Jack Strayer: Health savings accounts, high deductible plans

Published 9:24 am Thursday, January 23, 2014

The Affordable Care Act (ACA), also know as Obamacare, has been in the news lately and those familiar with my career in Washington sometimes turn to me for answers to questions they have about the ACA and high deductible health insurance.

Speaking from experience, from 1992 until 2003 and beyond I was the lead lobbyist for the health insurance industry’s efforts to enact a new insurance/banking product called Health Savings Accounts.

Health Savings Accounts are flexible spending accounts that are allowed to roll over instead of the old “use it or lose it” conundrum. You can contribute to your HSA and deduct the deposit from your adjusted gross income at tax time. The HSA can be used for any qualified medical expense that is covered by definitions of medical care found in the U.S. Tax Code (beginning with Sec. 123 – check it out). The catch is you must maintain a balance to cover your deductible should you get sick enough to begin using your health policy.

It took me 11 years and a change in leadership in the U.S. House and Senate to get HSAs fully enacted but HSAs were included in the Medicare Modernization Act of 2003 and soon small businesses and the self-employed began purchasing high deductible health insurance and establishing HSAs to cover the cost of their deductible.

But it is the Affordable Care Act that is putting HSAs front and center in this new age of nationalized health insurance. Most of the health insurance plans offered by the insurance industry through Obamacare come with some pretty hefty deductibles. The problem is the higher the deductible the lower the monthly premium so an HSA could be very attractive to someone who selects a high deductible plan. However, there is a minimum set for a deductible of at least $1,250 for an individual health plan and a minimum of $2,500 for a family plan. The HSA contribution (which is all tax free) is capped at $3,300 for an individual and $6,650 for a family plan.

The topic of HSAs can be very confusing because it is where banking and health insurance join together with the IRS to help save you money and improve the quality of and access to health care for all Americans. Most banks are offering HSAs to their account holders and accountants are always willing to answer your tax questions. Insurance companies are happy to help because now there is a way to make sure that sick people meet their deductibles.

Because I am limited by space restrictions here in this column, I am urging everyone to search your computer for Health Savings Accounts FAQs and you could save your self money that you will surely need to pay your subsidized monthly health insurance premium.

A native of Niles, Jack Strayer moved back home in 2009 after living and working in Washington DC since 1976. Strayer has served as a congressional staffer, state legislative press secretary, federal registered lobbyist and Vice President of the National Center for Policy Analysis. He is a nationally recognized expert on federal health policy reform and led the fight for the enactment of Health Savings Accounts (HSAs)