeritus professor of law at Washington and Lee University in Virginia who is an expert on health law.

If you're pondering whether to "go bare" next year, it's worth noting that the Internal Revenue Service won't accept electronically filed returns unless you indicate whether you had coverage, an exemption or will pay the penalty.

Q: None of the marketplace plans in my area offer out-of-state coverage or any coverage for non-network providers. Why would an insurer limit what's offered in that way?

Plans with broad provider networks have been steadily shrinking. Nearly three-quarters of plans sold on the ACA's marketplaces in 2018 have restrictive networks, according to an analysis by the consulting firm Avalere Health. The percentage of such plans has steadily increased since 2015, when it was 54 percent, the analysis found.

Health maintenance organization (HMO) plans and exclusive provider organization (EPO) plans were categorized as restrictive because they typically have relatively fewer providers and don't provide coverage for out-of-network care. Preferred provider organization (PPO) and point-of-service plans, on the other hand, were considered less restrictive because they generally have broader networks of providers and offer some out-of-network coverage.

The reason plans with restrictive networks are proliferating is because they help reduce costs, said Chris Sloan, a senior manager at Avalere.

"One of the ways to do that is to have a narrower network," he said.

But there may be an upside for consumers. "It's not just reducing costs for the sake of costs, it's also to slow the premium growth," he said.