Health savings accounts -- tax-free money -- pushed in repeal and replace
(KUTV) As Donald Trump navigates his first weeks in office, one of the top items on his "to-do list" is repeal and replace the Affordable Care Act -- known as Obamacare. While Republicans have talked about repealing it for years, the Republican party has been accused of not having a viable option for replacement.
While no one knows for sure what repeal and replace will look like, Health Savings Accounts, or HSAs, will likely be a part of the plan. One sign of how heavily weighted HSAs will be can be found on Wall Street.
Utah’s Health Equity, a health savings account company, saw its stock skyrocket the day after Trump was elected. The night after Trump was elected, the Utah company woke up to a 43 percent increase and that number has held in the months that have followed.
Such savings accounts are favored by Republicans and have been backed by Speaker Paul Ryan and Rep. Tom Price, now the Secretary of Health and Human Services.
HSAs are not a standalone fix, but part of a possible solution that would work hand-in-hand with high deductible health plans. A recent NPR look at HSAs states the theory behind them as “Making consumers bear a bigger upfront share of medical care – while making it easier to save money tax-free for that purpose – will result in more judicious use of the health system that could ultimately slow rising costs.”
“When people make a shift going from a traditional plan, copay plan to an HSA plan, there is a big difference,” he said.
Neelmen, a recently retired Utah County trauma surgeon, launched Health Equity, a health savings account company, after lobbying congress to back HSAs in 2003. The one-time surgeon has watched his company steadily grow for nearly 15 years and believes “there will be a day when more than 50 percent of American’s have HSA's.”
Health savings accounts have been confused with flexible spending accounts and 401k style savings. Neelman said there is a clear difference; A trifecta of tax savings. With any other savings, “You either pay on the way in or the way out. Health savings accounts are the only tax advantage account where money goes in tax free, grows tax free and spend it tax free on health care.”
Unlike flexible spending accounts, the money you save in an HSA rolls over year after year, tax free.
“The money in the HSA is yours for life. If the money goes in the account and you don't spend it, you roll over and you can invest it, use it to the end of your life on health care, tax free.”
If Obamacare is replaced, the current 24 percent of companies offering HSAs will likely grow exponentially.
Utah's Intermountain Healthcare sees a higher HSA adoption rate as a good thing. Dave Adams, who overseas health plans for the healthcare company, thinks it is part of his company's “responsibility” to employees “to provide this type of benefit and allow them to pay for all of their medical expenses with dollars that never get taxed.”
He refers to the trifecta of tax savings saying “there is no other benefit or account like this in America today.”
Intermountain Healthcare adopted HSAs in 2001 as an employee option, but they didn't catch on until almost a decade later in 2010. Now in 2017, 69 percent of Intermountain Healthcare's 40,000 employees take part.
Adams is emphatic when he said he “loves it.” In fact, he said his HSA “is the best” as he tries to accumulate the dollars in the plan and then “use them sparingly because they will become a part of my retirement benefit when I retire.”
HSAs allow anyone to save tax free for a life time and gift the money to family when you die. Neeleman said savings is not the only benefit he sees. After spending years in the operation room and talking to patients, he looks at the HSA as a way to improve healthcare another way.
“I found if people had even a little financial incentive, they asked me a remarkable different type of question,” Neeleman said.
Patients, he said, would say, “Look I understand you recommend this but is there a better, lower-cost solution?”
That conversation, he said, “provided an opportunity to have a dialogue.” Conversations Neeleman believes, could transform healthcare as we know it.
Adams who oversees health benefits for Intermountain Healthcare, doesn’t see the option going away.
“If this is not being offered, I would encourage you to talk to your benefits department and find out how you can participate.”
Opponents of HSAs say they may worsen, rather than improve healthcare, because people may hold back and not go to the doctor when they feel like they should save money.
For companies like Intermountain Healthcare actively using the HSAs -- the system works. Intermountain Healthcare has a 95 percent return rate of employees using the accounts year after year.