HSA changes in GOP health plan could mean incentives for employers
- The American Health Care Act (AHCA), Republican lawmakers' proposal for replacing the Affordable Care Act, offers changes to health savings accounts (HSAs) that employers and their workers could find favorable, reports Benefits Pro.
- AHCA changes to HSAs include, among other things, a raise in contribution limits to the out-of-pocket maximum of high-deductible health plans (HDHPs); a removal of the ACA contribution limit on flexible spending accounts (FSAs), which is now $2,600; and allowing spouses to make catch-up contributions to the original account, rather than open an new one.
- An America's Health Insurance Plan report shows that enrollment in HSAs grew to 20.2 million in the U.S. and continues to grow, although more slowly than in prior years, says Benefits Pro.
The continued growth in HSAs, although slower than in previous years, could be a major incentive for employers to offer or continue offering them. Most employers (75%) in a Plan Sponsor Council of America's (PSCA's) HSA Snapshot survey said they include HSAs in their retirement savings plan offerings.
The downside of the PSCA survey is that 50% of plan participants don't leave an end-of-year balance in their accounts. Employers might want to address this problem if they offer HSAs among their retirement savings plans.
To attract more participants to HSAs, the AHCA reduces the penalty on non-qualified contributions to accounts before age 65 from 20% to 10%. By lowering the penalty for using HSAs as tax shelters, the AHCA might encourage plan participation.
- Benefits Pro 6 favorable changes to HSAs under GOP health bill