The Affordable Care Act, or Obamacare, is going into full effect beginning in 2014. Many people are concerned about how their health care will be affected. If you use health savings accounts (HSA) now is the best time to understand the changes that will take place. HSAs will be available, but there will be limitations attached.
HSAs are accounts that allow employers to place tax-free monetary contributions for the employees to use in connection with their health plan. This account is primarily used to help cover health care costs. You may choose to invest it, much like a retirement account. The money in HSAs carries over without an end date or penalty for withdrawal. The contribution is currently capped at just over $3,000 for individuals and just under $6,500 for families. Since the accounts are for health care plans with high-deductibles, the deductible is at least $1250 for individuals and $2,500 for families.
HSAs are different from health reimbursement accounts (HRA) and flexible spending accounts (FSA). Both of these, the HRA and FSA, are use-it-or-lose-it accounts. This means that whatever is not used up by the end of the year is forfeited. Employees chose these accounts as they are not subject to payroll taxes. With the modifications that the healthcare act is putting on the HSAs, they will have limitations on what the HSAs will cover. HSA funds will no longer cover over-the-counter medications without a prescription. If money is used for non-medical purposes, there will be fines. While many preventative care services will not work towards the HSA plans, all health plans will be required to provide necessary health benefits.
Finally, health savings accounts will also be available on all plans, including the “Bronze Plan.” The “Bronze Plan” has the lowest premiums with the highest deductibles. Many employees will continue to be able to use their health savings accounts to help with the cost of the doctor visits.
You will still have the ability to have money deposited into the account, and it can still be used to cover medical expenses throughout the year. However, you will be required to get a prescription from your physician if the medication is sold over the counter if you wish to use your HSA funds to cover it. The health savings accounts will not really be affected under the Affordable Care Act. It will continue to service employees the way it originally was enacted for.